With just about half of the year already in the books, now is the ideal time to take stock of your business activities year-to-date. This will enable you to take wise tax actions that will pay off on your tax bill when you file your 2013 income tax return next year.
What to look for in your books
Determine whether you’ve been profitable so far, and whether your numbers meet, exceed, or fall short of your estimates at the start of the year. Also, face up to losses that you may have experienced to date. If your analysis shows:
Better than expected, you’re looking for ways to reduce your taxes, so explore traditional actions such as:
Setting up a qualified retirement plan, such as an SEP or 401(k) plan, to save for your retirement in a tax-advantaged way
Buying new equipment and machinery to better run your business while capturing tax write-offs (explained later)
Also, make sure that your remaining estimated tax payments for 2013 are increased to avoid underpayment penalties.
Lower than expected, tax savings can still be helpful but may not be the most important action now. If your profits aren’t what you expected, or you experienced losses, reduce your remaining estimated taxes to conserve your cash and avoid making an interest-free loan to the government. (You can%E