Year-End Tax Planning - Stock Up

In yesterday's post, I discussed the issue of timing to save on taxes.  Figure out which year (this year or next year) will have the highest taxes.  Then move income into the year of lower taxes and expenses into the year with higher taxes.  The second step in this timing process is to look for other ways to increase expenses by stocking up and pre-paying (if you want to move expenses into this year, that is).

Stock Up

• Look at your office supplies and copy paper and replenish to a reasonable amount.
• If you have supplies you use regularly in your factory, warehouse, or in your work, stock up on these too.

Pre-Pay

• Pre-pay insurances, like your business insurance or specialized insurance for your type of business (malpractice insurance or product liability insurance, for example)
• Pre-pay your rent or your mortgage. If you pre-pay the mortgage, make sure you are drawing down the principal, not just paying additional interest.
• Pre-pay on subscriptions for professional journals or the reception area in your office.

Check with your tax adviser, to be sure the savings will reduce your income.

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