Five ways you can maximize your end of year deductionsNovember 7, 2018
With the end of the year quickly approaching, it’s time for business owners to check in and review their year. Evaluating how your fiscal year went and taking that information into account when making decisions for you and your business for the upcoming year is crucial. Remember, small changes can have large impacts on your income and tax liability for the upcoming year. Here are a few ways in which you could prepare for the year-end and maximize your deductions.
Staying organized: One of the most important things is having all of your paperwork in order. Being on track of your expenses and deduction will allow for more efficient and orderly end of year process.
Increase business expenses before year-end: If you need to purchase products or upgrade your office supplies and equipment, do so before the end of the year. You will be able to increase the amount of your deductions for the year.
Deferring income: If you have the ability to defer income to the next year you can save a significant amount of money. Depending on the income level you are on at the end of the year, so ask your bookkeeper if it makes sense to defer income into the next fiscal year.
Charity: Contributing to charity can not only improve your image and social involvement, it can also provide your business with tax deductions. You can also make deductions by donating to charities. You can donate food, clothing or other goods and claim a deduction for the market value.
Setting up a retirement plan: Have a retirement plan? If not, set one up before the end of the fiscal year. By making payments towards your retirement plan you can reduce your income for that year, thus reducing the amount on which you are taxed.
Always keep your previous fiscal year in mind when setting new goals for the upcoming year. Paying attention to small details can pay off in the long run and save your business a lot of headaches and money in the process.