Tax Planning, in the summer? News Flash, there is more than one day of the year to worry about taxes. As a blogger I watch my bottom line very closely and try to keep my income and expenses in check. Now that we are done with two quarters of the tax year it is a good time to assess profitability.
If it appears that 2017 is going to be a stellar year watch out because with positive income comes a high tax bill! Now is time to have a plan, not April 15th or December 31st. Summer tax planning is important as end of the year tax planning.
- Buy Equipment: Summer might be a good time to update your phone, tablet, or laptop for a newer version. To be able to depreciate items it doesn’t necessarily need to be paid off, but leasing doesn’t count. The item needs to be in the business, a personal cell phone isn’t allowed, but a business cell is. And the life of the item should be more than one year. For example, a calendar won’t be able to go beyond a year so it is an expense. A piece of furniture can be used over a longer period of time so why not depreciate it?
- Time to Hire? Try hiring a veteran, this will allow the business to utilize the Work Opportunity Credit Other targeted employees include:
- Summer youth employee
- Qualified veterans
- Long-term family assistance recipient
- Temporary Assistance for Needy Families
- Retirement: Never too early to start planning for retirement. A tool available to anyone is the myRA retirement. This is super cool because it costs nothing, and you can fund up to $15,000 into it before rolling those funds over to a Roth IRA.
Technically this is a pay-as-you-go tax system. For the small business owner that means an estimated quarterly payments. Usually by the 15th of the following months: April, June, September, and January. Paying too much estimated taxes is an interest fee loan to Uncle Sam. Paying too little in estimated taxes means extra penalties at tax time.
Is R&D for me?
Research and Development is for business that develop new products or processes. If there are engineers, product development people, or even scientists on your payroll your business may be eligible.
Here are a few other indicators that your business might be eligible for this awesome credit:
- Improved process
- Software development and testing
- Development of a product
- Improvement of a product
- Formula development
It may be time for a tax advisor, someone that can review the business income and expenses and help develop a plan for the future of the business. Timing is key when it comes to taxes and an advisor can help keep that business on track.