A lot of businesses and individuals wait until December to start thinking about tax planning. While there are definitely some year-end moves you can make that will help to minimize your taxes, now — with the summer quickly coming to an end — is the best time for tax planning.
Why now? Halfway through the tax year you have a good idea of what your projected earnings are going to be. There’s still plenty of time to take steps to minimize your tax burden that will allow you to keep more of the money that you’ve earned.
#1-Finish Your 2017 Tax Returns
While it’s true you may have until October 15 to file your income tax returns if you filed for an extension, you don’t have to wait until the last minute. Finishing your taxes in a rush, whether in April or October, is a recipe for disaster which may result in overlooked deductions or errors.
#2-Adjust Your Compensation, Quarterly Estimated Tax Payments and Withholding
Businesses owners need to receive “reasonable compensation.” Adjusting this to assure the optimal level of compensation and taxes paid throughout the year is best done now vs. scrambling at year-end to implement. Ideally, you want to pay in not-too-much but not-too-little in order to be “penalty proof” without big surprises.
#3-Plan to Maximize Retirement Plan Contributions – Increase Contributions or Consider Changes in Plan Design
In many cases, there is still an opportunity to change or increase the amount being contributed to a retirement plan or the type of retirement plan being utilized for a business for 2018 as well as for 2019. Some plans must be established by October 1 and others involve TPAs (Third party administrators) or providing notification to employees, so don’t wait and assume you have until December 31 to decide.
#4-Understand How the Tax Reform Act Affects You and Adjust Your Expectations Accordingly in These (3) Critical Areas:
- Deductions Have Been Limited or Eliminated
- Tax Rates Have Gone Down
- 20% Deduction for Qualified Business Income
We’re tax specialists focused on the complex accounting needs of individual owners and their emerging businesses. You won’t find a more well equipped or helpful guide. Contact us anytime, and subscribe to our blog for more information that can help keep you safe and compliant.