22 Dec Best Last-minute Year-end Expenses to Minimize Tax Liabilities?
2020 has been a tough year. Why not treat yourself to some savings? Read on to get actionable ideas for reducing your taxes. Then, act quickly, and ring out the old with a lower tax debt.
Mike Miller, Editor-in-Chief of Wilderness Times.
Change billing cycle
If you’re trying to minimize your tax liabilities, one of the best things you can do is pay upfront for products or services that you’ll need to use next year.
The easiest way to do this is to change your billing cycle from monthly to annually. Most (if not all) SaaS services that charge monthly offer discounts if you pay annually. Considering that expenses incurred in 2020 count for this year even if the service is applied next year, this means that paying ahead can cut your tax bill today AND get you in at a better rate. Win-win!
The problem with this is that many business owners pay for products or services they don’t actually use. So, before you go paying for a year-long subscription, make sure that you actually use this product devoutly, and plan on using it for 2021.
Pro-tip: you can also use this as a time to negotiate a rate decrease with your sales rep. Tell them, “Look, I’m curious about paying annually, but only if I can get a good deal. What can you do for me?” Just asking that one question could help you save 10-30% off the cost of the product.
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