Hurry, Here's 5 Things You Can Still Do to Lower Your 2014 Tax Bill
The recession is finally waning, business is on the steady upswing and profits are rising. Finally! Making money is finally back en vogue and business owners, entrepreneurs and shareholders can once again celebrate.
But for many, the pleasures of positive earnings will bring with it a larger-than-predicted tax bill. That’s a good problem to have, but one that still needs to be addressed. So before you resign yourself to writing a bigger check to Uncle Sam next spring, think about employing some of these tax-saving tactics before year’s end:
1. Company matching for retirement accounts.
Do you have a 401(k) or SEP-IRA plan set up for your employees? If so, think about upping the company match. Either way, you’ll be not only reducing your tax bill, but giving your teammates a much-deserved reward for all of their hard work this year.
2. Pay January bills in December.
If you need an extra write off, consider cutting checks for invoices that aren’t due until January earlier on Dec. 30 or 31. This could include rent checks, utilities and such. You can add these figures toward your expenses this year and reduce your 2014 taxable earnings in the process.
3. Make a charitable donation.
Many companies have a dedicated philanthropic arm. Even if you don’t, consider making a one-time gift to a great cause. You may even want to get the entire company involved in the process by taking up a vote as to what charities you’ll support. Better yet, find out where your employees are contributing as part of their year-end giving and offer a company match.
4. Pay your estimated taxes early.
This is of particular value to business owners of S-corps, limited liability companies or partnerships, where the profits all get passed to the shareholders and counted as part of their income tax liability. Paying state estimated taxes by Dec. 31 instead of holding off until Jan. 15 can give you a significant write off come early next year.
5. Throw a holiday party.
Maybe you’ve held off doing so in recent years to save money. That made perfect sense when times were tough and putting on such an activity just wasn’t affordable. Well, if you have the cash, you may find hiring a swanky DJ to accompany that all-inclusive buffet dinner party for you, your employees and their significant others at a local hotel not only doable, but good for your tax bill.
There are certainly other options on the table as well, including purchasing a vehicle or a sizable capital asset before the end of the year. Additionally, it is important to understand that every business has a slightly different tax and financial situation. Regardless, the point here is that business owners can still take action to lower their tax bill.
While no one is advocating against paying the IRS what is owed, I will be the first to say no company or individual should pay more than their fair share.