I hope you’re recovering from all that rest over the weekend!
For your (very) quick consideration this week, I’ve put together a short (but sweet) list of simple last-minute tax moves for your business in 2016.
But, if your situation doesn’t seem simple…
3 Last-Minute Tax-Planning Spots Cleared
We’ve effectively cleared three appointment spots for this week, if you’d like for us to take an in-depth look at your business, and authoritatively advise you on tax strategy which can still work for 2016 (and beyond). Give us a call: (816) 533-8000 or simply email us to snag your spot.
So, for those of my clients and friends who prefer to “do it yourself” (though with THIS tax code, I’m not sure that’s always wise), I’ve put together a brief, and actionable “checklist” to ensure that you’re squeezing every last drop out of the deductions available to you for 2016.
Use them or lose them.
Tax Strategy For Kansas City Businesses At The End Of The Year
“We didn’t lose the game; we just ran out of time.” -Vince Lombardi
As it probably goes without saying, time is short, and some moves do require more than this week to pull off — so I’m restricting myself to those items which you can realistically affect before the end of the year.
And, again–these are focused on what will apply to your Kansas City business. If you didn’t get a copy of our list for a personal/family return, let us know and we’ll shoot it over to you.
1) Buy Supplies in Advance
How much paper, toner and other office supplies do you expect to use in 2016? Order it now so the cost is deductible in 2016. Buy what you think you’ll need for the coming year, as long as you have the space to store it. This is especially easy to do with software, information courses, or other subscriptions that you know you want to keep.
A word of caution: Under a 12-month rule, you cannot deduct prepaid expenses that run more than the end of the year following the current year. For example, if you prepay a three-year subscription to a trade journal, the cost is deductible over three years (not just one).
2) Work Now, Bill Later
Instead of sending an invoice immediately so you’ll receive payment this week, consider waiting until next week. This will ensure that payment is received in 2017, and taxes on the income are deferred for another year. However, if you expect to be subject to the alternative minimum tax (AMT) in 2016, it may make sense to adopt the opposite approach — bill immediately to receive the income this year. The income will be taxed at no more than 28 percent under the AMT versus a regular tax rate of up to 39.6 percent.
3) Get Ahead On Other Vendor Costs
You may have bills piled up that are not due until 2017. If you pay them now, you can deduct the expenses in 2016. Don’t have the funds in your bank account at the moment? Consider putting the expenses on your business credit card if the vendor or other party allows it. Costs charged to credit card before the end of the year are deductible this year even though the credit card bill isn’t due until 2017.
I do hope these help — and remember that we’re always here to help!
Feel very free forward this article to a Kansas City business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Kansas City families and business owners. And we always make room for referrals from trusted sources like you.
Tax Hero, LLC