Don't Put Off Tax Planning

It seems almost cruel to bring up the topic of taxes this far in advance of year-end, but now is the time of year when smart business owners are thinking ahead and making adjustments that will minimize the number of dollars that go into Uncle Sam's pocket on April 15.

We all know taxes are complicated, but they still have to be paid. It's a good idea to have someone who knows taxes inside and out so that you can get the tax advice you need.

Here are some things to think about as you ponder that next tax day.

Who's sitting down with you on a regular basis to determine the tax impact of your key decisions including major purchases and sizing your personal paycheck?

The amount of money you can deduct for equipment purchases is higher than it has ever been. You can take expenditures that your company would otherwise need to capitalize-write off over several years-and get an immediate tax deduction. Depending on your tax bracket, you could see a tax break of $15,000 to $39,000.

Do you have someone advising you on a good strategy so that you tax-optimize your year-end income and expenses?

The golden rule of end-of-year tax planning is "increase expenses and delay income." That can be as easy as paying your January mortgage early or prepaying for subscriptions to keep the tax money in your pocket for an additional year. But if you've had a bad year, and expect next year to be better, you may want to take the opposite approach. We can help you make a smart choice.

Do you have someone advising you on ways to save taxes you might not know about?

You may be missing out on frequently missed deductions. For example, have you considered setting up a Dependent Care Assistance Program? It's a simple and inexpensive way to put more money in your employees' pockets. You can reimburse employees up to $5000 in child care expenses tax free. They don't pay income taxes on the reimbursement, and you don't pay payroll taxes.

Your CPA still plays a vital role in preparing and filing your actual returns. But wouldn't it be reassuring to know that there was somebody who really understood your business and was working side-by-side with you throughout the year to develop a big picture tax strategy?

Taking every legitimate deduction available to you is simply smart. However, you have to make sure your decisions are based on the long-term benefit your company, not just on short-term tax savings.

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Author: Margot Brandlin writes in Minneapolis, Bookkeeping with Owl Bookkeeping and CFO. Bookkeeping in Minneapolis with OWl allows her to give the highest caliber of service to her clients.

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