A midyear tax review of your business can pay off in big ways. Consider these ideas:
- Establish a retirement plan (if you don’t already have one). Have you looked into setting up a SEP IRA, SIMPLE IRA, or Solo 401(k)? Examining your choices now gives you time to select the best plan and get the paperwork completed. Then you’ll be set to make contributions as your cash flow allows — and to take the deduction on your 2019 tax return.
- Hire your kids. If your child is younger than 18 years old and works for your unincorporated business, there are no Social Security or Medicare taxes on your child’s pay. Wages paid to your child are also deductible. Keep in mind that the compensation needs to be reasonable for the work actually performed.
- Review your marketing metrics. One of the best techniques to tell if your marketing efforts are paying off is to measure your cost per new customer and cost per order over time. If you don’t have a plan to consistently review your metrics, make one now. Consider reviewing them on a monthly basis.
- Deduct equipment purchases. Depending on your situation, you may be able to take advantage of tax savings if you purchase business equipment before the end of the year. You can expense up to $1.02 million in purchases of qualified equipment this year.
- Track your business driving. You may be able to deduct mileage expenses for driving related to your business. For 2019, the rate for business related mileage is 58 cents per mile. You can deduct actual costs for parking fees and tolls in addition to mileage. Keep detailed records to substantiate your deduction.
- Check your employee benefits. Do you offer health benefits to your employees? If so, look into tax-advantaged plans such as health savings accounts, flexible spending accounts and health reimbursement arrangements. These plans can reduce your taxes and help control your benefit costs.
Questions or interested in setting up a mid year tax planning meeting? Call us toll-free at (888) 388-1040.
