8 Items for Small Business 2013 Year-End Checklist
December 15, 2013 by Aaron Scott Young
Small Business tax-savers to consider as the 2013 year-end approaches:
- Estimate your tax liability for 2013. Adjust your final quarterly voucher or your withholding to avoid underpayment penalties. Check estimated payments for your C Corporation for the same reason.
- Consider prepaying college tuition you’ll owe for the first semester of 2014. Expenses paid for you, your spouse, or your dependents will count on your 2013 return if you qualify for education tax credits. Breaks include the American Opportunity Credit, which can reduce your tax bill by up to $2,500 and is partially refundable.
- Gather tax identification numbers your business will need to issue year-end reporting statements. Though two reporting requirements were repealed (the one for rental property owners and the one for payments to corporations), the old rules live on. In addition, penalties for failure to file have increased.
- Consider setting up a newly available SIMPLE cafeteria plan for your business. The plus: pre-tax employee benefits without the need for discrimination testing.
- Hire your child under the age of 18 to do legitimate work in your business. You get a business tax deduction, and your child can earn up to $5,800 without paying income tax. Bonus: When your business is a sole proprietorship, you don’t have to pay FICA taxes. Double bonus: The kiddie tax does not apply to wages.
- Start a retirement account for your working child. Boost the tax savings you get from paying your child to work in your business by gifting the child money for a deductible, traditional IRA contribution. The maximum basic contribution for 2013 is $5,000.
- Claim the last of the residential energy credit. Install certain energy efficient property in your home, such as insulation, doors, and windows, and get a federal tax credit of up to $500. That’s the aggregate total credit, including amounts you claimed in prior years. The credit is scheduled to expire after December 2013.
- Get the documentation you’ll need for all your 2013 charitable contributions, or you risk losing your deduction. Even gifts under $250 require a bank record or a receipt from the charity.