As a small business owner, you don’t need me to tell you that 2018 is quickly disappearing. By the time you subtract holidays and vacation, there are really only a few days left!
Before the calendar flips into 2019, we’ve rounded up some great ways to help you save serious money on your taxes this year.
Here are seven ways you can start to save money right now:
1. Clean out your closets…maybe.
There’s a possibility that you could benefit from the value of donating some unused/unwanted items if you end up itemizing your deductions come tax time.
Clean out your closets, dressers, and storage areas. Then donate items you no longer need to charitable organizations such as Amvets, Goodwill, and the Salvation Army. Here’s a good guide for pricing what you give.
If it doesn’t make sense to itemize your deductions, consider bunching your charitable contributions every other year, setting up a donor-advised fund, or (if you’re over 70 ½) make contributions through IRA distributions.
Even if it works out better for you to take the new standard deduction, declutter and donate anyway. You’ll benefit from getting rid of some stuff and helping some great organizations at the same time.
2. Prepare your W-9s.
Make sure you have all of your vendors’ W-9s completed so you can prepare timely 1099s. If you file electronically in 2019, 1099s aren’t due until April 1. However, you need to be ready to send Copy A to the recipient by January 31 and Copy B to the IRS by February 28, so it’s a good idea to get your W-9s done by the end of this year.
3. Harvest your losses.
Work with your broker to review any unrealized capital losses against any capital gains. Individuals can deduct up to $3,000 ($1,500 if married, filing separately) of excess losses. This reduces your overall taxable income.
Sell off stocks that may produce a loss. If you sold stocks that resulted in a gain, the losers may offset that.
4. Fully fund your retirement.
Many of your retirement options (401K, IRA, SEP, etc.) will allow you to contribute all the way up to the tax deadline in April 2019, but it doesn’t hurt to do it now.
5. Don’t forget your car and health insurance.
Be sure to give your accountant/payroll provider your personal “use of auto” information and your Owner’s Health Insurance information so they can include it on your W-2 if you are a greater-than-2% shareholder.
6. By the way, FSA.
Now is a good time to review your Flexible Spending Accounts to determine if the account balance can be used before the end of the year. You will lose any unused funds, so go ahead and schedule medical appointments, fill prescriptions, and buy new glasses/healthcare items covered by your FSA.
If you’re a business owner, set up your tax savings account and create automatic transfers. Saving is a good habit, but it can be a hard sometimes. Automate as much as possible to make it easy on yourself.
(Note for 2019: It’s always better to slightly under-fund your FSA to keep from losing any of that money at the end of the year.)
7. Send the kid to college.
To ensure you don’t have an unemployable 20-something taking up permanent residence in your house one day, fund your child’s 529 college savings plan now. Your future self will thank you.
Contributions must be made before the end of the year in order to take advantage of any state income tax benefits or to be eligible for the federal gift-tax exclusion.
But wait, there’s more!
These are only a few of the ways you can maximize your tax savings for what little is left of 2018. Set up an appointment with your accountant to determine any other direct action steps you can take between now and the end of the year.
We love working with small business owners and especially love helping business owners make more money so you have more freedom to do the things you love. If you need some help, that’s what we do best! Give us a call or visit us online. We’ll be glad to take a look at your business to see how we can help you save your hard-earned money.