We are ¾ of the way through the fiscal year, and you likely already know where your business will fall on the profit/loss spectrum. Armed with that information, now is the time to explore the variety of ways to increase profits or decrease tax liability (depending upon your business and personal goals).
In an effort to decrease their tax liability, many business owners opt to purchase new equipment, furniture and/or vehicles for deduction purposes. The concept is relatively simple, but there is certainly more than one way to approach deductions (i.e. deduct the total cost, deduct portions of the purchase over time, etc.)
Deducting portions of a fixed asset purchase over time (depreciation) may be an appropriate method. Alternatively, many business owners take advantage of the accelerated depreciation opportunity provided by the IRS. Accelerated depreciation allows for greater deductions to be taken in the earlier years of an asset’s life (to include fully depreciating the cost of a fixed asset in the year the item is purchased). This results in an immediate reduction in business profits and ultimately tax liability.
So what makes sense for your business? Contact David Knab to learn more about simple ways to reduce your tax liability.