Taxes are something that most small business owners have plenty of concerns and questions about. At Tristate Accounting, we offer a variety of services that help business owners with their tax-related needs. In terms of small business tax tips (which is something we’re asked about on a regular basis), one of the most effective measures a small business can take is to do some strategic planning.
Specifically, by being aware of certain year-end tax planning options, small businesses can put themselves in the most favorable position possible. So with that goal in mind, let’s take a look at a few things your business should strongly consider as 2015 comes to a close:
Defer and Accelerate
As the year winds down, what your business does in terms of income and expenses will depend on where your business is at in its lifecycle. If you expect to be in the same tax bracket in 2016, your best option is to defer income and accelerate deductible expenses for your business. On the other hand, if your business is growing and you project that it will push you into a higher tax bracket next year, your best bet is to accelerate revenue now and defer as many deductible expenses as possible until the next calendar year begins. This is something for individuals to think about, as well as any business that operates as a C Corporation.
Be Strategic If You’re a Cash-Basis Entity
Any business that operates as a cash-basis entity should be as strategic as possible in regards to scheduling payments. By using credit cards to pay for recurring expenses now that will be due in the beginning of 2016, it becomes possible to deduct more charges. The same is true for making payments by mailing checks at the very end of the year. Prepaying for certain expenses and not sending invoices until the very end of December are two more strategic options that you should think about for your business.
Carry Back or Forward a NOL
NOL stands for a net operating loss. For businesses with expenses that outweigh revenue, the 2015 net operating loss can be carried back for up to 2 years. This makes it possible to retrieve previously paid taxes and ultimately improve cash flow. Although this may sound complicated, it’s something that a tax accountant in Cincinnati can help provide guidance around. It’s also worth noting that for businesses which expect a tax rate bump, carrying a net operating loss forward for as many as twenty years may be the most beneficial option.
If you’re looking for tax services in Cincinnati, OH that can help your business stay on the right track, be sure to get in touch with us to discuss how we can help.