Skip to main content

Super Last Minute Business Tax Moves

Time is running out for 2013 and for last minute tax moves.  Here are a few tips for business owners.

Timing is everything:

How does 2013 look for your business and you personally?  Also, what do you expect for 2014? These questions are important because, for example, if you know 2014 will be much better than 2013 then you may want to time profits so that you take more income in 2013 and then you will have less in 2014.  Why would you want to do this?  Perhaps you expect 2014 to be so much better that it may put you into higher tax brackets and/or cause other taxes to "kick in" like the Net Investment Income Tax, The Alternative Minimum Tax, or the Additional Medicare Tax.  Of course it could be the other way around too and you may want to delay profits into 2014.  Either way these are timing opportunities that you can take advantage of.  Realize you will have to report the income but when you report it can affect how much in taxes you will pay.

So how do you delay or accelerate profits between years this late in the year?

  • If your business is an accrual based taxpayer you may accelerate or delay invoices to affect your revenue.  If 2013 looks better you can wait to invoice clients/customers until after the first of the year thereby taking the revenue in 2014 instead of 2013.
  • Cash based taxpayers can collect payments to accelerate income into 2013 or encourage customers to pay after the first to delay income into 2014.
  • Cash based taxpayers can also accelerate payment of business expenses into 2013 by paying them before year-end.  Recognize that this can be accomplished by putting the charge on a credit card even though you will not pay the credit card until next year.
  • You can make last minute purchases of capital assets to be deducted in 2013 if you put them in service before year-end.  If you want to reduce income for 2014 you could chose to wait to purchase capital assets until after the first of the year.

These are just a few examples of tax moves that businesses can make before the end of the year. There may be others too depending on your circumstances.  These suggestions may or may not be beneficial for your situation.  A comprehensive conversation with your CPA about your circumstances can help you to make these decisions.  I would be happy to help you as your CPA.

These can be a complex tax matters that require planning and ideally an ongoing knowledge of your situation.  I would be happy to assist you with this as your CPA and discuss different business and tax strategies with you.  Feel free to contact me using the information below.

Jeff Haywood, CPA
The CPA Superhero
The above information is general information and is not all inclusive and as always in your tax situation everything "depends on facts and circumstances."  So call me to talk about your specific facts and circumstances.

Popular posts from this blog

The Dreaded IRS Audit...The Reality

Updated May 31, 2018

There is a fear of an IRS audit.  People have heard all kinds of stories and have many ideas about what will cause an audit and how to avoid it.  For example some fear that taking a deduction that they are entitled to will make them the target of an IRS audit.  I have also heard clients say both that filing on time will prevent an audit and also that filing an extension will avoid an audit.  So what is the reality of IRS audits.  

Who gets audited and why
The IRS audits aroud 1% of tax returns they receive.  That sounds like random selection but there are things that increase your chances of selection.  Ordinary taxpayers with ordinary income and deductions if audited are usually just a random and very unlikely selection.  In fact none of my cleints that can be described this way have ever been randomly selected for an audit.  Most audits are triggered by the unusual or areas of suspect by the IRS.  The IRS itself indicates there are randomly selected audits but m…

Who Is Watching Your Business? Someone Is. Hopefully It Is You.

Who Is Watching Your Business A few employees from the office went out together for dinner and a movie. It was interesting when the charges at a local restaurant and movie theater showed up on the next business credit card bill. It was reported to me as suspicious and I took it to the owner. Upon investigation it looked like the employees from the office had charged their night out on a company credit card. But how did they do that? Had the owner given them permission? No, he had not. It was discovered that one of the accountants had, without authorization, requested an additional credit card which she used for personal expenses.

Later, at tax time, a local tax-preparer called to ask about an employee's W-2. I could not give information about an employees salary but the preparer found two things interesting. One, some one from the firm I worked for would come to him to have their taxes done rather than have them done in house. Second, the salary and of course the taxes withheld s…

Year End Tax Moves to Reduce Business Profits

Here are some tax planning strategies to help you reduce profits for the year and thus reduce the taxes you will pay you. (Keep in mind if you want to accelerate profit into this year do the opposite of the strategies listed below)

Delay Revenue If your business is an accrual basis tax reporting business delay sending out invoices until next year. For a cash basis tax reporting business delay receipt of income. You may need to call people you have already invoiced to request that they make sure you don't receive their payment before the year end. In reality they can send you a payment before year end and you could receive it after year end so this could benefit both you and your clients/customers.

Accelerate Expenses On the Expense side for an accrual basis tax reporting business make sure you enter all the bills you receive before year-end and make sure they are dated this year. For a cash basis tax reporting business pay as many bills by year-end as possible. If cash is tight m…