J.K. Lasser's Guide to Self-Employment, 2nd Edition

CHAPTER 12 Strategizing Year-Round for Tax Savings

1. Tax-Savvy Business Decisions
2. Year-End Planning
3. Post-Year Tax Elections
4. Lease Instead of Buy?
5. Don't Overlook Carryovers
6. Audit-Proof Your Return
7. What's Ahead

While you may focus on taxes during tax season when you know your income tax return for the prior year is due, you should be thinking about taxes throughout the year. The actions you take during the year can favorably impact your tax results at tax time.

Since you're a Schedule C filer, your business and personal tax pictures are intertwined. Reducing the business income that's subject to tax can save you taxes on your personal (nonbusiness) income. For example, if you bring down your taxable business income by allowable deductions, you can minimize the additional Medicare taxes on earned income and net investment income (if applicable).

In taking actions for tax results, don't do so at the cost of bad business results. Keep in mind that taxes are only one factor in the actions you take. Assess the impact that actions will have on cash flow, productivity, and other business issues. In many cases, as you'll see in this chapter, tax savings align with business and financial advantages.

Tax-Savvy Business Decisions

Actions you take throughout the year can pay off in tax savings on your return. These actions can have effects beyond mere tax savings. They can help protect the financial security of your future, provide current cash flow, or achieve other business objectives. ...