Is this you? Every year in April, are you surprised by how much you owe? Do you rush around the last week of December trying to manufacture tax deductions to offset revenues or income? You can avoid either of these problems by caring about your taxes in September. Yes, now.
One of the best ways to reduce your taxes is to plan ahead. As I write this article, there are roughly three months left till the end of the 2005 fiscal year. Now is the time to sit down with a proactive tax professional, review your finances and develop a plan for manipulating them to reduce your 2005 taxes.
More Money Blues
In a wicked twist of life, making more money can cause surprising tax problems. This need not be if you plan ahead.
If you are a salaried employee, have you received a raise or extra benefits during 2005 that will push you into a higher tax bracket? There is nothing more frustrating than getting a raise and having a higher tax bracket actually leave you with less disposable income. If you fall into this category, you may want to stuff money into a 401k or other pre-tax vehicle to lower your reported earnings.
If you're a small business owner, have your revenues increased when compared to 2004? Increase revenues are obviously desirable, but can lead to frightening tax amounts and cash flow problems. If revenues are increasing, you must have a plan in place to offset them for tax purposes. Failure to take this step can lead to horrific self-employment taxes for LLCs, sole proprietorships and S-corporations given the 15.2% tax rate. Businesses using C-corporations will face even worse consequences.
Saving Your Hide
A proactive tax professional is a good tax professional. A proactive tax professional is going to look at your financial situation and give you specific advice regarding steps that will lower your 2005 taxes. When it is time to file your 2005 taxes, you will thank your lucky stars you planned for it in September 2005.
Richard A. Chapo is with - Stop overpaying small business taxes. Visit to read more business tax articles about tax relief and tax help.
