How much money are you going to make this year? Since 75% of the year is over, October and November are good months to get with your CPA and discuss tax strategies. While it’s a good idea to minimize taxes, many of you could have cash flow or leverage covenants on the credit commitments with your bank. So, please be mindful of those as well when you sit down with your CPA.
Here are 3 things you should discuss with your CPA to make good decisions about taxes.
1) Reducing income: Most businesses have elected to be taxed as a sub Chapter S entity, so income flows through to the personal return. However, electing to be a cash basis taxpayer in many instances can allow you to defer income in to the succeeding year if your company is growing. Also, many owners elect to own real estate to get interest and depreciation deductions on investment real estate. Many of us contribute to 401K or Simple IRA accounts to reduce taxable income. Check with your CPA on what options exist for you.
2) Increase your deductions: If you itemize your deductions, you can take deductions for health care, state and local taxes, mortgage interest and gifts to charity. There are others, but these are the most likely. Again, check with your CPA to see what deductions you’re eligible for.
3) Take advantage of tax credits, on the business side, there are a variety of tax credits for R&D or if you’ve purchased real estate, a cost segregation study can help you depreciate the personal property associated with your real estate purchase at an accelerated rate. On the personal side, check with your CPA to see what tax credits are still available.
You don’t want a big surprise come April 15th and have to write a large check. Plan now to be sure you’ve had a reasonable amount withheld and adjust your withholding if needed.
