If you have not implemented these business tax planning strategies yet, it is not too late to consider them prior to December 31, 2016.
1. Automobile Business Usage Reimbursement – If your company does not own your personal vehicle, document the business miles used by your personal automobile during the year and have the company reimburse you for the miles. If your company does own your personal vehicle, determine the percentage used personally and either reimburse the company or report as income to you.
2. Owner Loans to/from the Company – Review the amount lent to or from the company to its owners during the year. Consider how you wish to categorize these payments prior to year-end. This can lower your IRS audit risk.
3. Income Tax and AMT (Alternative Minimum Tax) Projection – Project the business’ taxable income and how it will impact your personal income tax and AMT. There are certain timing strategies that can minimize both taxes.
4. Tax Withholding on Year-End Bonuses – Calculate the proper amount to withhold from year-end bonuses to owners to minimize their personal tax underpayment penalties.
5. Bonus or Dividends or Distributions – Depending on the type of corporate entity in which your business operates (S or C), you should consider whether to pay the shareholders a bonus versus a dividend or distribution, given the preferred tax incentives for dividends.
6. Estimated Tax Payments – Determine if it is better to make estimated tax payments for the fourth quarter or increase tax withholdings on payroll. Also consider when best to make your 4th quarter state estimated tax payment.
7. Equipment Purchases – If there will be a need for equipment, consider purchasing it prior to year-end to take advantage of accelerated bonus depreciation or expensing options.
8. Maximize Retirement Plan Contributions – Determine the best retirement plan for your company and determine when the deadline is for establishing and funding the plan. There are also deadlines if you wish to change your contribution percentage to your employees.
When you meet with a tax professional from our office, we review the above items and many others with the intention of minimizing your taxes and lowering your IRS audit risk. Make a tax planning appointment if you would like to explore the above strategies and others in more detail. Call 390-8855 or 653-0110 today!