You have worked hard in 2018 and time flies… It’s already November and there’s less than 50 days left before the year ends. Have you taken advantage of all the business deductions to lower your taxes this year?
If not, the good news is it is not too late! In this article, we share with you a number of tax tips you can use to offset your income.
Know That Every Dollar Counts
First, and the most important TIP! Know that every dollar counts! As a taxpayer, you are entitled to claim every single deduction as long as you have adequate supporting documentation. Keeping good records is important. Hence, it is a good practice to take some time during the last quarter of the year to gather and file all your receipts, bank statements, credit cards statement and any other vendor invoices/contracts or other relevant documentation. Make sure your books are reconciled properly so that you won’t miss any deductions. Every dollar of expense counts and when added together, can turn into huge tax savings for you!
Business or Personal Credit Card Charges are Deductible on the Same Day
Second, any charges you make to your business or personal credit cards that day is also deductible the same day! This applies if you are a sole proprietor or single-member LLC. If you are operating as a corporation, the credit card needs to be in the name of the corporation.
Prepay Your 2019 Expenses The third tip is a secret that many don’t know, that is to prepay your 2019 expenses. By prepaying your expenses at the end of December, you get to enjoy the deduction for this year. The IRS Regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge. Just remember to make sure whoever you are prepaying understands this strategy and that you have proof of payments made.
Office Equipment
Fourth, it’s not too late to purchase office equipment. The current year limit on Section 179 purchases is $2,500,000. Just don’t forget to place the qualifying assets in service before midnight of December 31, 2018 to get the deductions this year.
Defer Billing Your Customers Until Next Year
The last strategy may sound crazy to some but over the years, I have seen clients who deliberately stop billing their customers and patients just because they want to pay less taxes. By using this method, you defer your supposedly “taxable income” to the next year and will not owe any taxes until 16 months later.
Need more guidance on how to prepare for your 2018 taxes, sign up for our partner's, XQ CPA's, tax seminar to learn how you can minimize your taxes for 2018! REGISTER HERE