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Wrapping up the tax year for your small business

Owning a business demands a lot of your time. You more than likely put a great deal of your time and effort into making it a success. Part of the time and effort you put into your business involves a plethora of paperwork. Depending on the nature of your business, certain state and federal agencies require you to submit certain documentation for a variety of reasons.

One thing that nearly every business has in common is the requirements of the IRS. Even though you may not file your federal tax returns until next April, preparation often starts early. As the year draws to a close, you may need to take certain steps to help ensure that your tax season goes well. Now may be the best time to begin preparing.

Maximizing your deductions

Taking the following steps could provide you with more deductions:

  • End of year purchases: If you need better equipment, now would be the time to buy it. Paying vendors in advance and stocking up on supplies for your business could also help.
  • Check your reports: Make sure your records are accurate and up to date while it's still easier to fill in any gaps. Making sure that you end the year with "all your ducks in a row" may make tax season easier.
  • Charitable contributions: It's the holidays. Contributing money or goods to one or more charities at this time of year not only provides you with community goodwill, but also provides you a deduction on your taxes.
  • Delay taking in income: Any payments your business expects in December that you can delay until January would not be considered income for the current year.
  • Plan for retirement: This would be a good time to contribute to an existing retirement plan or start one. The contributions you make reduce your taxable income.

Getting organized in these last weeks of the year will save you a substantial amount of time. There won't be any need to scramble at the last minute.

Making plans for tax season

If taking these steps makes sense to you, you may want to consider one more option. Bringing in a tax attorney could help ensure that any decisions you make work best for your business and don't put you at risk of ending up under the scrutiny of the IRS. Few people really understand the tax code and the potential legal ramifications that could arise if dealings with the IRS don't go well.

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