December is here; however, it is not very late to lower your year-end tax bills. If the previous year was a great year for your business, do not hesitate to improve your tax deductions and reduce your total payable tax bill by extending subscriptions, ordering supplies and paying up all pending bills prior to the end of the year. It is possible for you to achieve all that, it is feasible with the principle deductions for prepaid expenses, although the tax savings accruing from it may be minimal. Yet it is very essential since every cent counts in business.

For example, you cannot claim any deduction for benefits stretched beyond eithe4r twelve months from payment or the end of the year subsequent to the year in which payment is made, whichever one is earlier. Look at this instance; payment for a 3-year subscription to a business journal in December will only create a deduction for 12 months, the part of the subscription cost for the rest 24 months is claimed in years to come.

These crucial hour tax-savings below may appeal to you:

Earnings Distribution
Perhaps you are an owner of corporation and your business has experience a boost in the current year, it will be wise to pay out earnings. Such earnings may comprise of year-end bonuses to staff, which are tax deductible. It may also comprise of dividends to shareholders – this is not tax deductible, it is taxed to shareholders at a percentage not exceeding 15 percent. This rate may be less when compared to that which the owner-employees would pay on extra compensation.

Charitable Donations
Where it is affordable for the business, gifts to charitable organizations can bring about great tax deductions. However, deduction may not be allowed in this act if for instance, you have deducted the cost of items fully beforehand. Think of giving away old items such as unused inventory, computers and similar items particularly for the purpose of benefiting others and creating more space for new items in your business space ( in a situation where deductions are not allowed).

Conduct Annual Meetings
For corporations, it is a sure thing to hold annual meetings in order to elect corporate officers and directors and also to make certain moves. If will offer a tax savings benefit to utilize the meetings to authorize yearend dividends and bonuses for instance.

Now, it is time to prepare for the following year; it is not too early to commence tax planning for the coming year. Some of the ways to plan for taxes for the next year is to fix salaries as well as benefit programs. In the course of doing this, take cognizance of the increased wage base for the Social Security portion of FICA tax. Also, search out if new rules for retirement plans demand action by the business. In order to enable staff to pay for health costs as well as dependent care on a pre-tax basis, authorize flexible spending accounts. Set up accountable plans to foot the expenses for travel and other operations for employees; this way, you will avoid employment tax on reimbursements for these costs.