Last Minute Tax Tips
My least favorite thing to hear from a business owner is that they ran out and bought a whole ton of stuff before the end of the year to get the tax write-off. Ugh. While it seems like a great idea from the advertisements you are seeing by car dealerships, in the stores and all over FaceBook – it’s never a solid business strategy to spend money on things you don’t need, when you don’t need them. Let’s run through this before you head off to your holiday celebrations and have to endure more unasked for tax advice from your drunk uncle.
(As an aside, you aren’t technically taking tax advice from us either through this article…if you want to actually get our eyes on your business and give you some customized tax advice, book a call below. This article should not be construed as tax or legal advice, and of course, you should check with your own financial team to see how you should apply the strategies below to your own situation.)
While I absolutely believe that tax strategy & planning is a year-round conversation, there are a few quick things you can do at the end of the year if you feel like putting one more thing on your to-do list this week 🙂
Here’s the problem: The actual savings in taxes that you will earn from spending $5,000 is pretty small – compared to the cash flow issues that not having that $5,000 in January might cause. And, depending on what you are buying, you might not even get the full tax advantage of the cash you just spent. It can create a real mess if you don’t do it correctly. A solid tax strategy isn’t just about spending more money – it’s about looking at how you can spend the money that will give you some good tax savings.
Here’s how to do it right: I am never the one to tell you not to buy the latte or the shoes – but we do advise our clients on how to spend smart. Here are three strategies we recommend to our clients:
- Plan ahead for your purchases so you know what you will be spending and you can work it into your cash flow – and then you can take advantage of some great Black Friday or holiday sales. It’s a great time of the year to purchase new computer equipment & the tech gadgets you have been eyeing.
- You can make the purchase on a credit card so that you don’t have to use your cash, and then pay it off next year, while still taking the tax deduction this year. This is a great way to leverage your cash by using your credit.
- *If you have extra cash* you could prepay for some of next year’s expenses now. Take a look through the first few months of next year and see if there’s anything you can pay for now. Can you stock up on printer ink, book your travel for the trips you know you are taking, or make January retainer payments for your team? You could also pay off programs now that you were in a payment plan for, or upgrade software you know you will be using all year to the annual subscription and probably save some cash as well.
And, sometimes the best strategy of all at this time of the year: Just Say F*ck It.
Stop stressing about your taxes. Enjoy the holidays with your family and make your first new year’s resolution that you are going to get a financial team in place for the new year that will be able to give you the support you deserve. Book a call with us to talk about how we can help you implement a tax strategy all year next year so you don’t have to worry about it anymore.