Smart Yearend Planning Tax Deductions

Smart Yearend Planning - Tax Deductions
There are three main areas we need to​ keep in​ mind as​ the​ year ends:
1 .​
2 .​
Corporate formalities
3 .​
Planning for next year
Revisit the​ idea of​ converting your 10 largest expenses.
This is​ an​ ongoing process that should be done at​ least twice the​ first year .​
It’s not realistic to​ expect you​ will convert all of​ your biggest expenses the​ first time around because it’s too big of​ a​ task—this is​ a​ habit needing to​ be developed over time .​
Our largest expenses,​ habits,​ and businesses all change over time .​
As your life evolves,​ so should your deductions,​ so keep current .​
Strategy: upstreaming income.
the​ goal of​ upstreaming income is​ to​ shift income from this tax year to​ the​ next tax year .​
Whatever your operating account balance is​ on​ December 31 will get added,​ as​ of​ January 1,​ to​ your last year’s income .​
If you​ have a​ $50,​000 balance,​ for example,​ going into the​ next year,​ that’s taxable income .​
You therefore should upstream the​ money,​ making it​ no longer taxable for that year .​
This strategy is​ applicable if​ you​ have an​ S Corp,​ partnership,​ limited partnership or​ sole proprietorship .​
How to​ upstream income
Upstreaming income is​ accomplished by setting up a​ new entity such as​ a​ management company with a​ different yearend than your business .​
a​ business’s income can then be shifted out of​ the​ 2018 tax year to​ 2018 .​
You will want a​ contract and invoices to​ reflect this agreement between your business and management company .​
Move the​ $50,​000 balance to​ your management company with a​ June 1 yearend,​ for example .​
The money should be moved ideally at​ least on​ a​ monthly basis,​ not just once at​ the​ end of​ the​ year .​
I​ recommend taking five to​ 10 checks out of​ your checkbook and put them in​ a​ file for the​ upcoming year .​
In January,​ if​ you​ find out you​ had some expenses you​ missed—it’d be a​ lot better to​ have a​ check in​ sequence that you​ can write from December.
Smart Yearend Planning Tax Deductions Smart Yearend Planning Tax Deductions Reviewed by Henda Yesti on June 28, 2018 Rating: 5

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