Grit Daily: 9 Effective Tax Planning Tips for Small Businesses
Manage Timing of Income and Expenses
The best tip I can give to small business owners is that it’s all about timing. The specific #1 tip to minimize their tax burden legally is to manage the timing of income and expenses. If your business is doing well and you are busy all year, be proactive and plan ahead, well before the year is over.
This gives you time to make large purchases before year-end and deduct them against the business in that year, or defer income to the next. Have these conversations in advance of year-end, like in October, so you’re aware or can be ‘advised’ on what to do. Being a business owner myself, I like to have a rough idea of taxes or a snapshot of my tax exposure with real cash flows for accurate projections.
What if it’s much higher ‘on paper,’ but you didn’t realize it? Business owners have revenues that can be drastically different each year for many reasons. Be proactive in tax planning; I recommend it’s done well before the end of the year to calculate the maximum you can do.
Stephen Roth
Founder Principal, Limestone Financial Group
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
