Happy holidays and a very merry 2020.  Before we end the tax year of 2019, there are some tips for Small business owners that could help save on your tax liability for 2019 or in the future. We are in the second year of the Tax Cuts & Jobs Act and the IRS is still issuing newsletters on the changes for businesses.  As more tax professionals become familiar with those changes, it is important to have the conversation with your accountant about ways to cut your2019 tax liability and which of the TCJA provisions affect you and your business.

Here are some things to discuss with your accountant:

  1. Does your business qualify for different tax treatment?  If you are operating as a pass-through business, the amount you can deduct may have changed.  This article is not meant as tax advice, but is informational only.  We recommend you speak to your accountant regarding any change in how your business will be treated under TCJA.
  2. Make a plan on how you will pay taxes.  Know the amount, and then prepare for payment when it is due either by putting money aside, or by arranging for a line of credit to pay the IRS.  Talk to your accountant about paying your taxes quarterly vs annually to figure the best approach for your business.
  3. Set Up – or max your contributions to – a retirement savings plan.  If your business income is volatile, it may seem impossible to contribute to a retirement plan until the cash flow evens out, but you will need the plan regardless, so track the patterns and figure out how to begin setting aside retirement funds to save on your own tax bill
  4. New or Used equipment that you buy and put into service by the end of the year can entitle you up to $1.02 million in federal tax deductions. For certain types of equipment, businesses can take a 100% immediate depreciation deduction instead of the 50% prior to TC&JA
  5. Defer Revenue/accelerate expenses.  If your firm runs on a cash basis for tax purposes, and your profits jumped in 2019, you may want to defer revenue until 2020 for any products not dependent on holiday demand.  If you have a trade show or convention coming up in first quarter of 2020, you may want to pay your registration fees now as a way to claim the expenses in 2019.
  6. Contribute to charity.  You can show your social responsibility, feel good and save on taxes in one act.  Contribute products to a charity, and you can involve your employees in something with added meaning.  Keep in mind, if you own a pass through business your ability to donate may be limited in 2019.  Consult with your accountant to get the full story. 

Your business is important, and paying taxes on time protects your business.  If you are not getting all the support and information you need, visit businesstaxprep.org contact us to be connected to a certified public accountant who is right for you.