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The following article was published in our article directory on March 11, 2013.
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Article Category: Advice
Author Name: Graeme Nichol
People who own small businesses in Fernandina Beach have many things to consider when planning their business taxes. Talk to your CPA and Financial Planner, the combined knowledge could really save you money!
There are choices to make regarding the timing of expenses and income that impact annual taxes this year and next. It's best to plan your annual taxes in advance because of these factors. Your Financial Planner / Financial Advisor can also be a great help.
Planning and preparing taxes in advance saves you time and money. This allows for plenty of time to get the most out of your taxes each year.
You're more likely to miss out on opportunities and strategies that will help reduce your tax bill if you wait until the last moment. Plus, you'll be under stress to get your taxes filed on time. Consider these money-saving, year-end tax strategies for your small business:.
1. Buy a vehicle for work.
If part of your business requires you to haul people or items, buying a work vehicle offers you a considerable tax advantage. Section 179 first year depreciation allows for up to a $ 25,000 write-off for "heavy" SUVs that get 50 % of their use from your business.
This write-off involves specific considerations, so you'll need to check the depreciation rules for work vehicles before you make a purchase.
2. Buy other equipment.
There are other forms of first-year depreciations available through Section 179. New and used business software and equipment is eligible for write-offs up to $ 250,000.
Typical equipment that applies for this tax credit includes computer systems, machinery, office furniture, and software that's bought and used in the current tax year.
3. Prepay next year's expenses.
You can also prepay expenses for next year now to earn additional deductions on your upcoming tax return. Buy next year's equipment in advance, or pay upcoming expenses before the end of the year arrives. This way, you can claim these expenses as deductions and save yourself additional money before tax season.
4. Defer some of your income.
Will you be in the same tax bracket next year? If so, you can cut down on your taxable income by delaying some of your payments until after the beginning of the next year.
Deferring income and accelerating deductions postpones a portion of your tax bill and allows you to save money on this year's taxes.
5. Accelerate some income.
You'll want to employ the opposite strategy if you plan on being in a higher tax bracket next year. Accelerate some of that income into this year's earnings and postpone some deductible expenses until after January 1st. This creates tax savings on your higher tax bill in the following years.
A healthy balance between accelerating income and delaying expenses lowers both tax bills, for both the following and current year.
The Bottom Line.
Business owners should consider tax strategies all year long, not just when tax time rolls around. There are many opportunities for tax savings and deductions throughout the year, if you know how to apply your income and expenses accordingly. These strategies maximize your tax savings for this year and next year, too.
Keywords: Financial Planning, Financial Advisor, Saving, investment, advice, CFP, CFA,
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