Originally Posted by White Gardens
To me, any accountant advising you to spend money to avoid taxes is steering you in the wrong direction.
For one, you have to have the money first to buy the equipment. If that takes away from your day to day living expenses, then what are you going to live on.
Equipment also depreciates, you never get your money back on something that depreciates.
If you go to sell your business or equipment, then you end up paying capitol gains tax. So avoiding taxes at point A doesn't mean you won't have to pay taxes at point B.
Spending 20k to avoid paying 3k in taxes seems like a bad numbers evaluation. If you have 17k left over after taxes, invest it somewhere where you will make the 3k back.
Lots of investments also give you a tax break or deduction also.
Everyone business owner that told me I should buy equipment or spend money on stuff to avoid taxes was pretty much broke. Never could I figure that one out.
That and the farming community I grew up in pointed it out to me. Farmers would spend 200k plus on equipment to keep from paying taxes and always complained of being broke.
I completely agree with everything you just said, I am in a similar position as the OP but I'm just keeping the money and paying the taxes on it. The fact of the matter is the way I personally run my financials, I use the extra money at the end of fall to make it through until next spring. I plan my financials to not rely at all on snow plowing income (and it looks like, again this year, that was a very good decision.)
One thing I did one year was effectively "sell" my personal tools to my business at the end of the year. Prior to starting this business I was an auto mechanic, so the fair market value of my tools is around $10,000. And since the tools are now used almost exclusively for business owned equipment repairs and kept at my business' shop, it seemed fair. Being a large sum, the $10,000 investment was depreciable, but I chose to take all the depreciation in that current tax year to avoid higher taxes.
To the OP, maybe you have some things that you still "personally" own, but the business uses much more often than you do, that you can "sell" to the business to avoid some taxes. If you do this though, make sure to document what you are "selling" with pictures so you can make the argument of their value to the IRS if necessary.