The end of the year is the perfect time to capitalize on some financial tips ahead of tax season. The April 15, 2014 deadline is fast approaching, and small business owners should make sure all of their necessary preparations are in order before the end of 2013.
Thankfully, there are plenty of year-end tax planning steps one can take to prepare. From stimulus acts to a financial plan, business owners should take the opportunity to save money now, rather than wait.
However, a tax advisor should always be consulted before making any financial changes.
Deductions worth noting
Planning for taxes could be a complicated task, but small business owners have plenty of options when it comes to deductions. According to William Lako in an article for The Marietta Daily Journal, a number of stimulus acts are in place to help companies grow.
For example, the Section 179 property-expensing deduction allows firms to subtract the purchase price of qualified equipment or software. This can extend to as much as $500,000 out of the cost, and qualified items can either be new or used.
In addition, small businesses could use the Work Opportunity Tax Credit, Lako explained. This allows owners to deduct up to $2,400 for hiring new employees from certain targeted groups before Jan. 1, 2014. This could be an ideal strategy for companies that are looking to expand, but are short on the funds to do so.
Talk to a financial advisor
A small business owner shouldn't tackle tax season alone. Instead, an advisor can be a useful tool in navigating the current economy.
For starters, owners should take stock of their income, according to Bloomberg Businessweek. All important data should be collected in order to determine which tax bracket a person or company falls under. This can also be a good time to plan ahead and predict if anything will change in 2014. If money received is expected to be lower, owners can defer income into the next year.
Moreover, this time of year could be the perfect opportunity to make retirement contributions, the news source noted. Entrepreneurs have options with IRAs and other accounts, all of which reduce taxable income for this year. Converting a traditional IRA to a Roth IRA also can save money.
Overall, a tax advisor can be the best resource for a small business owner. As the end of 2013 nears, now is the time to prepare and assess finances in order to limit taxable income.