Small Business Tax Advice

End of Year Tax Tips

How to lower my taxes? That's a question that's top of mind for many entrepreneurs right now. Fortunately, our December tax tips article for small business owners is chock full of useful end of year tax tips.

It's end of year tax tips time.

First things first, are you lost? If you're looking for April tax tips, you're in the wrong place. It's December! If you're not a small business owner, you're also in the wrong place.

OK, they're gone. When your front door is a search engine, you just never know who's going to walk into the room.

Now let's get down to business.

This article is all about smart tax moves for small business owners, focusing on year-end tax advice.

Managing Revenues and Expenses to Lower Taxes

Let's start with the basics. You are taxed on your profits. That's your money in minus your money out, or revenues minus expenses if you want to use accounting lingo.

For purposes of this article, we're going to assume that you a pass-through entity. That means your business income and deduction items roll through to your personal tax return, typically being recorded on your Schedule C.

We're also going to assume that you use the cash method of accounting for tax purposes.

With these two assumptions, we think we estimate that we've got more than 80% of small business owners covered.

Here's a blinding glimpse of the obvious for you. To lower taxes, you need lower profits.

You can lower your profits in two ways:

  • Decrease Revenue. If you can achieve lower revenues, you can lower your profits. The goal here is simple: minimize the amount of money that you deposit in your checking account in December.
  • Increase Expenses. The more money you pay out now, the lower your profits. Again, this tax tip for December is pretty simple: take as much out of your checking account as possible by writing as many checks for business expenses as you can.

So how do you decrease revenues and increase expenses?

This is a big topic so we need to break it down into small edible chunks. Towards that end, we drill down into ways to lower your taxes using these two basic methods in these tax tips articles:

Once you've read the two articles above and mastered the techniques to lower your taxes by increasing expenses and decreasing revenues, you'll want to read our More End of Year Tax Tips to Achieve Lower Taxes article.

In the last article in the small business tax reduction series, we'll discuss a few interesting End of Year Tax Tips That Probably Don't Work.

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