Top Tax Planning Tips
We’ve briefly mentioned the benefits of starting your tax planning early, but what exactly does that planning entail? You can prepare in several ways, and we’ve compiled the top tax planning tips to help you minimize your amount owed in the spring.
Top Tax Planning Tips:
Create a Personal Plan
Business owners know the ins and outs of their business better than anyone else. With this said, who better to start building a tax plan than yourself? Formulate a general outlook of what your finances may look like in the following year, and then plan to avoid any tax issues. For example, to ensure that taxes get paid in full, consider starting a savings account explicitly meant for saving money to pay taxes.
Pause Purchases of Mutual Funds
Those interested in purchasing a mutual fund, but will hold the funds in a taxable account, should hold off on buying until the next year. This will ensure that the year-end distributions are not added to your tax bill until the following year.
Purchase Business Supplies
Those who are self-employed can claim tax deductions for their small business. For example, if a person has a small company that is mostly eCommerce and operates out of their home, they can claim a home office deduction. Also, taxes are based on net income, so consider purchasing needed items before the spring to help save money in the long run.
Collect Donation Information
Donations to charitable organizations are typically tax-deductible, but what many are not aware of is how this will affect your tax bill. The Tax Cuts and Jobs Act of 2017 changed the process in which these deductions are handled. With this said, these deductions will be tough to itemize and process unless there have been large monetary donations made.
Suppose your typical charitable contributions for the year will not be significant enough to deduct. In that case, you may consider consolidating two years of giving into one year, every other year, to make sure you receive the tax deduction. One can also consider setting up a donor-advised fund if they plan on depositing large sums of money into the fund, which can then be tax deducted.
The best tax planners do more than prepare a business’s tax returns. To best prepare for tax season, it’s essential to stay on top of monthly taxing, financial management and maintenance, and breaking tax industry news.
If your current tax planner doesn’t do much beyond compiling your tax return, or if you don’t have anyone preparing for tax season at all, it’s time to make a change.
Our comprehensive tax preparation and planning services include payroll and sales tax prep, tax authority and audit representation, and so much more.
This is the all-encompassing tax preparation assistance your business needs to minimize tax liability and ensure financial solvency. By having us on your team, you are more likely to benefit from those opportunities.