How would you like to keep more of your money? A small business CPA weighs in on how to reduce your taxable income in 2021.
Stop Billing Customers, Clients, and Patients
Here is one rock-solid, straightforward strategy to reduce your taxable income for this year: stop billing your customers, clients, and patients until after December 31, 2021. (We assume here that you or your corporation is on a cash basis and operates on the calendar year.)
Not billing customers and patients is a time-tested tax-planning strategy that business owners have used successfully for years.
Example. Srini, a dentist, usually bills his patients and the insurance companies at the end of each week. This year, however, he sends no bills in December. Instead, he gathers up those bills and mails them the first week of January. Presto! He just postponed paying taxes on his December 2021 income by moving that income to 2022.