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2017

As the end of 2017 nears, small business owners should consider strategies to maximize tax savings while increasing cash flow. Used wisely, these five tax strategies will help small business owners save on taxes, minimize tax liability and increase deductions.

 

1. Defer Income. Most small businesses are taxed on what’s known as a cash basis. A “cash basis” means when you receive cash or money from your customers, it's taxable in the year you received it. You also receive a deduction in the year expenses are paid. One way to minimize the income that comes in this year is to defer receipt of that income until the next year. For example, if you perform services for somebody in December, encourage your customer to pay you in January. That way you can defer income to 2018 and pay taxes on that income the following year.63623641_s.jpg

 

2. Invest for the Future. Pay for expenses in advance for things you plan on using in future years. For example, purchase new vehicles for your fleet, computers, furniture or other major items you considered making next year now, so you can get the deduction for them. Additionally, if you have a depreciable asset like a car, furniture and fixtures, you may be eligible to take a full deduction using IRC Section 179. That allows you to deduct the complete amount you paid for an asset the year in which you purchased it. Finally, consider purchasing additional inventory – especially if you know that you're going to use that inventory, the inventory is going to be sold, or you have a client who will want to buy it. Accelerate your expenses in the current year to defer the benefit for future years.

 

3. Accelerate Retirement Contributions. If you and your employees have a retirement plan for your business, encourage your employees to accelerate what they will do to contribute before year end. If you have a matching program, you may have the ability to take a deduction for the amount you match. Also, if you offer bonuses or incentive pay and you're not an accrual base tax payer, consider paying the bonus before year end, so you can take the deduction on your business return. Note that an “accrual basis” means income is taxable when an income event has occurred but cash hasn’t been received yet. Expenses are deducted when they have been incurred or when they are owed.

 

4. Pay State Taxes Now. If you are taxed on a cash basis, you can get a deduction on state taxes paid before the year’s end. If you know you have a state tax liability for 2017 to be paid in 2018, make the payment before December 31 so you can take the deduction.

 

5. Be Charitable. Ever wonder why there's a line of people at Goodwill stores days before the end of the year? The simple reason is many people want to be able to take a tax deduction for items donated to charities.  Make sure you talk to your tax advisor or CPA-enrolled agent to find out your eligibility and to determine how much you'll be able to deduct on your tax return.

 

Implementing the right tax strategies at the end of the year can put you in greater control of your cash flow – always a good plan when heading into a new year.

 

About Ebong EkaEbong+Eka+Headshot.png

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective on small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

     

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

So here it is the end of the year and despite your best efforts, you haven’t quite hit your revenue goals. What do you do?

 

a) Panic or b) Give up?

 

How about we go with c) None of the above.

 

It’s sort of like that old saying from Alfred E. Newman of Mad Magazine: What, me worry? Worry? Not us. Here are four things you can do right now to deal with that unwelcome financial situation  – with one bonus idea.

 

1. Have a sale: The tried and true way to get more money in the door right now is to have a sale. People love sales, they love saving money, and they will definitely flock to your store to take advantage of a sweet deal. 83334132_s.jpg

 

A few caveats:

 

    • Lead with a loss leader: As you likely know, a loss leader is a popular product that, when put on sale, catches people’s eye. Putting one of your best-selling products on sale will do just that for you. But, and this is critical, ensure that other products make up for the “loss” you will take on this leader.

 

  • Help them help you: Of course, you have to get the word out about your sale – as you do, be sure that your best customers not only know about it, but maybe even are given preferential treatment.

 

  • Be different: Everyone had a Black Friday or a Cyber Monday sale. You need to be different. Have a Super Sunday sale, or a black tie optional evening event, for example.

 

More on timing your promotions

 

2. Market your business, and then market it some more: Aside from the sale, if you want to increase revenues quickly before the end of the year then you have to create some buzz. Market your business online and off. Market it places where you have never marketed it before. Try a guerilla marketing trick you have never used.

 

By trying new things and marketing and advertising in new places, you will expose your business to new people, and that’s the ticket.

 

3. Get a loan: You have yearly revenue goals because you have expenses. You run a business. Given that, sometimes you can’t leave such things to chance or the whims of a sale or the market, so what can you do to ensure certainty?

