You can put it on a credit card, for example, and pay the bill when it arrives in 2001. But there can be a limit on how many 2001 expenses you can accelerate into this year. In the book Tax Savvy for Small Business, attorney Frederick W. Daily notes that you can t prepay expenses more than 30 days in advance. He says that in his own practice, he sits down in late December and goes over his income and expense figures. Moreover, while looking around for ways to lower your tax bill, make sure you re also making sound business decisions.
Taxes are just one consideration in running a company.
For example, Spoor said, If you don t have good credit, don t run your cash reserves down to nothing by buying a piece of equipment you really can t afford right now. It might be better to pay more tax early next year and buy that equipment when your ledger is in better shape. Don t let the tax tail wag the dog, Spoor said. Many accountants advise business owners and taxpayers in general to use the tax-preparation process as an opportunity to take care of a variety of financial chores, including estate planning. It s a good time for an annual housecleaning, Spoor said.