Wrap up taxes annually by thinking about a tax strategy all year long. That's helpful advice you can take to the bank as you can make special efforts to reduce your tax burden. It's not just reserved for when your fiscal year ends or starts anew.

There are several ways you can decrease your tax obligation that comes from closing books annually. From inventory write-offs to business tax deductions and ways to defer income until the next fiscal year, knowledge of how certain activities can decrease your tax bill can come in handy.

Consider the following year-end tax tips:

1. Before you end taxes for the year, counts of inventory must be performed to ensure accurate numbers on your tax return.

2. Before closing books for the year, consider giving cash bonuses to employees, which can lessen your tax burden.

3. Before you wrap up taxes, year-end savings can come from setting up a better retirement plan option for yourself or employees.

Action Steps
The best contacts and resources to help you get it done

Review your end of the year tax records with an accountant

Preparing taxes is never easy, but making sure your books are up to date and having a clear view of your financial situation will help. Plan some extra time with an accountant to get organized and to develop a tax strategy to minimize your obligation every year.

I recommend: Discuss your unique situation with a professional from PriceKubecka, a certified public accounting firm. Butler Consulting Group offers tax services including tax planning and compliance.

Use year-end tax tips such as increasing expenses to allow more deductions

Purchase items early that your business will need for next year such as office supplies and equipment. You can also save money on your taxes by paying your regular bills early such as rent, utilities, and cell phone and Internet services.

I recommend: The Internal Revenue Service provides an update on Section 179 rules and regulations and how much can be deducted in a given year. Go through the National Federation of Independent Business checklist for small business tax deductions to see if there's a deduction you may have overlooked.

Consider deferring income when you wrap up tax records for the year

Every single penny put off until the end of the fiscal year lessens your tax bill. However, any deferral plan depends on your business legal status and your expected loss or profit for the year. It may make the most sense for those businesses considered a sole proprietorship, partnership and some S corporations. But be careful not to leave your cash flow in a serious situation just to defer income.

I recommend: Check out the particulars on deferring income from Estate Street Partners. Check out the services provided by O'Connor & Associates when it comes to indefinitely deferring income as a 1031 exchange.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Year-end tax tips include giving to charity. Make sure you keep all documentation for donations you've given throughout the year.

Sure, it’s the holiday season, and the last thing you want to think about is taxes. In this case, procrastination can be a costly. With a little time and effort, your small business can reap some real rewards. But hurry. Most tax-saving moves must be completed before the end of the year to qualify for that year’s tax filing. A careful review of business expenses and company operations can turn up ways to: 1) Maximize tax deductions. 2) Use charitable holiday giving to reduce taxes. 3) Adjust income to your advantage for tax filing purposes. Here are some year-end tax strategies that can bring your business a holiday bonus:

Action Steps
The best contacts and resources to help you get it done

Delay income

As a rule, you want your customers and clients to pay up quickly. December is a different matter. If you can defer income to the first week of January, you push back the time when you have to pay taxes on that income to April of the following year. By delaying income for a few weeks, you can hold onto more of your money for a while.

I recommend: Create invoices using templates from Microsoft and include a request to “Remit Payment After January 1.” The CCH Business Owners Toolkit offers a discussion of Business Income that can help you determine what is and what isn’t reportable income for tax purposes.

Write off inventory

Check inventory for damaged goods or items that have become obsolete. The loss of value can be used as added tax deductions.

I recommend: Keep track of damaged or unsellable goods with these customizable inventory forms from Microsoft. Or go with a software solution, such as QuickBooks’ Enterprise version.

Contribute to a retirement plan

If you’ve put off starting or contributing to a retirement plan, now is the time to get it done. Any money you put into an IRA, 401k or other plan reduces your income for tax purposes. A word of caution: different retirement plans can have different contribution, reporting and filing requirements and deadlines. Check with your financial advisor and accountant to make sure you understand the rules.

I recommend: If you don’t already have a plan, start one now. PAI offers a range of plans for small businesses. For simple, do-it-yourself retirement plans, check out 401(k) easy. See how to establish a SEP here. SmartMoney.com offers a review of the various types of small business retirement plans. For more information, see the IRS page on tax information for plan sponsors.

Help a worthy cause

Charitable contributions are deductible expenses, so get into the holiday spirit and make a donation on behalf of your company before the end of the year. It can not only help lower your taxes, it can make you feel better.

I recommend: The simplest solution is to write a check before Dec. 31 to a charitable organization in your community. Some Web services can point you to charities and even allow you to contribute online. Try America’s Charities or Network for Good.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Make sure any bills you decide to pay early qualify as business expenses and are not personal expenses
• •  When deciding whether to defer income, consider your present and projected future earnings. You don’t want to defer income from a year when your business has a loss into one where the business will turn a hefty profit.
• •  Individual tax situations vary. It’s a good idea to check with your accountant to make sure your last-minute tax moves will work to your benefit.
• •  As with any business action or transaction, be sure to keep good records.

