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last minute tax tips 2020

Last-Minute 2020 Tax Tips for Small Businesses

Believe it or not, we’re just a few weeks away from 2021. And while it might seem like the clock has run out on ways to save money this year, we have a few last-minute tax tips to help you save on your 2020 taxes.

Just don’t make waiting until the last minute a habit.

We recently explained why small businesses shouldn’t wait to hire an accountant, and a big factor is just how much you can save in taxes across the year. But that’s the key term: across the whole year. Planning out a strategy across 12 full months, which we advise you to do for 2021, can yield big dividends.

But those of you looking for tax savings within the final month of 2020 are in luck. Here are a few last-minute tax tips for small businesses to consider:

Last-Minute Tax Credits and Deductions

If you’re operating your small business out of your home (and many people are these days), good news! You can deduct some expenses based on the portion of your home for business purposes.

You also can deduct mileage for business travel purposes, though the rate went down in 2020, from 58 cents per mile last year to 57.5 cents in 2020.

And you can receive breaks on buying certain equipment, vehicles and even software that is used for business purposes more than 50% of the time. You can use this on one-time expenses you might not make year after year, but you can also use this to your advantage by purchasing regular supplies in bulk right before the end of the year, reaping additional tax savings for the current year.

Stock Market Tips

One tax tip that also benefits your future is to contribute to a retirement plan, such as a SEP-IRA or a Keogh plan. For the 2020 tax year, you can contribute 25% of your self-employment earnings, up to $57,000.

Another way to use the stock market to your advantage can turn a frown upside-down. That is, you can “harvest” losing stocks and funds by selling them for a loss, lowering your ordinary taxable non-investment income by up to $3,000.

Defer Income

If you’re in the enviable position of being able (and can afford) to take some income in 2021 as opposed to 2020, you can save on your taxes that way. If you’re self-employed, for instance, you can delay billings until the very end of the year so you aren’t paid until early 2021.

But you will have to pay taxes on it at some point, so this only makes sense if you expect to be in the same tax bracket or a lower one in 2021.

If you’re looking for every proverbial tax trick you can find in your sleeve before 2020 ends (or better yet, looking to set yourself up for big tax savings in 2021), talk to the experts at McManamon & Co. We’re a full-service accounting, tax, and consulting firm that focuses on small and midsized businesses. And our accounting team can help you better understand what tax benefits your company is poised to collect — not just in 2020, but for years to come.

We know every dollar counts, especially this year. Make your taxes work for you by calling McManamon & Co. at 440.892.9088 or contacting us online.

| Posted in McManamon & Co., small business, small business taxes, taxes