Own a small business? Here’s your year-end tax planning game plan

With year-end rapidly approaching, now is the time to take steps to cut your 2019 business tax bill. This column has some ideas for this year, but you also have to think what might happen to your business tax situation in 2020 and beyond. So, it’s a bit complicated this time around. But we forge ahead. Here goes. If your business doesn’t already have a retirement plan, now might be the time to take the plunge. Our current tax rules allow for significant deductible contributions. For example, if you are self-employed and set up a SEP-IRA, you can contribute up to 20% of your self-employment earnings, with a maximum contribution of $56,000 for 2019. If you are employed by your own corporation, up to 25% of your salary can be contributed with a maximum contribution of $56,000. Other small business retirement plan options include the 401(k) plan which can even be set up for just one person, the defined benefit pension plan, and the SIMPLE-IRA. Depending on your circumstances, these other types of plans may allow bigger deductible contributions.