Posted on: 1 April 2022
If you own your own business or you are self-employed, you've likely already looked into how tax laws or regulations apply to you in some regard. But there are plenty of things just about every business owner or self-employed individual can do from a tax planning perspective if they are looking to either save some money or make the process as efficient and painless as possible. To that end, here are some tax planning tips to keep in mind this year and every year to follow.
Pay Attention to When You Are Sending Out Bills or Invoices
If someone gives you a check or a payment this year or this financial quarter, you generally can't wait until next year or next quarter to cash it and then think that you don't need to report it on this year or this quarter's income. The IRS generally expects you to report income the year or quarter it was first received or when it first became available to you. But there are still ways to get creative here while still staying on the right side of tax law. For example, if you file taxes quarterly and you are approaching the end of a quarter, you may time your billing so that the customer does not actually pay you until after the next quarter begins. You don't want to abuse this idea of course, but if waiting a day or two to send a bill out will let you move something to the next quarter or next tax year, this might be to your benefit. Speak with a tax professional to make sure any billing adjustments you make are on the right side of the law.
Pay Attention to the Timing of Your Expenses and Look Into the Benefits of Depreciation
You can apply this same philosophy to your expenses as a business or self-employed person. Purchasing new equipment before the start of a new tax year or quarter may provide some benefits when it comes to either reducing your profit in one tax year or quarter or making sure you can start including depreciation for that equipment or device for the next quarter or year that you file.
Talk to a Tax Expert to Get This Year's Taxes Filed and Begin Planning for the Future
In general, it's best to keep things simple if you can if you are filing your taxes on your own. If you really want to save money and avoid all of these complex calculations, your best bet is to work with a tax planning professional to file your taxes this year and then go over strategies for how you can better time your billing or purchases in the future in order to get your tax bill where you want it to be in the years or financial quarters to come.
For more information on tax planning, contact a professional near you.Share