Small business year end tax tips
Although tip #5 equates to Don't take any unallowed deductions, the other tips are good ones that I have used in my own small business:
- Contribute to a retirement plan: To help minimize taxable income, I try to max out my SEP IRA contribution every year.
- Defer income: I use Cash Basis Accounting for my business (where revenue is recognized when payment is received), so I have the option of deferring revenue until 2007 by simply waiting a couple of weeks before sending out invoices to my clients. I typically avoid doing that though, because clients don't always pay their bills on a timely basis.
- Increase expenses: I often buy business equipment and office supplies at the end of the year because I know how much cash I have on hand. I have already purchased a new laptop computer and laser printer this month, and have been keeping an eye out for a good deal on a Dell desktop with an Intel Core 2 Duo processor.
- Pay bills now, not later: I will pay as many bills as possible (health insurance, credit cards, phone, internet, etc.) before December 31 so I can take the deduction for the 2006 year