Time for Taxes: 5 Tips for Maximizing Your Tax Savings for 2015

While the holiday rush and this festive season might not say “tax time”, December is the end of the fiscal year for many small businesses. It’s time to look back over the last 12 months and strategize for tax savings before time runs out. Even with the best accounting and recordkeeping, taxes are complicated and it is easy to overlook opportunities to save. Here are five tips to help you make the most of your tax savings this year.

Schedule a meeting with your CPA or tax professional now.

Connecting with your tax professional now to strategize will almost certainly save you money. As a small business owner you are an expert in your field, but there is a good chance your field doesn’t include the intricate ins and outs of our complicated tax code. Help from your CPA will keep your business on track. Keep in mind over 50 tax breaks for both individuals and businesses expired at the end of 2014, but Congress may decide to extend some of these through 2015. (see https://www.sba.gov/blogs/year-end-tax-planning-now) Your tax professional will help you navigate these changes so you don’t miss any opportunities to save.

Review Your Deductions

Making the most of your deductions is one of the most powerful ways to save on your taxes. While you don’t want to spend money just for the sake of a deduction, if there is equipment your business needs or will need soon, there may be a tax benefit to making purchases now. Depending upon your cash flow and need, you might also decide to stock up on necessary supplies now so you can take the deduction in this tax year. Review your books to find any outstanding bills that can be paid before the end of the year so you can deduct these expenses, too. If you need funds to cover these expenses, consider applying for a merchant cash advance with Jet Capital. Also ask your CPA how you should handle end of year bonuses to employees as this might be a smart deduction to take this year. If you are an independent contractor or freelancer, be sure to follow up with your tax professional about the self-employment tax deduction. This will be an important savings on the payroll taxes you have paid throughout the year.

Charitable Contributions

The holiday season is the perfect time to consider your charitable giving. According to the Chronicle of Philanthropy, small businesses tend to be generous in their giving and contribute up to 6% of their profits to charity. With careful planning and record keeping, your goodwill can also lead to tax benefits. To take advantage of tax deductions, contributions should be made by the end of this year to a charity or organization that has been granted tax-exempt status. The IRS has an online tool to make checking this status easy, see their Exempt Organizations Select Check. Non-cash donations can be made at fair market value, too. If your business hosted an event or fundraiser, expenses from this event can be deducted. It’s important to note that the IRS expects excellent record keeping for charitable giving, especially for non-cash gifts. Your tax professional will be an important resource in making the most of your charitable giving.

Retirement Contributions

The end of the year is an ideal time to check on your retirement planning to make sure you are getting the best tax benefits possible.  Contributing to a tax-friendly retirement plan will lower the amount of your taxable income. This saves you money now while making a smart plan for the future. According to the IRS, the basic limit for contributions to most retirement plans is $18,000 for 2015 and 2016, with an additional catch up payment of up to $6,000 for anyone over the age of 50. From a 401K to the various IRA plans, these retirement funds can save you money on taxes now and in the future when you retire. If you don’t have a plan set up yet, ask your tax professional for help in choosing the right plan for your future. If you do have a plan, check in with your accountant to make sure you are on the right track and to see if there have been any changes in regulations that may affect your plan.

Review Your Bookkeeping

Nothing will show the shortcomings in your accounting system like gathering all your details and paperwork for taxes. Use this opportunity to note what needs improvement in your recordkeeping. You may need to coordinate with your accountant to update your software or how you are tracking expenses. If you find your business in a bit of a cash crunch due to taxes, consider a merchant cash advance.  If any area of tax planning seems overly difficult because of your records, make changes to your system now so next year will be easier. Additional Resources https://www.sba.gov http://www.forbes.com

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