Year End Tax Tips For Home Businesses

Year End Tax Tips For Home Businesses
Someone recently asked me what they could do now to​ make tax time easier for this upcoming tax season.
The best thing you​ can do is​ to​ think about taxes before then year ends .​
Most people wait until the​ tax filing deadline before they ask how they can reduce their income taxes .​
Unfortunately,​ once 2018 ends,​ there's very little you​ can do to​ minimize your taxes for 2018.
To start your tax planning,​ you​ should review your income,​ deductions and withholdings before the​ year ends .​
Which means you​ need to​ get your bookkeeping caught up! you​ should use a​ software program,​ such as​ QuickBooks,​ Quicken Home and Business,​ or​ spreadsheets to​ keep track of​ your income and expenses for your business.
Once you're bookkeeping is​ caught up.. .​
do you​ expect your home business to​ have a​ profit or​ a​ loss this year?
If you​ have a​ profit,​ here are some tax planning tips to​ help minimize your home business taxes this year:
1 .​
Defer your income .​
If you​ have a​ home based business and it​ looks like you'll have a​ good profit this year,​ consider invoicing your clients in​ January instead of​ December,​ to​ defer the​ income to​ next year .​
Or,​ just wait until the​ end of​ December to​ send invoices .​
Any money you​ receive in​ January will go on​ your 2008 tax return,​ not 2018.
2 .​
Accelerate expenses .​
Do you​ need to​ purchase any inventory? What about supplies? Does your computer need to​ be replaced? If you've got a​ profit for 2018,​ consider purchasing inventory,​ supplies or​ other items that will need to​ be replaced soon this year to​ reduce your taxable profit.
In addition,​ if​ you​ itemize your tax deductions,​ make sure you​ pay all mortgage payments,​ property tax,​ medical expenses,​ etc .​
this year,​ even if​ they aren't due 'till next year,​ to​ help increase your tax deductions for this year.
3 .​
Contribute the​ maximum amount to​ retirement plans .​
As a​ home based business owner,​ you​ have several retirement plans to​ choose from .​
You can setup a​ traditional IRA,​ a​ SEP IRA,​ a​ Simple IRA,​ or​ even a​ 401K .​
The maximum contribution amounts vary based on​ the​ retirement plan,​ but these plans allow contributions from $4,​000 up to​ $44,​000 per year .​
Contributing to​ a​ retirement plan is​ a​ great way to​ maximize your retirement savings and to​ minimize your taxes at​ the​ same time.
4 .​
Give to​ charity .​
Although charitable donations don't reduce your business income,​ they do reduce your taxable income if​ you​ itemize your deductions .​
Gifts of​ cash or​ goods are a​ great way to​ help reduce your tax bill this year.
On the​ flip side,​ if​ you​ expect a​ larger profit next year,​ or​ if​ you​ expect to​ jump into a​ higher tax bracket next year,​ it's best to​ report as​ much income this year,​ and to​ defer as​ many expenses as​ possible 'till next year.
Either way,​ year end tax planning can really help minimize your taxes .​
But you​ have to​ make it​ a​ point to​ review your taxes before the​ year ends .​
Once 2018 is​ gone,​ so are your tax planning opportunities for 2018.
Year End Tax Tips For Home Businesses Year End Tax Tips For Home Businesses Reviewed by Henda Yesti on July 08, 2018 Rating: 5

No comments:

Powered by Blogger.