Don't Put Off Tax Planning | Bookkeeping

By MargotBrandlin
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Word Count: 425

It seems almost cruel to bring up the topic of taxes this far in advance of year-end, but now is the time of year when smart business owners are thinking ahead and making adjustments that will minimize the number of dollars that go into Uncle Sam's pocket on April 15.

Yes, taxes are complicated. Everyone knows that, but unfortunately, they still have to be done. It can help make this arduous task simpler, though, if you have someone who can give you the advice you need.

Here are some questions to ask yourself and some important facts to consider.

Do you have someone sitting down with you regularly to determine what the tax impact of your key decisions will be, including any major purchases you're going to make and the size of your paycheck?

The amount of money you can deduct for equipment purchases is higher than it has ever been. You can take expenditures that your company would otherwise need to capitalize-write off over several years-and get an immediate tax deduction. Depending on your tax bracket, you could see a tax break of $15,000 to $39,000.

Do you have someone advising you on a good strategy so that you tax-optimize your year-end income and expenses?

The golden rule of end-of-year tax planning is "increase expenses and delay income." That can be as easy as paying your January mortgage early or prepaying for subscriptions to keep the tax money in your pocket for an additional year. But if you've had a bad year, and expect next year to be better, you may want to take the opposite approach. We can help you make a smart choice.

Do you have someone advising you on ways to save taxes you might not know about?

Be careful not to miss out on deductions. For example, you can set up something called a "Dependent Care Assistance Program." This is a simple way to put more money in your employees' pockets. You can reimburse employees from $5,000 in child care expenses, free of taxes. You don't pay payroll taxes on that amount, and they don't pay taxes on what they are reimbursed.

Your CPA can help you take advantage of every tax opportunity when he or she prepares and files your actual returns. However, isn't it nice to know that somebody who knows your business is working with you throughout the year to develop a long-term tax strategy?

Taking legitimate deductions is simply smart business, but you have to make decisions based on what is good for the long-term health of your company, not just on what reduces your taxes.

About the Author

Author: Margot Brandlin lives and writes in Minneapolis, Bookkeeping with Owl Bookkeeping and CFO. Bookkeeping in Minneapolis with OWl allows her to give the highest caliber of service to her clients.

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