The end of the year is a big time for small retailers. You’ll need to get your taxes in order and enjoy the holiday too. Rob Starr of smallbiztrends.com offers 10 holiday tax write offs that can help you to do both at the same time.
Defer Some Income
Tax and business attorney Barbara Weltman says this year small businesses should defer income to take advantage of the lower tax rates that should be coming under the new tax code.
“If you provide services in December and wait to bill for them until end of the month you won’t get paid until 2018,” she says.
Buy Next Year’s Office Supplies Now
You can buy ink toner for the printer now and write off the cost for next year. Cleaning services and the like can be included if you want to prepay for something you’re not going to use right away.
Look for This Year’s Bad Debts
If you’ve got a bill that’s been hanging around all year without being paid, this is a good time to write it off as a bad debt. “Look through your books and see what’s outstanding,” Weltman says. “It could even be a loan to an employee or another business.”
Set Up Employee Benefit Plans
Providing healthcare to your employees makes a wonderful Christmas gift if you haven’t already got a plan in place. With the future of the Affordable Care Act uncertain, getting an employee plan now is a great year end write off and motivational incentive.
Give A Holiday Gift To Your Business
This is all about making sure you can take advantage of pass through tax laws at year’s end. To make sure you can take advantage of a personal tax return, you need to show you’ve got some skin in the business side of the game. “The owners needs to have sufficient stocks and bonds in the company to show losses on a personal tax return” Weltman says. “Maybe you want to put more money in the business.”
Throw a Holiday Party
Kevin Miller, chief marketing officer at the Neat Company, suggests getting into the holiday spirit with some partying, but cautions about keeping the records straight. “To steer clear of an audit, the best practice for writing off holiday parties is to keep them separate: throwing a party for employees and their families is 100 percent deductible; inviting vendors and clients to your holiday party can be partially written-off, if all interactions remain business-related,” he says. “Keeping good records (guest list, invitations, party-related expenses) will be your best protection.”
Traveling over the holidays is a good tax write-off but not if you’re going to visit friends and relatives. However, if you plan on visiting clients and business associates to talk about business plans for the new year, those travel plans are absolutely deductible.
Make A Charitable Donation, but The Right Kind!
Giving to those less fortunate is what the holidays are all about and it’s also a good business deduction. The general rule is charitable deductions go on personal and not business tax returns. Make sure you make the distinction between advertising and a charitable donation.
For example, buying an ad for your business in the program of the local high school holiday production may support the school but does not qualify.
Give Out Holiday Gifts To Employees and Clients
You can actually deduct $25 per person per gift every year. “That applies even if the gift is worth less than $25 dollars,” Miller says. “Keep in mind the definition of holiday can vary, so it’s best to use this write off around the major ones.”
Stock The Office With Treats
Here’s a suggestion everyone will love. Making the office festive with a series of holiday treats will keep people motivated during the busy season. Just remember to keep those stocking stuffers reasonable. Too much of a good thing can bring red flags and an audit.