As the end of the year approaches, small business owners need to be preparing for the year ahead. However, there are still some 2020 matters left to be taken care of—namely, your taxes.
If you haven’t put much thought into your 2020 taxes yet, make sure you do so now. There is still time to lower your tax liability and position your business for tax breaks or benefits this year. Here are five ways to squeeze tax breaks in before 2020 ends.
- Speak with an accountant: The number-one thing small businesses can do to potentially lower their tax liability before the end of the year is to have a conversation with their accountant or a tax professional. Nobody knows tax law better than these individuals, so they will be your top resource for learning about hidden deductions and tax breaks your company can take advantage of. Even better, they can help you get your tax documentation in order so filing is even easier next year. If you don’t have an accountant in place or are starting a new business and need an account referral, send an email to Tenet Financial Group and we can share a list of reputable accountants we work with on behalf of our clients.
- Donate to charity: Charitable donations give businesses the opportunity to deduct the value of each donation on their taxes. This is a great way to reduce tax liability while also making a difference in your local community—particularly in today’s climate, when many more people are in need. Make sure you keep documentation of every donation, whether they’re gifts of money or physical items.
- Make retirement account contributions: Contributing to your and your employees’ retirement savings plans may help you deduct additional income on your business taxes. Not only will this reduce your tax liability, but it will provide additional funds for your and your staff’s retirement. If you haven’t established a retirement plan yet, doing so before the end of the year might make you eligible for a tax credit, depending on the plan you create.
- Invest in equipment: If your business is in need of new pieces of equipment for your operations, don’t wait until the start of the new year! Buying new or used equipment before the year ends can help you deduct those costs from your taxes. Additionally, thanks to changes to asset depreciation in the tax code, you might be eligible for larger deductions right away, rather than spreading them out over time.
- Accelerate business expenses: Are there payments you can make in this calendar year, even if they aren’t technically due until next year? Accelerating your expenses can help you deduct more on this year’s taxes. Look for things like trade show registrations, stock and supplies or invoices with long payment terms.
Create your tax strategy early
Examining your business tax strategy before the end of year not only gives you time to ensure extra tax breaks and benefits but also helps you get your taxes in order well in advance. This can save you time during tax season and give you a stronger understanding of your business financials to help you make more informed decisions heading into the new year.
*TAX / LEGAL DISCLAIMER: Tenet Financial Group does not provide legal or tax advice and material contained herein should not be construed as such.