Tax Write-offs? An eCommerce site

How you can LEGALLY save money on taxes

[Hubie]

I've been racking my brain to see how I cut "profits" by making some legit end of the year expenditures. Here's what I've come up with:

Pre-pay a year of hosting.
Stock up on shipping supplies (boxes, envelopes, tape)
Load up online postage account (a postage purchase counts for this year even if the postage isnt used until 07 - depends on your accounting)
Load up in PPC accounts - same as above...buying advertising in 06 counts for 06, even if those ads will run in 07 I am pretty sure
Get that new computer Dec 31st if you are thinking about getting one in the first quarter of 07.
Sending x-mas gifts to fellow webmasters!

Would love to get a thread going on other good ideas.

Hubes

[gabidi]

Incorporate in a free trade zone country? Virgin Islands, Dubai, etc..

[LizaJane]

Pay all bills sbmitted to you but not yet due ( ie utilites , vendors)
Office supplies: ink - paper - cleaning supplies - shipping labels
Office Furniture - desk - shelving - chair - filing cab.
Office repairs - paint - flooring
re pave/gravel driveway ( Hey, UPS can be sticky about your drive!)

[LifeinAsia]

- employee bonuses
- open a retirement plan (401K, Single-K, SEP-IRA, etc., depending on your type of business)
- fund your retirement plans (although you can also do this next year prior to filing your return)

Just remember that for most big ticket items (computers, office furniture, office equipment, vehicles, etc.) you have to depreciate the amount over the expected life of the items. Although in most cases you can claim the full amount in the year of purchase by Section 179ing them.

As always, consult with your tax advisor for your specific situation. And considering that it's the end of the year, and he/she has dozens of other clients with the same idea and he/she probably needs one last vacation before Tax Season starts, you should do make your appointment yesterday. If you procrastinated yourself out of an appointment with a tax advisor, you can always go to www.irs.gov.

[stajer]

Hate to be a downer Hubie, but if you are in the US, and you carry inventory, you cannot use the cash method of accounting, you must use accrual method. Therefore, prepaying expenses will do nothing to reduce your tax liability.

[LifeinAsia]

stajer,

Not true- see the Gross Receipts Test in IRS Pub. 538.

[piatkow]

If would help if we knew where you were located as tax laws in the USA, UK, Australia, Canada, New Zealand or Ireland (and I am just assuming that you live in an English speaking country) are all different.