Year-End Tax Tips for Small Business Owners

With 2017 on horizon, tax season is soon to follow. For business owners, paying taxes is rarely an enjoyable process, so Cambridge Title Company would like to introduce a few tips to alleviate any unnecessary headaches that the process creates.

Write Off Business Equipment

When acting as a business owner, you can take advantage of IRS-recommended write-offs for business-related equipment which was purchased and used within the year. However, because of depreciation, it may be advantageous for write-offs to take place over multiple years, as opposed to just the one.

Write Off Overhead Costs

In addition to writing off equipment, overhead costs can count towards tax deductions as well. These include regular payments, such as rent, electricity, telecommunication services, and other utilities. The best part is that this is still applicable if you pay in advance.

Defer Payments

When it comes to billing clients, you could potentially delay payment till after the new year. By doing so, you won’t have to pay taxes on said payment till the following year. This is useful when money is tight.

Contribute Towards Retirement

When planning for the long-term, keeping retirement top-of-mind is never a bad idea. Money deferred towards a qualified retirement plan is generally not taxable until money is withdrawn down the line. If you currently have a plan, consider dedicating extra finances towards it. If not, the end of the year is always a great time to start.

Take Care of Bad Debts

Nearly every business owner has a client or two, who fails to make payments. If you have evidence of efforts to retrieve a bad debt (while remaining unable to do so), you can write it off on your taxes as well.

While some of the aforementioned tips are easy to implement into tax payments, others mandate additional preparation. In either case, once tax season arrives, you’ll be glad you went the extra mile.