As the season changes from fall to winter, snow begins to fall and brewers release their holiday beers. Sharing the latest seasonal brew at a holiday party this December helps spread the holiday joy. As you are celebrating the last month of the year, don’t forget to begin your year-end tax planning.

Spread is a great word to use when thinking about your tax situation. Spreading out your income or expenses to even out your net income from one year to the next is a solid tax strategy. It will allow you to take advantage of the lower tax brackets year in and year out and minimize your income taxes. As a small business owner, you will have some flexibility in terms of being able to either defer or accelerate income or expenses.

If your brewery has had an exceptional year, consider buying some equipment in December that you had originally planned on purchasing in 2015. Accelerating the depreciation or Section 179 expense into 2014 will help reduce your taxable income. The accrual method of accounting could also be very beneficial for your business in order to capture all of your expenses.

If you sold your business or realized some other extraordinary income event, think about a donor advised fund or donating long-term appreciated stock to charity. Spreading your expenses to a year with higher income gives you the biggest bang for your buck.

If your restaurant has allocated you a loss this year, consider converting an IRA to a Roth IRA or selling appreciated assets to spread out the income to your benefit. Planning for a loss from a flow-through entity always requires special consideration. Do you need to establish tax basis prior to year-end in order to be able to deduct the loss? Should the loss be considered passive or nonpassive? If you have a net operating loss, should it be carried it forward or back? Spreading the loss to the proper period will maximize your tax benefit.

Whether your business is in the red or the black, take a moment to consider whether or not spreading out your income is the right move. And remember, it’s always the right move to share a holiday beer this season.  I recommend trying Begyle’s Christmas Ale, a favorite of mine from a local brewery. Cheers!

For any questions, contact me at [email protected] or call 312.670.7444. Visit orba.com to learn more about our Restaurant Group.