With year end fast approaching, many of our clients are looking ahead to next year’s taxes. You may be wondering if there is a way to minimize your tax burden for next year. Especially if you had a good year and your cash flow is…well, flowing.
The good news is, there are a few things you can do, but you need to get going on them ASAP. So we’ve provided a list of the top three quick and easy things a business owner can do in December to reduce next year’s tax burden.
Don’t just wait for next year’s tax bill. Do something!
- Buy something. And we don’t mean, “buy a ton of Christmas presents with your business credit card.” Buy something for your business, preferably something that will depreciate so that it will help reduce your tax burden in years to come. The most obvious choice is often a vehicle–in December, adding to or upgrading your company car or fleet can be a great deal. (You’ll get the benefit of year-end dealership promotion prices and the tax break.) But a car isn’t the only way to utilize that cash flow. If you’ve been considering investing in industry-specific equipment, or you need a new laptop or computers for your office, now’s the time.
- Invest in something. Like your retirement. Depending on the type of IRA you have, adding funds to your retirement plan can help mitigate your tax burden for next year. If you don’t have an IRA, get one and fund it with as much as you can afford (up to $5500 to impact your taxes). You can do this as late as April of next year, but you may as well start thinking about it now so you don’t miss your opportunity. Consult your financial advisor for the best option for you and your business.
- Pay something. Pay business bills. If you’re experiencing a lot of positive cash flow right now, use it to your advantage. Take a look at your outstanding business payables and get them paid before December 31st. Taking care of these bills will reduce your excess revenue for this year and allow you to start next year with a clean slate.
Reduce your Tax Burden
Those are three quick and easy things you can do to reduce your tax burden for next year, if you have positive cash flow. But that’s just the tip of the iceberg–we can help you with more solutions that are customized to your business and your situation. It’s not too late to schedule a tax planning session, so be sure to contact us today!