Get Your Timing Right to Save Taxes
Pay attention to the timing of receipt of income and payment of expenses in your business, and you can save taxes this year. If your business uses the cash method of accounting, wait until January 1 to send out your invoices. You won’t be taxed on the income until you receive payment. If your business is on the accrual method, see if you can delay shipment or providing services until next year. However, if you need the cash flow, or you anticipate higher income next year, you may be better off getting that income now.
Check out timing for expenses as well. Consider stocking up on office supplies and other things you use regularly for your business. Remember that the IRS considers payment by credit card to be the same as cash. Even if you don’t pay the bill until next year, you’ll still get to deduct charges made this year. See if you can schedule repair and maintenance work on your company vehicles and equipment now rather than later. Check with your vendors to see if you qualify for a discount by pre-paying next year’s expenses this year. If equipment or vehicle purchases are coming up, think about making those by year-end.
Before you do anything, give us a call so we can help you get the tax result you want.