7 Year End Tax Tips For Small Business

As the end of the year approaches quickly, tax season is coming and faster. Here are some simple tips for preparing for taxes:

1. Get up to date on all accounting.  If you’re behind on your books now is the time to get them up to speed.  If you don’t have a personal accountant and you’re a bit behind, you may want to hire one to take care of the detailed work for you.  This will save you a ton of time so you can focus on other important aspects of your business.
2. Hold off on getting rid of assets.  If there is anything you’re looking to dispose of, such as old equipment, you will want to wait till the start of the New Year.  If you don’t your Capital Cost Allowance Claim will be reduced for the year.  Consider being a pack rat for the month of December and once January comes around – dump it all!
3. Encourage clients to hold payments till January.  By deferring your customers to pay in January, you will avoid raising your income bracket.  All monies deferred to January will not be taxed until April of 2009.  A ton of money can be saved in taxes by simply differing payments.  You can also push charitable donations that were made at the beginning of 2008 back to 2007 to get higher deductions (you’ll need a receipt with a 2007 date).
4. Spend money now.  This is the best time of year to buy those large items you’ve been holding off on.  As you know whatever you purchase will be logged as an expense which, in the end will be a deduction.  Take an inventory of what you have and what you could use for the next business year.  If you need supplies, equipment, travel plans and even bills due next year.  By spending more, you’ll save more!
5. Take an inventory of losses.  Everything you purchased but cannot use may be categorized as a loss.  Damaged merchandise, items that you can’t use, a failed marketing expense can all be classified as “loss.”  Take advantage of every attempt you made in the last year that flopped.
6. Make a charitable donation.  If you need to decrease your income, then give some money away.  You can donate to a number of charities or grant money to a local college student.  Whichever way you want to do it, you’ll save money on your bottom line.
7. Add funds to your retirement plan.  Another great way to reduce your income is to place money in your retirement plan (401k, IRA, SEP and KEOGH).  This is a simple way to move your money around and help balance your budget for the end of the year taxes.