Tax Deductions

Tax Deductions to Consider for the Last 3 Months of 2018

This year has flown by, leaving many people surprised that we are nearing 4th quarter. How did your business perform during the first three quarters of the year? What are the tasks that need to be addressed before you finish up 2018?

As we start into the fourth quarter, it is a great time to assess your business efforts and identify areas of improvement. The best thing that you can do is tap into the resources that are offered by business professionals who can help with your goals.

What Support Do You Need in 4th Quarter?

Here are a few ideas of outsourced professionals that can help you end the year on the right note:

  • Accountant: Evaluate the books to determine any expenses that should be covered before the year closes. Look at potential tax deductions to help with the management of your tax burden for the year. We will discuss this in more depth later in this article.
  • Lawyer: Is it time to restructure the business? Whether you are changing the way the entity is structured or you are looking for ways to improve your contracts, don’t hesitate to bring in the services of a legal team. You can find a local lawyer who can assist with your efforts. Or, look at online services such as Legal Zoom and more.
  • Business Coach: Sometimes, goals are just out of reach because you are having a hard time seeing things from a different perspective. A coach can be a valuable asset to help you identify systems that are no longer working. Changing a few of your habits and systems can make a big difference to boost your profits during the holiday season.
  • Marketing: If you want to maximize sales when consumers are shopping for the holidays, then make sure to utilize the services of an experienced marketing team. There’s no reason for you to spend time trying to figure out the best strategies. Instead, tap into the services that are offered to bring more customers to your website.

As you can see, there are many different focuses that you might choose for the last four months of the year. There’s no question that the financial health and organization of your company should be the top priority. Once you have the right financial system in place, then you will know how much cash flow is available to support the other services that are needed to help your company grow.

Why Tax Write-Offs Before the End of the Year?

It is common for business owners to procrastinate tax strategies until the tax deadlines are looming. But, the truth is that right now is the best time of year to evaluate your situation so that you can manage your spending before the year ends.

For example, if you’ve had strong sales numbers in 2018, then it means that you might be facing a higher-than-normal tax bill when Tax Day rolls around in April. While it is great to have high numbers for the year, it can be debilitating to face the expensive taxes that need to be addressed. Work with your accountant to find the right strategy that might offset the taxes that are due.

One of the best strategies is to invest money into things that are needed for the business. If that transaction goes through by December 31st, then it can be used as a deduction for 2018. You shouldn’t be spending money for no reason. But, with a good strategy, you can get access to the equipment and services that are needed for your company, while managing your tax bills at the same time.

Overview of Business Taxes

The most effective strategy to ensure that your taxes are filed correctly, and on-time is to hire an experienced accounting team to handle the work. You should be spending your time on other business activities, instead of trying to decipher tax law and crunch the numbers. Outsourcing these services can be a powerful way to boost your long-term results. The key is to make sure that you hire an experienced team who understands the most effective strategies to use for your business.

Tax planning should be an ongoing process, which means that you need to talk to your accountant more than once a year. Not only do tax laws change regularly, but it can be a burden to keep up with the rules and regulations that apply to your industry. Even though you will be spending money on the accounting services, you will actually save money in the long run by reducing your tax burden.

There isn’t one flat tax that needs to be paid by your business. Instead, a variety of taxes need to be evaluated. Your accountant can talk to you about the paperwork and calculations that are required for all of your financial needs:

  • Personal Taxes: You need to pay income tax on the money that comes into your household. If your business is structured as a sole proprietor, then your personal taxes will be completed along with the business deductions and income. Other applicable taxes include those associated with your personal property and your house. These taxes need to be considered on a local, state, and federal level.
  • Self-Employment Taxes: In addition to the income tax calculations listed above, there are a few things that need to be considered for self-employment taxes as well.
  • Business Income: If your company is structured as an entity, then there might be business taxes assessed by the federal government. Talk to your accountant and lawyer about the structure of your company and how to determine the taxes that apply to your circumstances.
  • Payroll Taxes: When you have employees on payroll, there are specific taxes that need to be managed with payroll processing. Not only do you need to calculate the right deductions from the employee paychecks, including Medicare and social security. But, you also need to calculate the company’s burden as well. Then, regular payments need to be made to the government. The timing of these payments varies on the size of your company and the number of employees.

Possible Tax Deductions for Fourth Quarter

If you experienced higher than anticipated profits this year, then an effective tax planning strategy is to speed up the timeline for purchases that are scheduled for next year. Shifting the timing of these purchases can help to offset the tax burden in the current calendar year, giving you more time to figure out your strategy for 2019.

On the other hand, if your revenue was lower than anticipated, then you might hold off on certain expenses until the New Year. Since your tax burden will be lower than normal this year, it might be beneficial to wait until January before putting money into equipment and other costs that might be needed for your company.

Keep in mind that a dollar spent rarely equates to a dollar that is saved on your tax bill. So, it doesn’t always make sense to come up with artificial expenses in an effort to reduce your tax burden.

Here are some of the expenses that might help with your deductions this year:

  • Computers, Cell Phones, and Other Electronics: Staying up-to-date with your equipment is essential so that you don’t run into problems due to outdated electronics. You might watch the Black Friday sales to find discounts on laptops or cell phones for your office staff. Everyone will be glad to have the upgrades for their equipment, and you will be glad to take advantage of the write-off before the end of the year.
  • Retirement Contributions: Certain retirement accounts allow you to set money aside tax-free. Talk to your accountant about potential retirement strategies that can be used.
  • Furniture: If your office furniture is outdated, then it might be time to invest in a new style. First-impressions matter when customers come to your office. So, you should always be sure that you are creating a good impression with interior décor that is trendy and welcoming.
  • Office Supplies: Are you running low on printer paper or pens? Put in your order at the local office supply store before the end of the year. Also, look at other expenses that might be needed, such as a new printer, filing cabinets, and more.
  • Software and Digital Subscriptions: We live in a digital world, making it hard for any business to avoid ongoing subscription services. The truth is that these tools can be helpful when you find the right services needed for your company. Don’t be shy to invest money in training courses as well as monthly subscriptions that are necessary for your business model. Examples include accounting programs, design software, stock photos, and more.
  • Insurance Coverage: A good insurance policy can go a long way to protect your company in times of emergency. Review your insurance coverage to see if anything needs to be changed to increase your coverage.
  • Travel and Entertainment: If you are thinking about attending an industry conference, then right now might be the perfect time to book the flights and hotel rooms. A portion of these expenses can be written off on your taxes.

What questions do you have about your business tax strategy? Talk to us at Easier Accounting for personalized recommendations. We are here to answer your questions: (888) 620-0770

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