December 28, 2018
Year End Tax Steps!
Take an inventory of your product. If there is product which is expired, damaged or no longer sell-able for whatever reason, take it out of your inventory and mark your total cost as “spoiled”. This is a deductible expense.
If you have the ability to sell your excess inventory at a slightly discounted rate do so. Holding large amounts of inventory at year end is not a Tax Advantageous strategy.
Speaking of inventory, many companies are trying desperately to get rid of theirs. Now is the time for some smoking deals on computers, tablets, and those big screen monitors you’ve wanted. You will be able to deduct the cost of this business equipment 100% up to one million dollars.
Car expenses, don’t forget that your car is a tax-deductible expense. Keep track of your miles! Business miles are not just to see a customer. Trips to events, the post office and to pick up inventory are deductible! Keep clear records. I use a phone app called Mile IQ which runs silently in the background. You can then classify your drives as business or personal at the end of the day. You will also want to track actual expenses to see whether the mileage or an actual expense deduction is the most Tax Advantageous strategy.
Don’t forget your home office! A portion of your home is deductible. This is an often-overlooked tax strategy.
As many of you may know, the Tax Code received its biggest overhaul in history on November 2, 2017, effective January 1, 2018. While many people will no longer have to itemize due to the larger standard deduction, it is imperative that business owners get the appropriate tax advice to take advantage of a new and largely misunderstood deduction called the Section 199A deduction, also known as a 20% Qualified Business Pass-Through Deduction. Many will be eligible for this potentially huge tax savings.
Feel free to contact me offices if you have any questions.
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Are you operating your business under a single-member LLC? This entity has no effect on how the income or losses are reported.
Single-member LLCs that have rental properties titled to it have the income is reported on Schedule E, even if tax documents are issued with the LLC’s EIN.
Questioning your business entity choice now? If you would like to review your entity choice and its tax implications call me to schedule a consultation.
Being Tax Advantageous NOW may save you a lot later.
Rhonda A. Mannes,