Year-End Tax Moves for Small Business Owners in 2020Submitted by JMB Financial Managers on November 25th, 2020
Year-end is quite possibly the most hectic time for small business owners, and 2020 is no different. It is time to look back on the year to measure how the business did, even if the year unraveled differently than planned, and begin planning for 2021.
In the midst of all that, don’t forget to make year-end tax moves to help reduce your tax bill to end the year as fiscally responsible as you possibly can.
1. Make Any Last Minute Purchases
Review your financial statements to evaluate your company’s health. After analyzing your revenue streams, determine if you should purchase any big-ticket items before year-end as to minimize your deductions. Taking this step reduces your profits and therefore, your taxes.
2. Make Year-End Retirement Plan Contributions
If you haven’t made contributions to your retirement plan, now is the time to do it. Take this opportunity to max out your plan contributions and lower your taxable income.
If you don’t have a retirement plan set up, you can do so before December 31st to take advantage of the tax deductions offered to small businesses that establish new retirement plans. Contact us today if you’re interested in learning more about the different benefits each type of retirement plan offers to small businesses.
3. Make Charitable Contributions
There’s no better time to make a charitable contribution than during the holiday season. Not only is it a generous move that charitable organizations will appreciate, it is a good tax move for your business, especially under the rules of the 2017 Tax Cut and Jobs Act.
Be sure to keep documentation of any donations you make as they are tax deductible. Donations don’t always come in check form; these tax breaks can also be material items that can be deducted at market value.
Save More by Implementing Tax Saving Strategies
If you're looking for more information on reducing your taxable income, download our complimentary guide, 3 Tax Saving Solutions.
If you're looking for more resources, we’ve got you covered:
- How to Lower Your Taxes – A Guide for Independent Contractors and the Self-Employed
- Important 2020 Financial Deadlines
Start Planning for 2021
The new year is right around the corner, and if 2020 taught us anything it’s that we should be prepared. Take proactive steps and start planning sooner rather than later. After making all of your year-end tax moves, don’t forget that creating a budget to follow in the upcoming year should be a top priority.
As always, if you find yourself in need of assistance, reach out to a financial professional to see how they can benefit you.
About the Author
Jack Brkich III, is the president and founder of JMB Financial Managers. A Certified Financial Planner, Jack is a trusted advisor and resource for business owners, individuals, and families. His advice about wealth creation and preservation techniques have appeared in publications including The Los Angeles Times, NASDAQ, Investopedia, and The Wall Street Journal. To learn more visit https://www.jmbfinmgrs.com/.