6 ways business owners can maximize 2017 tax savings.

As a business owner, you are probably always looking for ways to save money, especially when it comes business taxes. This becomes even more important as we approach the end of the year. We have 6 things you can do to limit the bite Uncle Sam can take out of your bottom line:

1. Update or upgrade business equipment now.

If you were already planning to buy business equipment such as computers, software, copiers, office furniture, etc. do it now. Normally you can only deduct for depreciation over several years, but purchasing now means you will have a better chance of deducting the entire amount. There are limits to what you can claim (you cannot deduct more than your net taxable business income for instance), but the amount will make a difference.

2. Pre-pay certain expenses.

You likely have some expenses that you’ll need to take care of next year. Go ahead and pre-pay them before the end of the year. These expenses can include business or specialized insurance related to your business, rent or mortgage (the interest is deductible), subscriptions to professional journals, or membership in associations.

3. Set up employee retirement plans.

A good way to save on taxes is to start a 401(k) retirement plan for your employees. You’ll be able to claim the cost of setting up and administrating the accounts and up to a certain amount each year. The employer contribution you set aside for yourself and employees is deductible, up to a certain limit. If you already have a retirement plan in place, make sure you put in your employer-agreed contribution before the end of the year, as that can be deducted as a business expense as well.

4. Bundle your business expenses.

Business owners can take deductions for work-related expenses, such as:

  • Capital expenditures
  • Employee bonuses
  • Prepaying expenses you’ll need for next year, like supplies
  • Bulk purchases
  • Business-related travel expenses

5. Get rid of underperforming stocks

Take a look at your stock portfolio. Chances are you have some that have lost value since you bought them. If the total lost exceeded your capital gains, you can deduct up to a certain amount and count that as “losses” from your income.

6. Donate to a charity.

You can “do good” in two ways by giving to a cause you care about. If you itemize your taxes, make a donation by the end of the year and claim that as a deduction. Aside from cash or checks, many organizations will also accept donations of cars and stocks/mutual funds. An added benefit of giving stocks means you can balance your investment portfolio and also avoid paying capital gains taxes (see above). Look for copies of an organization’s IRS determination letter and taxpayer ID on the website, which will allow you to claim the deduction. You should not need a determination letter if you are donating to a religious organization or church.

Use these tips to help your business save on your taxes before December 31st. For expert advice on tax minimization and other ways to manage your business assets, contact us today.

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