Why Midyear Tax Planning is a Smart Idea
Being Prepared Can Save Money
Most people only pay attention to taxes in April and at the end of the year, but spending a little time on mid-year tax planning can help your business save a bundle. If you wait until the last minute to take advantage of tax breaks for small businesses, you might miss the boat. Plan ahead and you might even be able to give bigger bonuses this year.
Midyear tax planning might save you some money in one or several of the following ways:
- Purchase new equipment: One of the requirements for taking a write-off on equipment expenses is that it must be in service before the end of the year. This means that any new equipment that is purchased in late December and not delivered until January won’t make the cut for this year.
- Start a retirement plan: In order to take a deduction on some retirement plans, you have to have the plan set up by a specific date. However, you can often make deductible contributions to the plan until the date your taxes are due, which gives you even more opportunities to save.
- Upgrade employee medical plans: Health plan premiums are generally deductible, as are employer contributions to health savings accounts. If you don’t currently offer medical benefits and want to, get a plan in place well before the end of the year to maximize your tax benefits.
- Review estimated quarterly tax payments: Although you probably set estimates for the final two-quarters of the year, mid-year tax planning gives you an opportunity to revise those figures if necessary. If you are having a good year, you may want to increase your estimated payment to avoid penalties. If your income is less than last year, reducing your payments accordingly will keep more cash available for your business.
Authors
 Keith Huggett |