It is the time of year where you are asking yourself, what can you do in the next 2 and a half months to save thousands of dollars?
This may seem like a long shot gimmick, but the reality is there are actually things you can start doing today to set you up for next year. It is called year end tax planning!
We are heavy into this at our tax firm, right now, so it is on my mind and I really wanted to share with you guys how we approach this so you can better prepare yourself!
One of the first things we do is we NEVER let the tax tail, wag the dog…
What the heck do I mean by that? Great question, let me explain! What that means is we don’t ever want to make a purchasing decision based on saving income taxes.
Expenses do help lower taxes, but we don’t encourage you to spend money just to save on your taxes.
At the end of the day if you don’t have a good reason to spend that money on a productive expense, it is better off to just pay the taxes you owe and save the money you didn’t spend for the future of your business.
That being said, if you know you are going to be making a big purchase, especially if you know you are going to need to spend this money in the first quarter, go ahead and spend that money now and take the tax deduction.
Another thing to do if you are worried about your tax bill is prepaying your expenses.
For example sometimes you can pay your landlord a few months ahead, or your cell phone bill, or anything that is going to give you a credit that you can file as a business expense to make it easier for you in the following year.
Also look at your personal credit card statement, obviously you should not normally be tracking your personal credit card payments with your business expenses but that is why we are having you take a look at that now.
Sometimes we are spending money on our personal card that we are not tracking on our business expenses that could be business expenses. Go back and view January- October statements and see if there are any expenses that were a business expense and submit those to your accountant.
Now is a great time to be thinking, preparing, and reviewing your tax strategies. You still have plenty of time to implement changes if needed to better track your expenses in order to make the tax accounting easier at the end of the year.
Check out the video below to hear more about the topic!
We will be offering a lot of advice on our page here but we also would be happy to help you out on a more personal level. Feel free to hit us up if you need help preparing your taxes.
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