It’s that time of year – the air is cold, the Christmas trees and lights are going up, and you should be thinking about year-end tax planning that will save you lots of $$ come tax-time next year.
While most people don’t think about taxes until 5 months from now, you can save yourself some big bucks if you give taxes a little attention now.
I wish I had knew some of this back in 2006, the year my first business skyrocketed and I hit a million bucks in revenue. Because I didn’t do any conscious tax planning, I ended up with a huge tax bill in early 2007 and had to take out a loan to pay it! Ever since then, I plan for taxes every year around this time and you will now too.
Here are some different things you can do based on the specifics of your situation:
High-income and able to give some of it away to charity before the end of the year, consider these year-end, tax strategies.
Regular income earner and/or own some real estate, consider these year-end tax strategies.
Regular income earner and/or own some loser stocks, consider these year-end, tax strategies.
Mint.com has another great summary of year-end tax strategies for regular folk.
Here is a round-up of year-end tax strategies for small business owners:
If you are a small business owner just starting up, do this before the end of the year to save on taxes next year.
If you have employees, consider the year-end tax saving strategies offered at Smart Money.
If you’ve got some extra money laying around and need an SUV, WSJ says to do this now to save taxes.
Great general overview for all business owners on things to do and think about before year end to save taxes next year by About.com.
Plus, a few things I didn’t see in any of the summaries that are particularly appropriate for us entrepreneurial types:
1. If you are in a year-long coaching program and expect your income and tax rate to be higher next year, see if you can prepay your coach in full this year (and maybe even get a pay in full discount for doing it!)
2. Invest now in creating programs or products you won’t launch until 2011. So for example, I have a product enhancement gal working with me on improving the Money Map to Freedom program, which we will offer again in 2011. But, I’m paying her all this year for the work she is doing. Spend now, generate income later.
3. Switch up your Health Insurance and consider a high-deductible HSA (Health Savings Account) that allows you to put a bunch of money aside pre-tax that you can use for any health costs. If you are the type of person/family who uses mostly alternative care that doesn’t get covered by insurance and you only use insurance for major medical emergencies, this could be a good idea for you.
One of the things I learned in law school is, it’s always better to pay taxes later. Defer, defer, defer, defer. Use the tax deferral to invest in the growth of your business. You can do all of this legally when you keep your eyes open and are in the know about how to live the entrepreneurial life to your benefit.
I’ve given you several resources and a few additional tips here. Let me know if you have questions or know of any nifty strategies I overlooked.
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