5 Easy Ways to Reduce Your Tax Bill: The IRS Doesn’t Want You To Read This

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One of the greatest struggles of business owners is cash flow preservation - keeping more of the money they make. Being strategic about how and when to purchase supplies, pay taxes and how to claim charitable deductions can affect the amount of annual income or profit claimed, and therefore the amount of taxes owed.

Contrary to popular belief, tax deductions are not free. To qualify for tax deductions, you will need to either spend money or use your resources.

Effective tax planning allows you to keep more of your cash so that you can put it to work for you. Finding out the right mix of deductions and credits for your business will help you to be smart about your spending, so you only spend on items that will give you the best value.

Here are five ways to postpone taxes for the current year and keep more of the money you make:

1.   Let your debtors pay you in January

If you are in a high tax bracket, you can delay collecting some of your revenue until January. Allowing your debtors to pay you in the new year can reduce your revenue, and save on your taxes for the current year.

2. Use your credit cards to preserve cash

You can get a deduction for business purchases that you make on your credit card. Get what you need for your business in December, and pay the bill in January. That way you get the deduction without spending your cash.

3.   Be strategic about charitable giving

Giving to charity is a great way for your business to give back to the community, but in order to get the full financial benefit, you will need to be strategic. Charitable contributions can only be filed on your personal tax return, if you own an LLC, S-Corporation or Partnership.  You will be able to take advantage of charitable miles or supplies used to provide charitable services as a business deduction.  If you own a C-Corporation, you may qualify for a tax deduction for all charitable contributions.

4.   Use your retirement plan as a savings plan

You can start putting away cash as soon as possible by deferring some of your income to a retirement plan tax-free. The money also grows tax-free, and some plans allow you to borrow when cash flow is tight.  Some of these tax-deferred plans are required to be set-up before the end of the tax year.

5.   Pay your taxes ahead of time to claim a deduction

You will receive a deduction for taxes paid to state and local governments ahead of time. If you anticipate that you will owe state taxes for the current year, consider paying before the end of the year to reduce your taxable income.

For more tax saving tips to implement in your business, visit ronicabrownagency/blog