Tax planning is something to do year-round. At the very least, the beginning and end of the year are ideal times to consider tax-savings strategies.
The following are tax tips to consider for your business. While it may be too late for 2011, now is the time to consider implementation for 2012.
- Evaluate your accounts receivable. Write off all bad debts you have tried to collect (You must be able to show you tried to collect. Consider utilizing collection agencies.).
- Take advantage of the health insurance credit, which could save you hundreds of dollars. Generally, if you pay more than 50 percent of your employees’ health insurance premiums, you qualify.
- Time the purchase of fixed assets to take the most tax benefit. To take depreciation, the asset must be placed in service before year-end.
- Evaluate inventory. When you near the end of 2012, dispose of excess, unusable inventory to take advantage of an additional deduction.
- Take advantage of cafeteria plans. These allow certain benefit costs of employees to be paid pre-tax, saving the employee tax dollars. The employer also will save because no FICA tax is paid on the pre-tax deferral.
- Health savings accounts: the employer can save on health insurance premiums because they use a high-deductible plan. The employee can benefit by paying for health care with tax-exempt withdrawals. Unused amounts can be carried over to future years and earn income.
- Implement a retirement plan: the most common are SEP, SIMPLE, and 401(k). Consider a Roth feature in your 401(k). It is the only way high-income earners can put money into a Roth.
- Employ your children, if practical. They would have to perform work commensurate to the pay. You can take the money they earn and put it in a Roth. Most likely, they will not earn enough to be required to file a return or pay tax.
- Take advantage of tax brackets if you are a C corporation. Take advantage of the 15 percent bracket, and pay dividends when it makes sense.
- A holiday party or summer picnic qualify for 100 percent deduction.
- Have your business reimburse you for mileage incurred in relation to work.
- If you have losses, you must plan as well. It is important to ensure you have basis for any losses. C corporations may be able to carry back some losses to recuperate prior taxes paid.
To learn more about how SS&G can help your bottom line or to schedule a complimentary one-on-one consultation, please contact us at 877-772-6341 or Rx@SSandG.com.