A Reference Guide For Business Deductions!

With Christmas just 12 days away, it seems as though many people find themselves “scrambling to the finish line” because there is still so much to get done. With that being said, we are definitely not trying to pile any more items on your “To-Do List.” But, I’m sure that you also don’t want to get a large tax bill surprise next year. So, we’ve created A Reference Guide For Business Deductions for you to do today to help ensure that your business pays a little bit less in tax for 2017.

1. Give cash year-end bonuses
Like any compensation, the bonuses you give to employees are tax deductible. The bonuses are also subject to payroll taxes; these taxes are tax deductible as well.
If your business reports on the accrual basis, you don’t even have to disburse the bonuses this year. As long as they are declared before the end of the year, they are deductible this year provided you pay them by March 15, 2018. However, when giving bonuses to 50% C corporation owner-employees and S corporation owner-employees with any ownership interest, they are deductible only when actually paid.

2. Buy new equipment
Need a new computer? Some heavy machinery? Office furniture? If you put it to business use by December 31 you can deduct all of the cost on your 2017 tax return rather than depreciating the cost over a number of years. Using 100 percent bonus depreciation, the cost of new equipment and machinery is deductible without any dollar limit.

3. Donate cash
As a good way of showing your charitable side to your employees try matching contributions to their favorite charities. Your business can make cash donations to IRS-recognized charities. The deduction for contributions by individuals (including owners of sole proprietorships, partnerships, limited liability companies, and S corporations) is 50 percent of adjusted gross income; for C corporations it is 10 percent of taxable income.

4. Set up a qualified retirement plan
You can shelter your profits while saving for retirement by adopting a qualified retirement plan, such as a 401(k) or profit-sharing plan. As long as you sign the paperwork with the financial institution at which you’ll keep the plan, you then have until the extended due date of your 2017 return to make contributions that will be deductible on your 2018 return.
If you have employees, you must include them in the plan on a nondiscriminatory basis. Factor in the cost of covering employees when you decide which type of plan to use and how much to contribute.

5. Order next year’s supplies
Buy now, what you expect to use next year. Consider office supplies, cleaning supplies, and other items that will be used by your business within the year. Again, on the cash basis, you can deduct the supplies now even though you’ll use them next year.

If you still need help or are confused about which deductions may apply to your business don’t worry! Premier Group is here to help with end of year tax or accounting issues. Give us a call today at (301) 577-6444 and schedule a FREE 30 minute consultation. Here at Premier Group we “Make Dollars, Make Sense.”

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