Get a loan.

 

Your options are many. You could get a short-term loan, a line of credit, a loan against receivables, etc. What we know is that your bank wants to help your business succeed.

 

4. Cut overhead: The other side of the financial balance sheet equation, when increasing revenue isn’t possible, is to reduce your overhead by cutting expenses. The key here is to be sure that the expenses you do cut are not ones that will eat into revenue. Don’t cut that marketing budget!

 

And finally, our bonus tip:

 

5. Let it go: A goal is just that – a goal. If your situation is such that your revenue goals are not a matter of life and death and really are “just” goals, then you might want to redo your calculations, say that whatever you made this year is good enough, and call it a day.

 

Learn how to call it a day and make the worry go away: How to Enjoy Vacation and Keep Your Business Humming

 

What, you worry?

 

About Steve StraussSteve Strauss Headshot New.png

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss.

 

Web: www.theselfemployed.com or Twitter: @SteveStrauss

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

Over 2.4 million small businesses are owned by military veterans, according to the Small Business Administration. In fact, a recent SBA study found military service has a significant impact on self-employment: Veterans are 45 percent more likely than non-veterans to be self-employed.

 

For the self-employed, finding the right business and tax deductions to lower liabilities is important for proper cash flow. With this in mind, here are the top four tax breaks and strategies for veteran-owned small businesses:

 

1. Moving Expense Deduction: If you have unreimbursed moving costs to a new location, you may be able to deduct some of those costs on Form 3903. Speak with your CPA or Enrolled Agent to get more information, ensure your eligibility, and determine how much you may be able to deduct.62488489_s.jpg

 

2. Reservists’ Travel Deduction: If you’re a reservist whose reserve-related duties take you more than 100 miles away from home, you can deduct your unreimbursed travel expenses – even if you don’t itemize your deductions.

 

3. Uniform Deduction: You can deduct the costs of certain uniforms you can’t wear while off duty. This includes the costs of purchase and upkeep. You are also required to reduce your deduction by any allowance you receive for these costs.

 

4. Work Opportunity Tax Credit (WOTC) for unemployed people and veterans: Hiring veterans also provides tax advantages and the credits can be sizable. But look closely at your situation, because there are a number of variables to consider:

 

    • Qualified Long-term Unemployment: If you hire a veteran that begins work between January 1, 2016 and December 31, 2019 – and the individual is employed for 27 consecutive weeks or more and works at least 120 hours – you can claim 25 percent of first-year wages paid up to $6,000 for a maximum income tax credit of up to $1,500.

 

Additionally, if your new hires work 400 hours or more, you can claim 40 percent of first-year wages up to $6,000 for a maximum income tax credit of up to $2,400.

 

    • Short-term Unemployment: You may be eligible to receive a credit of 40 percent of the first $6,000 of wages (up to $2,400) if you hire veterans who have received unemployment benefits for at least 4 weeks.

 

    • Long-term Unemployment: You may be eligible to receive a credit of 40 percent of the first $14,000 of wages (up to $5,600) if you hire veterans who have received unemployment benefits for longer than 6 months.

 

    • Veterans with Services-Connected Disabilities: This is part of the existing Work Opportunity Tax Credit for veterans with service-connected disabilities who are hired within one year of being discharged from the military. The credit is 40 percent of the first $12,000 of wages (up to $4,800).

 

    • Long-Term Unemployed Veterans with Services-Connected Disabilities: There’s also a new credit of 40 percent of the first $24,000 of wages (up to $9,600) for companies that hire veterans with service-connected disabilities who have received unemployment benefits for longer than 6 months. The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations.

 

By using the right tax strategy, you can lower your taxes as small business owner. Make sure you speak with your CPA, enrolled agent, or tax advisor to check if you and your business are eligible for any of these tax credits and deductions.

 

    CLICK HERE TO READ ARTICLES MORE FROM SMALL BUSINESS EXPERT EBONG EKA

 

Related Article: Service Members & Veterans

Related Article: 7 Resources for Military Veteran Small Business Owners

Related Article: Why Veterans Make Great Entrepreneurs

 

 

About Ebong EkaEbong+Eka+Headshot.png

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

      

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

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