Business Owners Should Do. There are plenty of things savvy business owners should do before year’s end: set goals for next year, thank employees for their contributions, conduct year-end reviews, plan the company Christmas party… the list is long. But you’d better add tax planning too!For this blog, The Alexander Group, a top-rated business consulting firm in St. Louis, we will focus on things that will help you lower your taxes for this year.

Sell Losing Stocks

The goal here is for your annual capital losses to exceed your annual capital gains. If you own stocks whose value has decreased since you purchased them, sell enough of them so that you have at least $3,000 in losses. The IRS will then permit you to deduct up to $3,000 worth of said losses from your annual business income. And if you sell more than $3,000 worth of depressed stocks, the overage carries over into next year.

Charitable donations

There are at least 1.5M nonprofits and charities in the United States, and charitable donations are of course a very popular way for businesses to lower their income taxes. Donations can take the form of property and/or money, which you can then itemize as deductions on your taxes. Here are some things our St. Louis-based management consulting company suggests you keep in mind:

• 501(c)(3) is the IRS’ designated code for charities that qualify for tax-deductible donations
• The IRS issues a determination letter to each charity that confirms the charity’s qualifications
• This letter and all other relevant information can be easily accessed via most charities’ websites
• Churches and other religious institutions are the only entities that can qualify as 501(c)(3) without an IRS determination letter

Regardless of which charities or how many charities you donate to, keep a record of each donation. This is easy, since every charity offers a donation receipt confirming your cashless, “quid pro quo” transaction.

Open a Health Savings Account (for the self-employed only)

If you’re self-employed and paying for your own health insurance, a health savings account (HSA) is a combination IRA/health insurance policy with a high deductible. The benefits to opening up an HSA include:

• Implement an HSA by December 31 and you can make 12 months’ worth of deductible HSA contributions
• HSA contributions can be withdrawn and used to pay for virtually any uninsured health-related expense
• Withdrawals are tax-exempt

Buy Business Equipment

Computers, desks, filing cabinets – buy whatever your business needs before year’s end and you can deduct the entire amount from your business income, instead of having to depreciate the expense over several years. The annual limit for this deduction if $500K, and it covers a wide range of business-related items that are used more than 51 percent of the time. Also, through 2019 a “bonus depreciation” is available for first-year business equipment purchases.

Retirement Plans

All businesses are recommended to create and fund retirement plans (401(k)s) for the benefit of their employees and for the related tax-related upsides. For the self-employed, the tax benefits of setting up a retirement plan are especially lucrative, and there several options to choose from: IRAs, Keogh plans, SEP-IRAs, etc. Your contribution limit depends on the plan you choose and your net yearly earnings.

Business Planning and strategy consulting are just two of the high-level services The Alexander Group provides to St. Louis business owners. Contact us today for more information.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.