If you own a sole proprietorship or a company and you file taxes on a calendar basis, you will want to take all of the deductions to which you are legally entitled. Here are a few:
TAKE IT ALL
If your business made a qualified large purchase in 2019 and has unpredictable annual income, you may want to consider depreciating the asset 100% during the year of purchase rather than gradually over the asset’s life.
A QUALIFIED SUCCESS
Owners of sole proprietorships, partnerships and S corporations may be eligible for a qualified business income (QBI) deduction when they qualify by income. They may deduct up to 20% of their qualified business income, qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership income.
Whether you run a fulltime business or gig from a home office, you may be able to deduct certain expenses for space and equipment used solely for your business.
CHANGE TO CASH
If your business grosses less than $25 million annually, changing your accounting method from accrual to cash can offer one-time savings. The accrual method recognizes income when earned while cash accounting recognizes income when received.
SOONER OR LATER
With either accounting method, you can accelerate or delay income and expenses depending on your company’s performance with savvy planning. Talk to your tax professional to learn about these and other ways to save on taxes.