So it's the end of another year: no, not December 31st, but the end of a tax year — as the filing date looms closer and closer, many businesses may want to cast an eye online for year-end tax tips to find out what other companies are doing with their books. Tax time is a chaotic season for nearly everyone, and small businesses in particular have their own unique challenges for efficient and good filing.

The web can be a great resource for finding out what's happening in the current tax year, or examining multi-year trends in how people and businesses report taxes. End of the year tax trends are good patterns to keep track of, because what's good for one party can often be good for many. As the tax code shifts, businesses look to tax trends to see:

1. What specific tax changes may have led to specific year-end tax tips on certain kinds of investment, activity or spending.

2. How recent changes may influence filing dates, filing methods, or filing status.

3. What a business can expect after filing at the end of a tax year.

Action Steps
The best contacts and resources to help you get it done

Find year-end tax tips news and trends from general resource sites

The informative public sites on the Internet can have a lot of tax info applicable to a business situation, whether it's links to firms and organizations who help with tax prep, or feedback from other parties who have found better ways to reckon their numbers.

I recommend: Pages like this one in WebProNews introduce readers to general trends in what others are doing in the latest tax year, as well as links to resources or software or other prep options. For more info and responses from individual filers, try the tax prep pages at CNet.

Examine the role of year-end tax tips news and trends in software in today's tax prep industry

By many accounts, more and more businesses are using software such as the most popular new programs advertised on TV to figure up taxes. Software can eliminate a lot of the cost of hiring an accountant, but may not be as accurate in the long run.

I recommend: For a look at top software like the eminently popular TurboTax and challenger TaxCut, take a look at personal finance sites like Money Blue Book to get tips for using the power of the computer to file. Find more at Bargaineering: "Engineering a Richer Life."

Look for more info on publicly traded tax prep companies offering year-end tax tips news and trends

Some pages that focus on publicly traded tax prep firms like Jackson Hewitt explain recent demographic trends, such as a flock to later filing, that may influence the stock numbers and reveal general patterns in American tax 'migration.'

I recommend: Find articles on trends in top tax prep businesses at sites like GuruFocus.com. Find more news on Jackson Hewitt and other firms at SeekingAlpha.

With a tough year facing many businesses of all sizes, most are looking for relief. One place to find it is through taking advantage of end-of-year tax tips. If you're doing your own taxes or even reviewing your company's tax returns, the key to making sure you save as much as you can is to understand the meaning of the terms used in those tax tips.

This guide focuses on six key terms commonly found in end-of-year tax tips that can benefit both you and your business. They include: deferred income, withholding, tax deduction, tax credit, IRA and flex spending account.

Action Steps
The best contacts and resources to help you get it done

Deferred income

Deferred income is payment that's been received by a company but not yet considered earned and is considered a liability. Deferred income is also referred to as deferred compensation, unearned revenue or deferred revenue. Examples of deferred income include retirement plans, pensions and stock options.

I recommend: Read Tax Tip 1 at OutsourceTaxReturn.com to see if deferred income is a tax tip your business can take advantage of.

Withholding

Withholding refers to the portion of an employee's wages the employer sends immediately to the local, state and/or federal taxing authority. That amount is counted as partial payment of the employee's annual tax liability.

I recommend: Learn more about the IRS withholding calculator at the agency's website and click on the link at the bottom of the page to take advantage of the calculator to ensure you're not paying too much or too little withholding at the end of the year.

Tax deductions

A tax deduction is a fixed amount or percentage of an expense that's subtracted from your adjusted gross income to get your taxable income. Common tax deductions include education expenses, mortgage payment allowances and home repair expenses.

I recommend: Learn more about standard tax deductions, itemized tax deductions, above-the-line tax deductions and Schedule C tax deductions at the H&R Block website.

Tax credit

A tax credit results in a dollar-for-dollar reduction of the amount of taxes that you would otherwise owe the government. Popular tax credits include the child tax credit, education credits, plug-in hybrid electric vehicles tax credit and qualified first-time homebuyer's tax credit.

I recommend: Learn more about tax credits at Businesstaxrecovery.com.

IRA

IRA stands for Individual Retirement Account. An IRA is a tax-deferred account that lets those who own one add to their accounts every year while deferring the taxes on earnings until that person reaches the age of 59 ½.

I recommend: Read the article at the SmartMoney website to see if now's the right time for you to convert to a Roth IRA.

Flex spending account

Flex spending accounts are employer-sponsored plans that let employees pay for certain medical expenses on a pre-tax basis. These are use-or-lose accounts; if you don't use everything in the accounts during the year, the money is gone forever. A flexible spending account is also called a flex plan, flexible spending account, flexible spending arrangement or reimbursement account.

I recommend: Read the Kiplinger article for information on flexible spending plans and suggestions on where to spend the money.