The end of 2015 is close, but there is plenty to do before 2016 arrives. Karen Stern, Partner in Charge of BSW Small Business Services, outlines some year-end tax planning tips in this month’s “Financial Fitness,” as featured in Small Business Monthly.
Tax planning is a year-round endeavor, but many of your most productive strategies can take place at the year-end. So while you’re making plans for the holidays and preparing to ring in 2016, keep these helpful tips in mind and get ahead of the tax game!
- Update your accounting. Make sure you understand where your business is financially now and where it will be at the end of the year. Take the necessary time to make sure your books are up to date and accurate. This might be a good time to reach out to your accountant and schedule some time to review your operations.
- Defer income. Deferring income will help you with your upcoming taxes, so any payments your business can receive during the first week of January as opposed to December cut down your tax bill. However, any deferral strategy you implement will depend on your profit and losses for the year as well as your business legal structure.
- Plan timing of charitable donations. Just as you would defer income to the next year, be sure to push any early 2016 charitable donations back to 2015. And make sure you get a receipt for the tax deduction!
- Increase expenses. Any items your business will require in the immediate future should be purchased this year to maximize deductions. Plan out what you’ll need for the first quarter and see whether those goods or services can be purchased now.
These year-end tax tips will vary depending on each business owner’s situation and accounting method, so if you have any questions, be sure to contact your tax adviser!