End-of-the-Year Tax Tips for Small Business Owners

Summary: These practical end-of-year tax tips for small business owners can help reduce your tax burden and strengthen your overall financial health.

Are you one of the many small business owners who find bookkeeping to be the most draining task? If so, tax season may be your least favorite time of the year. As the calendar year comes to a close, there are some end-of-year tax tips you can use now to help save you money and make the next tax season a breeze.

5 tax strategies for small business owners

From adjusting the timing of your income and expenses to maximizing deductions and reviewing your financials, these end-of-the-year tax tips can give you more control over your year-end numbers.

Defer payments

Small businesses are taxed on profits. The lower your profits, the less money you may have to pay out in taxes. If you can afford it, you might defer any payments you receive in December to January. By holding payments off a month, you can lower your taxable revenue and save money on taxes. This can help balance out an unusually high profit year. It’s always important to talk with your accountant first to see if this option makes sense for your business.

Shop now

Does your office or business need a restock of supplies? Do it now, before January 1, so that you can cash in on deductions. The more reasonable business purchases you make before the end of the year, the better, in terms of your small business taxes. But don’t start spending money unnecessarily just to increase your deductions.

Don’t just move money around

Moving money around instead of creating an actual expense is a common mistake with small business taxes. Paying off your credit card doesn’t count as an expense. While that is a good thing, it should not be a part of your overall tax strategy.

Donate to charity

Charitable donations are a win-win for small businesses. They help establish your business’s place in your community while helping others and are also a great tax deduction. Even better, more than just monetary donations can be claimed as tax deductions. You could donate goods or services, toys or equipment. It’s always advised you check with your tax adviser for rules related to charitable deductions.

Review your finances

While you are closing out the calendar year, organize your files and check your inventory. To build a strong business, you need a good grip on your financial standings. Doing a thorough review now and during tax season will give you a better idea of how your business is doing and save you time down the road. If your business has grown significantly since last year, consider taking another look at your accounting to see if your current bookkeeper or CPA is still the best fit.

Take control of your year-end tax strategy

Smart tax planning can save you a lot of money. Simple steps like delaying income or pre-purchasing supplies can save you big in the long run.

If you need help to get your business finances in order, connect with a financial professional at Mutual of Omaha. We can help you build a more resilient business with tailored financial strategies and support that fits your goals.

Frequently Asked Questions

Q1: What are the best tax deductions for small businesses?

Some of the best tax deductions for small businesses are those that directly relate to the cost of running and growing your business. It’s always a good idea to consult a tax professional to determine what deductions qualify for your specific situation. Some of the most commonly used deductions include:

• Home office expenses – If you use part of your home only for business, you may deduct a portion of your rent, utilities and maintenance costs.
• Business vehicle use – You can deduct mileage or actual vehicle expenses if you use your car for business purposes.
• Office supplies and equipment – Items like paper, software and computers are deductible as long as they’re used for your business.
• Travel and meals – Business-related travel expenses and a percentage of meals, especially if you are entertaining clients or attending work-related events, can be written off.
• Professional services – Fees paid to accountants, attorneys, consultants or freelancers are typically deductible.
• Employee wages and benefits – Salaries, certain bonuses and certain employees’ benefits may be claimed as business expenses.
• Marketing and advertising – Costs for promoting your business through advertising, social media campaigns, promotional materials and even website hosting often qualify as deductions.

Q2: What are common mistakes small business owners make when preparing for taxes?

Small business owners often encounter a few avoidable missteps when preparing for taxes. One common mistake is failing to separate personal and business finances, which can complicate record-keeping and lead to missed deductions. Not keeping organized, up-to-date records can also make it easy to overlook expenses that could lower your taxable income. Don’t leave your tax preparation to the last minute. Rushing can lead to mistakes and missed deductions. Planning ahead and seeking professional help can sometimes prevent these problems.

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.  Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

Mutual of Omaha Investor Services, Inc. and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation.

329867_0625