End-of-the-Year Tax Tips for Small Business Owners
The end of the calendar year can be an important time for a small business owner. It’s not too late to take steps to reduce your end-of-year tax bill. If you are fiscally responsible, you can maximize deductions and put yourself on a path to saving money. Even though tax season is not until mid-April, now is a great time to get started. Here are several ways you can help your small business reduce its tax liability in 2015. But hurry, time is in short supply to implement these ideas that will result in tax savings for the year.
Make Big Purchases (Like a Steel Building!)
There isn’t a better time to buy a pre-engineered steel building. Now, that’s exactly what you would expect a pre-engineered steel building company to say. We’re not trying to pull the wool over your eyes here. Now is the time to spend your money on your company’s needs to maximize your deductions. Is your small business outgrowing your current workspace? Kill two birds with one stone by moving into a steel building. Take advantage of the great write-offs in 2014 by buying a steel building for your business. The more deductions your business can claim, the lower your taxable profit will be. Check with a tax professional for a full rundown of all possible incentives on your business expensed steel building.
The Internal Revenue Service defines business expenses as the cost of carrying on a trade or business. To be deductible, the IRS says a business expense must be ordinary (one that is common and accepted for your trade and business) and necessary (one that is helpful and appropriate). Common business expenses for your pre-engineered steel building include office supplies, start-up fees, employee’s pay, travel, retirement plans, and rent expense.
Upgrade Equipment and Software
Some small businesses can write off the cost of equipment and software in the year they buy them. The amount that can be deducted in a tax year can change, so make sure to confer with a tax professional and have them teach you about the current law. Computers, manufacturing equipment, and business software are possibilities for deduction for this tax year.
Defer Your Income
According to the U.S. Small Business Administration, billing late in December will defer your taxable income in 2014. You can also defer income by taking capital gains the following year. If you think you’ll be in the same tax bracket, it might be smart to defer you income. The USSBA goes on to say that while you can’t defer wages or income of your employees, you can pay bonuses this year, and still deduct the payroll taxes on them.
Make Charitable Donations
It is always better to give than receive, and giving this time of year has its advantages. Consider sharing your small business’s good fortune by donating equipment, money or excess inventory on a tax-deductible basis. The only caveat is if the equipment has reached full depreciation, you won’t be able to get a write-off.
State Neighborhood Assistance Programs (NAP) and Youth Opportunity Programs (YOP) are in place in some states to encourage businesses and individuals to donate to a tax-exempt organization in the U.S. for the benefit of low-income citizens. In return for yearly contributions, which could be due at the end of the year, business could receive tax credits that may be applied against their state income tax liability.
Make sure you talk to a tax professional before making any important business decisions! Then, talk to one of our building experts to get started on your path to a pre-engineered steel building!Photo courtesy: 401(k) 2012