Now Is the Time for Business Tax Planning

Autumn is almost gone and tax planning should be in full swing.

Tax planning? Yes, now is the time. You have less than two months to make the moves that will save you money in April.

There are two key things you can do now: defer any income until next year and maximize deductions this year. If you’ve been putting off major purchases such as a color printer, vehicle, etc., you should consider buying them this year to help lower your taxable income. You may also want to consider updating or upgrading your employer-provided benefits. One new approach in benefits is to provide flexible spending accounts, commonly known as "cafeteria plans". Whether small business owner or sole proprietor, don’t forget to reduce taxable income by putting money in a 401(k) or retirement account.

In any case, review all allowable tax deductions before the end of the year and take action. Finally, if you can make substantial reductions in your taxable income, remember to make Form W-4 changes or lower your final quarter estimated tax payment to the IRS and State of Virginia, which are due January 15, 2003.

Tony Slaga, VP, NBA