The Importance of Timing in Business Tax Planning

Maximize your profitability with good tax planning so you won’t be burdened with taxes that could be reduced or even eliminated. Start with looking for ways to push income 2016 while pulling expenses into 2015.

If you use the cash-method of accounting, delay as many invoices as possible until after January 1, 2016 so that you will not receive payment until next year. For accrual-based businesses, hold off on providing services or shipping products until the beginning of 2016. Pull expenses into 2015 by purchasing supplies needed for next year now. Consider having equipment or vehicle repairs done before year end. If you drive your vehicle for both business and personal purposes, use it as much as possible between now and the end of the year to boost your total write-off.

Now may be the time to make purchases of equipment and assets that qualify for the Section 179 (“expense”) deduction rather than being depreciated. While depreciation deductions can be significant, be aware that if more than 40% of this year’s purchases are made during the last quarter of the year, depreciation must be calculated using the ‘mid-quarter convention’.

Gather information on any business losses you may have incurred during the year such as bad debts, losses due to theft or natural disaster or losses on the sales of business assets. Accounting properly for these losses will help lower your tax bill. If your business has a net operating loss, it may be carried back for two years or carried forward for as long as 20 years. We can help you decide which strategy will work best for your business as well as help you secure ALL the credits and deductions you are entitled to claim.

Start planning now to maximize your profitably and reduce your tax burden. If you are not sure where to begin, give us a call – we can help!

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