As the end of the year approaches, you probably have a pretty good idea of your business’s bottom line. Now it’s time to determine what tax strategies you can implement before December 31. Here are two.
Clean up loans and receivables
Did you lend money to a now-former employee or client? Are you certain you’re not going to be repaid? Take steps before year-end to establish the worthlessness of the debt. How? Going to court is not always necessary. You can prove your good faith attempts to obtain repayment with documented phone calls, letters, or correspondence with collection agencies. Business bad debts are generally deductible in the year they become worthless.
Think charitably
Your business can donate items such as cash, inventory (including food), equipment, and real property to qualified charities. The amount of your deduction depends on the type of property and the form of your business. For example, corporations may be limited to a deduction of 10% of taxable income. Donations of food and business inventory offer enhanced tax breaks. If your corporation is a qualified farming or ranching operation, a conservation easement contribution qualifies for special preferential deduction percentages and carryforward options.
Remember, whatever type of contribution your business makes, you’ll need to keep records, including acknowledgement from the charity. For more tax-saving ideas for your business, give us a call.
