Time is running out. You have worked very hard for your business. Imagine you now have less than a month before the year ends and your business is profitable. You know that you will have a tax balance and you are worried about how much is your tax bill. You obviously do not want to give your hard earned money away. What can you do if you don't want to pay too much taxes and if you want to increase your deductions, what can you really deduct? Can or should I deduct additional meals, travel, entertainment, office expense, continuous education? The common mistakes that business owners make is that business owners address these questions from a micro-level, such as asking specific question about specific type of expense. I have seen business owners spent money or made huge purchases just for the sake of not wanting to pay taxes. To me, that approach is financially irresponsible because every business should always saved up for sufficient working capital. By simply spending every dollar without a plan is just not a good approach to effective tax planning. Instead, I think business owners should consider is asking questions from a macro-level i.e. what are the ordinary and necessary expenses of my company? What kind of expenses that I will need to incur or what kind of investments/marketing efforts I should consider to grow my business?
In other words if you want to maximize your tax position efficiently and grow your business simultaneously, the mindset should not be how can I deduct every penny even if it is not related to business purpose.
A good approach should be thinking from the perspective of growing your business ie. consider investing into marketing efforts, website, SEO, providing continuous education for employees, meetings with clients, provide workshops for clients to increase awareness/branding. Tax planning becomes meaningless if the intent of the business owners are solely really just to reduce the tax bill. Tax planning becomes meaningful if business owners are trying to grow their business by giving back to the business and at the same time enjoying the tax benefits and advantageous from having to pay less taxes.