5 Year-End Tax Tips for Small Businesses | Tally Services

As the end of the year rolls around, it’s time to make the most of the season and look for ways to reduce your tax liability. Use Tally Services’ top year-end tax tips for small businesses to help you do so:

1. Consider Tax Cuts and Jobs Act Changes – The 2017 Tax Cuts and Jobs Act (TCJA) has made significant changes to the tax liabilities of many small businesses. For example, businesses can now take a 20% deduction from net business income under the Qualified Business Income Deduction section. There are also major changes to the deductions and credits businesses can now take for entertainment and meal expenses. If you’ve made a large capital purchase on something such as a vehicle or piece of equipment, there are new first-year depreciation limits that could result in tax savings for a small business.
   

2. Set up a 401(k) Plan for Employees – If you haven’t already, setting up a 401(k) plan for you and your employees is a good way to save on taxes. When you set up a retirement account for your employees, you can claim a tax credit for administering a 401(k), up to $500 for the first three years. You can also deduct the amount of money you contribute to your own or your employees’ plans.  
   

3. Reduce Profit – If your business has had a successful year, it might be wise to increase your expenses and therefore lower your profits (and tax bill!) by stocking up on supplies and inventory or prepaying for services and products where you can. Before you do so, it’s important to make sure the savings will reduce your overall tax bill.
   

4. Write Off Bad Debts – If you have any bad or uncollectable debt, you can write it off before the end of the year to lower your profits and ultimately save on your tax bill. Just note: if you happen to receive the money from a customer later, you will have to reverse the write-off.
   

5. Write Off or Write Down Old Equipment – If your business has old or broken equipment lying around that you are still paying taxes for, you can take them off your accounting records to increase taxes and ultimately lower your tax liability. If the equipment is completely worthless, it can be written off completely. If the equipment is damaged or less valuable than it was, you can write it down.

As the year’s end creeps up on you and your business, work with a local accounting and bookkeeping firm that can help you find tax opportunities and make the most of the TCJA changes. Look no further than Tally Services in Fort Collins, Colorado. We partner with businesses and organizations of all sizes to provide bookkeeping and accounting services to help your business grow and succeed, as well as prepare for year-end accounting and tax season. Click here to learn more about our services and don’t hesitate to contact us if you need help.