Are you looking at your 2019 taxes and lamenting missed opportunities for saving money? Are you thinking that you’ve got to get a better handle on this process for 2020?
If so, the time to act is not just right now as tax season looms, but all year long.
The following tips can make small business tax prep a breeze.
A common way for small businesses to reduce their tax burden is to buy new equipment at the end of the year—maybe it’s a new copier or office furniture. While this practice works for some businesses, an even better idea is to prepare a budget for capital expenditures.
Decide upfront how you want to handle things like investing in new technology.
Are you going to need more computers in 2020? Do you have a mobile workforce that you want to provide new tablets for at some point during the year?
Setting the budget in place today will ensure that you make the purchases and get the deduction. It will also serve as part of good overall planning for your business.
Consider quarterly employee bonuses
Another way a business reduces its tax burden is to give employee bonuses in December. The bonuses are welcomed by employees at a time when most are shopping for Christmas gifts. It’s a great opportunity for you to demonstrate your holiday cheer, whether it’s a good chunk of cash or just a subscription to the Jelly of the Month Club.
But like capital purchases, doing this incrementally throughout the year might work better. Perhaps you’re already paying estimated quarterly taxes, so your accounting is structured to report profits and losses every 3 months. Distributing the bonuses throughout the year can ensure that you don’t get caught short of cash at the end of the year.
If you’re uncomfortable with giving out bonuses that frequently, at least have a planned budget for the December distribution rather than just making a spontaneous decision at the end of the year.
Make sure you’re getting good advice
If you’re paying an accountant to do your taxes, they should do more than just crunch numbers. They should be able to give advice and ask the right questions that ensure you won’t miss out on valuable deductions. If they’re just a number-cruncher, they’re not much different than a software program—only more expensive.
Get the most from mileage
You probably have to spend time on the road in support of your business. Tracking mileage is one of the most basic deductions, but it can also be one of the most difficult to keep track of. If you head out to give an important presentation, you’ve likely got bigger things on your mind than the odometer. By the time you remember to check, it’s too late.
Fortunately, there are now mileage tracking apps that make this task easy and you can cash in on the savings.