For an independent business person year end tax planning needs to be a bit more strategic. As you know, if you work at a company at a job, taxes are taken out of your paycheck every week. There is less planning that you need to do. For the independent business owner like you, this is an important time of the year to maximize your earnings and minimize the taxes you pay.

The basic principle is to defer as much income as possible into next year and bring as many expenses into current year as possible since taxes are paid on a “cash basis”. The types of actions you can take are:

1. Buy anything you need for your company that you use in your business. If you have the cash, make the big purchases like computers or furniture now so you can deduct them this year.

2. Prepay any expense that you might normally pay in January like rent, utilities, office supplies, cell phone, subscriptions, and insurance.

3. If your clients or customers pay you monthly, have them pay you Jan 1 instead of Dec 31. If you send invoices to your clients, you may want to send them later in the month to ensure payment moves into January. Every cent you defer now counts and you don’t need to pay take on it until April of the following year.

4. Make a contribution to your retirement plan.

5. Think Green: There are special tax credits for energy saving investments like power for your home, office or a hybrid car.

6. Make charitable contributions to your favorites causes.

7. Ask your accountant for some year end advice. I am not an accountant and I don’t even play one on TV. Check with your own accountant to see how these apply to you.