If you are a business owner, you are probably searching for ways to save money on your state and federal taxes. It can be confusing since tax laws are complicated and change frequently. What was deductible last year may not be deductible this year. Ask your tax professional about whether any of these suggestions will benefit you and if he or she advises you to take advantage of any of them.
- Purchase equipment, supplies and software: Whether these expenses are totally or partially deductible changes each year so you need to check with your tax professional to determine what is allowable for the current tax year. Make all possible eligible purchases of necessary items by December 31 so you can include the deduction on your 2014 tax return.
- Review personal financial records to be sure that business expenses have been paid: It is common for owners of a small business, whether a partnership or sole proprietorship, to pay for some business expenses through personal checking or charge accounts. Sort through your personal receipts and cancelled checks and submit them for reimbursement from your business account.
- Submit expense accounts for yourself and your employees: Be sure all receipts for all business expenses incurred by you and your employees are submitted by the end of the day on December 31 so that you can claim all possible allowable business expenses.
- Make maximum contributions to employee retirement accounts: Employer contributions are tax deductible so be sure that, by year’s end, you have made the maximum allowable contributions.
- Treat employees and/or clients to a holiday party: Expenses for holiday parties are generally tax deductible, so you have the benefit of being a good guy and treating employees and clients to a party while, at the same time, deducting the costs from your taxes.
- Make a charitable contribution: You can give money as well as donate items. Both categories are tax deductible.
Before you take any action, be sure to discuss with your tax professional specific recommendations to be sure you are doing all you can to lessen the amount of your tax bill.