7 Year-End Tax Tips for Business

by Ron Leger, CPA

The end of the year is a great time to think about business goals and what you want to achieve next year for your business. As you prepare to close your books for another year, congratulate yourself for another year in business and take steps to make a few strategic tax decisions. Check in with your accountant and see what you might be missing before the year is over.

Here are a few year-end important tax tips and deductions to consider.

  1. Run an Inventory Check – Not only does good inventory management save you money, it also improves cash flow in other ways. Remember, inventory is product that you’ve likely already paid for with cash, and you’re going to sell it for cash, but while it’s sitting in your warehouse it is definitively not cash. Grasping where you are with inventory can help you make good tax and year-end decisions.
  2. Contribute to a Charity – This can be a brand benefit in addition to a tax benefit if strategic thought is put into your charitable contribution. 90% of consumers are more likely to support businesses that play a charitable role in the community. Year-end profits provide a great opportunity to give back to others in need. Keep records, make sure the contribution is eligible and fully paid by end of the tax year.
  3. Defer Income – By deferring net taxable income to a later year, you may be able to reduce your current tax liability. You can reduce your taxable income in one of two ways. You can either defer income to next year or you can accelerate deductions into the current year.
  4. Make Purchases – The end of the year is a great time to spend money on items that your business will need in 2018, and let you maximize deductions. Office supplies, equipment, vendor payments in advance are all possible choices that may make sense for your business.
  5. Create and Fund a Qualified Retirement Plan – Make payments to your retirement plan or set one up to reduce income. Max out on contributions and discuss the best plan for you and your business with an advisor.
  6. Always think outside the box. – The old adage exists that “there is a solution for every problem” rings true for business and taxes. Every business has the unexpected happen, but your strategic reactions can make a difference to your bottom line. Trust your advisor and talk through possible ideas.
  7. Analyze Your Stock Portfolio – Consider selling stocks that have lost value to generate a capital loss that can be used to offset gains. Take a hard honest look at the stock that was clearly a mistake to buy and move on.

Ron Leger is a  Massachusetts based CPA who specializes in the R&D Tax credit and taxes for businesses, individuals, trusts and tax exempt organizations.  Contact us today!

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