Sourced from The Finance Oasis
#1 Get Your Business Financial House in Order
Even if you are months behind, gather all of your receipts and bank and credit card statements, and enter your transactions into your accounting system. No accounting system? Then just use an Excel spreadsheet or even go as old-school as pen and paper for now. You’ll have to do this for tax season anyway, and doing it now gives you insight into what year-end actions will be most beneficial to you.
#2 Determine what you can spend money on now, to get additional tax deductions if you need them.
Does your business need any new equipment, like a computer or printer? Do you want to enroll in a business planning support program!!?? If so, the end of the year is a great time to work in these expenses if you have had enough income to offset them. Consider picking up next year’s office supplies now. If you’re cash-based taxpayer (vs accrual based), you can prepay things like office rent or business insurance premimums for next year, and get the tax deduction this year.
#3 Use your credit cards for purchases
Did you know that anything you purchase on a credit card is deductible in the year it is charged, not the the year you pay for it? The same thing goes for checks that are mailed this year. Mail them a few days before the end of the year, and they still count in this year even though they are not cashed until next year. Just remember not to go so overborad that you create a different financial challenge for yourself!
#4 Determine how much to pay yourself for this year
If you’ve been taking money out of your business all year to support yourself, now is the time to determine how much of this is salary, and how much is owner’s draw. Remember the IRS does not look kindly upon business owners that take all draw and no salary. So figure out how much is salary, and make sure to pay all payroll taxes that are owed before year end.
#5 Defer income until next year
If you’re a cash-based taxpayer, deferring income means you will pay taxes on it next year instead of this year, and unless you think you’ll be in a much higher tax bracket next year, its usually a good idea. Think about who can pay you next year rather than this year, and send them an invoice next year.
#6 Set up a retirement plan designed for the self-employed
A great way to save money and reduce your taxable income is by setting up a retirement plan. For self-employed folks in the USA, there are several choices including a solo 401K,a SEP IRA, and A SIMPLE IRA –with these you can shelter up to $49,000. If you Google “self-employed retirement plans” you will find plenty of information to help you get started.
#7 Start now to plan for next year
There are many things you can do now to set yourself up for a great financial year next year.
Create a financial budget and a business plan so you know now how you want to grow your business. Review your expenditures for this past year so you know what you can cut back on and what you should spend more money on.
These tips, sourced from The Finance Oasis, are general — your own individual tax & financial situation must, of course, be considered.
Let us know what other tips you might have to share with others and here’s
TO YOUR NIAGARA OF ABUNDANCE!
