At the end of the year, you'll likely have many financial issues to wrap up for your small business. You can benefit from doing the following tasks at the end of the year to simplify and reduce your tax bill.
Consider Withholding Invoices
As you compare your total income for this year to previous years, you may want to consider withholding some of your December invoices until January. This way, you won't need to pay taxes on these items until the following year. This is a good idea if you have had a higher income than usual this year, or if you need to keep your cash free for an upcoming purchase.
Wait to Liquidate Assets
In the same vein, if you are planning on selling old and depreciated items, you may want to wait to do so. If you hold onto your items for the entire year, you can claim a higher capital cost allowance, which reimburses you for some of the costs of your business upkeep.
Spend More Before the Year's End
If you have several upcoming purchases to make for your business, such as new technology or updated equipment, you may want to consider making them before the year ends. This way, you will be able to claim a higher business expense on your tax returns, which will reduce your total bill.
Contribute to a Savings Account
For small business owners, you can pay lower taxes if you send some of your business income directly to a tax-free savings account. You can also choose to put some of your business income into a registered retirement savings plan. These tools will help you to avoid claiming this income as business revenue, so you'll reduce this year's tax bill. You'll wait to pay the taxes until you withdraw the money from your savings account.
Hire a Tax Professional Now
You may be tempted to wait to start your taxes, but it's a good idea to get your tax professionals lined up as close to the end of the year as possible. It will take some time to collect paperwork for all of your employees, contractors, vendors, and clients, so you can take the pressure off of yourself by collecting this information early and sending it over to your tax accountant. By hiring tax professionals Padgett Business Services or a similar company to finish your taxes quickly, you can fully move forward into the next fiscal year.