If you have made a profit projection for the year and your taxes will be more than you had anticipated, this is a strategy that you may want to consider to reduce your taxes.
If you are using the cash basis for your tax return, revenue is determined by the date you receive it. For businesses using the accrual basis, revenue is determined based on when it is earned. The vast majority of small businesses are on the cash basis can have the ability to defer revenue. The accounting basis of your business is reported on your tax return. However, contact a tax professional if you aren’t sure where to find it on the return.
If your business is currently using the accrual basis, you can change to the cash basis by filing Form 3115 to change the accounting method with the IRS. However, it would be a good idea to consult with an expert tax professional before making the change.
You will need to quit billing customers and patients near the end of the year. Customers and patients won’t pay you if you haven’t sent a bill. By postponing the December bills and sending them in early January, you can reduce your taxes by reducing your income.
