What do you do when your business is suddenly more profitable than it has ever been??? It is good news, but the reality is that you have to determine how to allocate the extra cash flow so that it good for your business. A client of mine is doing so well this year that I have recommend to my client to work on reducing their taxable income now. The following are good ways to reduce your taxable income:
- Charitable Donations
- Pay more down on mortgage
- Investment in a IRA or a SEP-IRA
- Increase student loan payments
- Tracking all business expenses (meals, travel, delivery)
Also, use the extra cash flow to re-invest into your business. If you need new computers, software, or other supplies, now is the to time to make some smart purchases. Go on a shopping spree at Staples, but keep your receipts to give to your CPA.