Looking for ways to minimize your tax bill this tax season? Whether you own a startup or an established business, take a break from your invoice templates and other daily operation concerns and focus on these three end-of-year tax tips that can help you maximize profits while minimizing your tax liability.
- Purchase Equipment
If you need new equipment for your business and are looking for ways to minimize your tax burden, purchase the equipment you need before the last day of the year. Doing so will give you the opportunity to receive up a federal tax deduction up to $500,000. This deduction is specifically intended to benefit small businesses, so you may not qualify if your business spends more than $2,000,000 for equipment. You also need to purchase the equipment and begin using it before the last day of the current year in order to qualify for the deduction.
- Prepare for Your Taxes in Advance
Many businesses wait until the last minute to figure how to pay their taxes, but you can give yourself an advantage by preparing for your upcoming tax bill before it comes due. Begin your preparation efforts by taking out a line of credit or putting a predetermined amount of money aside each month. Your accountant can help you establish a good estimate for how much you will owe in taxes this year so you can put money aside now.
- Donate to Charity
Donating to charity will not only reflect positively on your business and improve the community around you, but it will also minimize your tax burden. Whether you donate inventory and cash or sponsor a charitable event, charitable donations help your business qualify for tax deductions.
There are many ways to prepare for the upcoming tax season, but these three tips will give you a good start toward minimizing your tax liability and keeping as much of your business profits as possible. Another way to enjoy increased profitability is to utilize tools like free invoice templates and recurring invoicing software that will maximize your efficiency when handling day-to-day invoicing responsibilities.