Year-End Tax Tips For Entrepreneurs

Posted on: December 24, 2013 | By: dunn_access | Tax Planning

By Stephen J. Dunn

The following tips are limited, except where noted, to cash basis taxpayers.  They suggest ways of accelerating deductions into 2013, and should not be undertaken without consulting your tax advisor.  Accelerating deductions into 2013 may not be in your best interests.  For example, a taxpayer with a large loss carryforward may not have taxable income to absorb deductions accelerated into 2013.

Make your fourth quarter state and local estimated tax payments by December 31, 2013.  The payments are generally due January 15, 2014.  By making the payments 16 days early, you can accelerate deduction of them by a year, from 2014 to 2013.

Make your January, 2014 office rent payment by December 31, 2013.

Make charitable contributions which you would have made early in 2014 by December 31, 2013.

Pay 2013 bonuses by December 31, 2013.

 Pay accrued expenses by December 31, 2013, including, for example, accounting and, for God sakes, legal expenses.

If you maintain inventories, take a physical count at December 31, 2013, or as close thereto as possible (using intervening sale and purchase records to work the physical inventory backward or forward, as the case may be, to December 31, 2013).  Adjust year-end quantities to actual, and make appropriate adjustments to spoilage, damage, obsolescence, etc.  This tip applies to accrual as well as cash basis taxpayers.

If it is your intention to contribute to non-qualified deferred compensation plans at or near December 31, 2013, make the contributions by December 31, 2013.  If such contributions require board of directors’ approval, you should also draw the consent resolution and have the board sign it by December 31, 2013.

Contributions to a qualified retirement plan, individual retirement account, or individual retirement annuity are deductible for 2013 if they are paid by the due date, with extensions, of the payer’s 2013 income tax return.  However, whether you are an accrual or cash basis taxpayer, if you are adopting a new qualified retirement plan, you must sign the adoption document by December 31, 2013 to be able to deduct contributions to the plan for 2013.

May you have blessed and happy Christmas and a safe and prosperous New Year.