It’s the holiday season and you’re probably already feeling super-strapped for cash. However, now’s one of the best times of year to make business purchases.
Why?
Because holiday sales tend to drive prices down AND you can potentially decrease this year’s tax bill with deductions to boot.
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But before you go spending your entire savings account, remember this rule of thumb:
If you need it, buy it now. If you don’t need it, don’t buy it.
Not sure if it’s a “good” purchase? Read more here:
- Entrepreneurs: follow this one simple principle to avoid wasting your hard-earned profit
- Equipment for your freelance business: Buy or Get By?
You also need to know these few technical details:
- The payment must be recorded on or before December 31. (It’s not good enough that you’ve received the invoice.)
- You don’t actually have to have the item(s) in hand.
Okay, so let’s get to purchasing!
**Note: I’m not an accountant, and while in general this is sound advice, you should always check with your accountant or financial advisor on how best to minimize your tax bill.**
1: Electronics
If you need a new computer, laptop, cell phone, tablet, printer, Wacom tablet, etc., now’s the time!
Electronics historically get discounted severely for the holiday and post-holiday sales to make way for next year’s models.
2: Software & apps
Get that latest version of creative software, upgrade your operating system, renew your MailChimp (or similar) subscription, or purchase that productivity app you’ve had your eye on.
3: Office furniture and décor
This includes desks, chairs (super-important to find a comfortable one!), art, storage, shelving, and the like.
4: Office supplies
Usually these are pretty small purchases, but every little bit helps.
And don’t forget about printer ink, which can add up if you purchase enough for the entire year (even if that’s only 2 cartridges!).
5: Marketing
If you’re going to be purchases spots in publications or having a new website created, pay for it now!
Not only will you get the deduction on this year’s tax bill, you’ll also force yourself to go through with it instead of putting it off because you’re too busy.
Why this makes sense financially
You might be saying, “What about next year’s tax bill? Aren’t I just kicking that can down the road?”
YES. Yes you are.
But that’s kind of the whole game in taxes: pay the least in taxes you can this year, and worry about next year next year.
The hope is eventually something will come up (like needing a new car, for example, or a change in the tax code) that will erase a few years of pushing the tax bill off.
How are you minimizing your tax bill this year?
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