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November/December 2019
Ways to Help Minimize Business Taxes
As we near the end of the year, now is a good time to examine ways your business can reduce its tax bill.
Move Things Around
Depending on whether you believe 2019 will have brought more or less taxable revenue than your 2020 estimates, consider pushing up or pushing back equipment and other capital purchases. In the same vein, send out invoices by December 31 if you expect a better next year or in January if you anticipate smaller profits next year.Depreciate Now
Another way to lower your business income is to use Section 179 to accelerate depreciation of certain property into one year instead of over a number of years. The recent tax law changes, according to the IRS, raised the maximum Section 179 expense deduction from $500,000 to $1 million, indexed to 2018 for inflation. The phase-out limit also increased from $2 million to $2.5 million.Carry Over Deductions
If you couldn’t use all of your deductions, credits and losses in previous years, you may have some remaining that you can carry over to reduce this year’s taxes.Defer Taxes Smartly
One time-tested way of accomplishing the dual goals of saving for retirement and lowering taxes is to contribute to a tax-deferred retirement plan. Contributions you make in your name or for employees are usually tax-deductible, while you get to potentially defer taxes on earnings in your retirement account and those of your employees.Start a Plan
If your business doesn’t sponsor a qualified retirement plan, consider doing so before year-end, if possible. Work with your accounting and financial professionals to determine which plan is best for your company.Home Sweet Home
If you work from home, you may be able to take a home office deduction. Just make sure that your place of business, whether it is a standalone office, your garage or a bedroom corner, is used exclusively for your business.Explore Business Structure
How you legally structure your business can have an impact on your business taxes. Talk it over with an attorney experienced in this area to learn if an LLC,S corporation, C corporation or sole proprietorship is best for you.
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