Updated June 10, 2019-
The fourth quarter is the time for small business owners to reflect on options for year-end cash flow and tax benefits.
In general, here are items to discuss with your accountant and tax advisor:
Anticipate tax obligations. Your first concern should be to reduce your tax obligation next April. Unless you already know you have too many write offs, you can further accomplish it with legal strategies to delay income and accelerate your expenses.
Expenses. Decide what equipment, furniture and supplies you can buy this month.
Delay invoicing. Unless you have cash flow issues, and if your calendar year is your fiscal year and you run your business on a cash basis, delay mailing your invoices.
Retirement account. If you don’t have a retirement account, establish a qualified plan. It’s important for diversity in a downturn or when times are good. This will help your tax picture, as well.
IT updates. If you’re considering updating your bookkeeping and technology systems, do it before the end of the year. In this way, you’ll make it easier to start fresh for the New Year. You’ll want to segregate your old records from the new.
Weigh the possible benefits for acquiring new equipment. You’ll need to make a financial forecast.
Financing options. As for financing any new equipment purchases, do your due diligence. Determine your best options for financing, as well as for your tax situation.
Section 179. Understand how the IRS will view your situation in terms of Section 179 depreciation deductions and bonus depreciation. Section 179 deductions for certain expenses are allowable up to $1 million.
Credit options. In addition to understanding the pros and cons of possible tax incentives, know your credit situation. For the best credit worthy businesses, lease financing might be a viable option. But it’s getting more complicated with financial institutions than in past years.
Buying due diligence. If you do buy or lease, it also goes without saying to comparison shop all fees, rates, and terms. Avoid paying so-called application fees. Also be careful with the hidden evergreen clauses.
Should you decide to buy from different vendors, consider grouping all the purchases into one package, which means you’ll benefit from lower fees and rates.
Consider these options small business options for year-end cash flow and tax benefits. But remember this is not tax advice for your situation. Again, see your accountant and tax advisor for counsel as part of your decision-making.
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“If you make any money, the government shoves you in the creek once a year with it in your pockets, and all that don’t get wet you can keep.”