By Karen Axelton
The end of the year is coming, and that doesn’t just mean holiday celebrations—it also means you only have a matter of weeks to take advantage of some last-minute tax strategies that can save you money.
Contribute to your retirement plan. If you haven’t already contributed the maximum this year and you want to lessen your tax bite, make an extra contribution to your plan before December 31. (Don’t have a retirement plan? There are many options available even for solo business owners, so start investigating and set up a plan for the New Year.)
Make charitable contributions. This is another way to reduce your taxes owed. Consider donating outdated equipment, vehicles or other business assets to a school or nonprofit organization that can use them, and your business can get a deduction.
Make major purchases now. For the past few years, small businesses have enjoyed an expanded Section 179 expensing deduction. For 2012 the annual limit is $139,000, meaning you can expense up to $139,000 in furniture and equipment your bought for your business in 2012. Currently, this limit is scheduled to shrink to just $25,000 for 2013, so if you’re considering a major purchase or buying new equipment, now might be the time to take the plunge.
Accelerate expenses and defer income. If your business operates on a cash basis, you can apply this strategy. Pay expenses before the end of the year (charging expenses on credit cards is considered payment) and give your clients a little extra time to pay you so you don’t have the payments in hand and don’t have to declare the income on your taxes.
Take advantage of the health care tax credit. If you have fewer than 25 employees and provide health insurance for them, you may be eligible for a tax credit going back to 2010. Eligibility depends on factors including your employees’ average wages and how much of the insurance premium you contribute. Visit the IRS website for details on the tax credit and how to claim it.
Get organized. You don’t want to be dumping a shoebox full of receipts on your accountant’s desk at tax time. Start now to pull together the records and paperwork you’ll need for your business’s tax return. This way, you can get any missing documents together in plenty of time. Getting better organized will help ensure you don’t miss out on any deductions that are rightfully yours—and that saves you money.
Consult your accountant. The right year-end tax moves for you will vary depending on your business, so check with your accountant now to determine what last-minute strategies you can use to cut your tax bill and maximize your income.
Image by Flickr user Images of Money (Creative Commons)Google+