Minimize Taxes before year end If you find that your Company has been profitable during the year and it is looking at a hefty tax bill after the year end, there are a few things you can do to minimize your businesses taxes. Note however, that you should consult your CPA to determine if these action items are right for you.
- Make payments - Pay all your payables and payroll before year end. Remember, cash expenditures during the year qualify for deduction. If you normally would run payroll on January 2, consider running that payroll on December 31 instead.
- Prepay - Prepay certain expenses normally due on the first of each month. Traditionally, recurring bills such as rent and insurance are due on the first of the month for the following month. Take advantage of prepaying these items to push the deduction to the current year rather than the next year.
- Buy equipment – Certain types of businesses can accelerate depreciation for tax purposes during the year of purchase. For instance, if you have a construction related business and buy a qualifying truck, you can accelerate the depreciation on that truck and take the total value as a deduction to businesses income.
Remember that your businesses may have NOL (Net Operating Loss) carry-forwards and getting extra deductions in a given year may not be needed. In addition, law changes can effect when and how you should spend money. Contact your CPA to determine what is best for your company.
dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality accounting and consulting services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.