December means tax planning!

This time of year, the masses are making last minute arrangements, running around the malls to get the best possible priced gifts for the holiday season. For CPA’s, December is not just the holiday season, it’s the time when we do final tax planning with our clients. Just like you shop for the best priced gifts for the holidays, so too, should you put effort into saving money on taxes. Year end tax planning can reduce tax liability while benefiting your personal finances or business.

How you ask?

Many profitable businesses that buy equipment at year end when they can better predict their year end profit. For instance, certain equipment purchase can be expensed in full to reduce the profitability of the Company and the tax burden. This deduction is predicated on the circumstance that the business NEEDS the requisite equipment. In addition, items such  401K’s, SEP IRA’s and other investment vehicles to shield income from taxes while benefiting your retirement are available. These and other tools are great ways to minimize your tax burden.

Individuals should consider such items as donating clothes and other household items for charitable donation deductions,  paying your entire real estate taxes prior to year end, etc. Timing of payments effect the deductions you take. Thus, on the flip-side making certain payments (such a s real estate taxes) after year end may be more beneficial in the long term if your income is going up in the following year. This is a great discussion point to have with a CPA.

If you are worried what your tax bill might look like come April 15, 2012, consider being proactive and call or email dbbmckennon today to inquire about year end tax planning. Being proactive is your single most advantage when it comes to taxes.