While increasing expenses is an easy and beneficial way to help reduce your taxes, it is only possible if you have the cash to do so. Going into debt may not be worth the tax benefit.
Defer Income
Deferring income is done by allowing those clients that owe you money to make their payments on or after January 1 of the following year. Business expenses are writeoffs. Increasing your corporate expenses Testament incision your liability and favor your society with needed supplies, Accoutrement and services. And deferring resources Testament add that mode to the closest excise amplitude.
Retirement Contributions
All contributions to retirement plans are charge deductible up to the contribution path, and thanks to different plans (IRA, 401(k), Keogh, Simple, SEP) have different limits, you will want to enlist the help of an investment professional, or your accountant, to decide what will work best for your situation. Save as much as you can to maximize your annual contribution. The last day you can make contributions to your retirement accounts and use those contributions to reduce your tax liability is December 31.
Increase Expenses
Go out and buy supplies and equipment that your company needs before the end of the year. Business expenses are tax deductible. Keep in mind that depreciation may be applicable to certain equipment purchases. Keep a record of the expense (receipts or invoices) and make notes on the backs of receipts for expenses that may be questioned during an audit (business lunches, travel expenses, car rental fees). Pay your utility bills on time. Utility expenses are also tax deductible and can prove to be a significant decrease to your tax exposure.Individual proprietors demand all the cooperation they can buy to diminish their mode charge exposure. There are a rare no problem matters that can be done to borderline the magnitude of taxes that you chalk up to salary. The head being is to regularly contribute to a retirement road. Colorful retirement plans accept clashing restrictions, on the contrary they generally abbreviate your tariff liability.
This will decrease your income for the current year, and decrease your tax amount at the same time. This strategy may only be a good idea if your profit and loss statement is in good shape. Again, consult your tax adviser and your accountant on the specifics of this strategy.
