Small businesses can become extremely busy during the month of December. Holiday shoppers increase the demand for goods and services, allowing your small business to experience a boost in sales.
As you prepare to handle the holiday rush, you should also be thinking about some year-end activities that can help streamline your tax filing. These activities will ensure that you are maximizing your deductions and reducing your tax burden as much as possible.
1. Make equipment purchases.
The end of a calendar year can be a great time to invest in new equipment for your small business. If you need a new printer, a computer upgrade, or access to a commercial copy machine, purchasing these items in December ensures that you will be able to claim them as a deduction when filing your taxes the following April. You can opt to deduct the full value of the equipment you buy, or you can spread the value out over a few years to help reduce your tax burden in the future.
2. Review business revenue.
The amount of money that you will owe when filing taxes on behalf of your small business varies based on the income bracket your company falls into. As the end of the year approaches, you should take the time to meet with your accountant to review your business revenue.
Any payments that you receive prior to December 31 will need to be included in your income when filing taxes. Deferring payments until January postpones the inclusion of that revenue until the following tax year. Your accountant can help you determine if it makes sense for your company to defer payments in order to minimize your tax burden.
3. Make a charitable contribution.
The holiday season puts a lot of people in a giving mood. Donating to a charitable cause can be a great way to capture the holiday spirit and give back to your community. Your company can opt to donate money or products, and both are deductible when filing your company's taxes.
Be sure that you partner with a charity that has achieved 510(c)(3) status. The IRS only recognizes these official charities, and donations made to other organizations may not be tax-deductible.
You will have a lot of responsibilities as the end of the year approaches. Take action before the month of December ends to help ensure your company's tax burden is as light as possible.
To learn more, reach out to professionals such as Jeffrey Beebe CPA.