Year-end Tax Planning Techniques You Can Do as a Business Owner

The customs have already started investigating self-employed people and small businesses as a part of their campaign in order to identify inadequate record keeping of taxes. In order to successfully manage your income taxes, you should consider utilizing any year-end tax planning techniques. Tax planning techniques can help you reduce the amount of your income tax and can make you wealthier instead. In general, the year-end tax planning techniques for small businesses and individuals include:

1. Defer Income

The income you received by December 31 still counts as your income for the whole current year (applies to most countries). One technique to defer it or delay it from being included in your current year income and include it in the following year is to record the income after January 1. This can definitely save you a big amount of money depending on where your income levels lie each year. To be more certain, ask a skilled accountant if this technique is applicable to your country and if it could really help decrease your tax bill.

2. Review Your Reports

Financially speaking, how was your year went through? This information is very important for your entire goal setting process. This can also help you ensure that your books and records are accurate and up to date. Have an accountant or bookkeeper run all your reports which are relevant to your business.

3. Make Purchases

It’s time to spend money for your business. Now is the right time to buy items that you need in your business as it can help you maximize deductions. You can upgrade your equipment and stock up office supplies. Make a list of those purchases and you can make it now so you can be able to avail of the necessary deductions.

4. Run Inventory Checks

Basically, if there’s a drop in your inventory’s market value, you can be able to apply additional deductions. However, this depends on your personal accounting methods. That is the reason why it is important to consult an accountant regarding with these matters in order to make sure that these techniques make sense. Specifically, the following techniques can help individuals and small business in their year-end tax planning:

For individuals:

1. Income Deferral Strategies – Example: Ask your employer to give you bonuses in January instead of paying it in December.

2. Income Acceleration Strategies – Example: Ask your employer if you can get your bonuses this current year instead of having it next year.

3. Deduction Deferral Strategies – Example: Defer paying charity donations, medical bills, property tax as well as other related deductions until next year.

4. ISA allowances and pension allowances – All of these year-end tax planning techniques are important. Whether you are an individual or you have a small business, you need to have a knowledgeable representative, whom you can ask questions and can undertake the tax planning for you. This is the reason why we suggest that you hire reliable Columbia Maryland bookkeepers for your business no matter how small or big it is.

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