The 2023 tax season is months away, but the new year will be here before you know it. This means you need to take action on tax planning moves now to lower your 2023 tax bill. By January 1 it will be too late.
6 Year-End Tax Planning Moves for Your Business:
Review how your business is set up.
Are you a sole proprietor, S-Corp, LLC, Partnership, or C-Corp? As your business grows, the best structure for your business may change. Take the time to review this with your CPA and Certified Financial Planner every few years.
Review your business retirement plan.
A great way for small businesses to cut their taxes is to establish a retirement plan. Would you rather write a big check to the IRS or to your own retirement account? I think the choice is obvious. There are several retirement plan options to choose from. Do your research and talk to an expert financial advisor to decide which is the best option for your business.
Are you eligible for the home office deduction?
During the pandemic, many small business owners began working from home full-time, and this trend has continued over the last few years. This means that they may qualify for the home office deduction. Talk to your tax professional to see if you qualify.
Don’t ignore your bookkeeping.
Filing taxes is stressful enough. Don’t make it harder on yourself by being disorganized. Break up your accounting and bookkeeping throughout the year to help avoid a missed tax deduction that could increase your taxable income.
Claim first-year bonus depreciation.*
Consider claiming bonus depreciation for eligible assets purchased in 2024, as the available deduction has been reduced to 60% (bonus depreciation was 80% in 2023). If you’re expecting a high-income year, it might be wise to accelerate certain purchases to take advantage of this tax break before it phases out further.
And finally, be proactive with your tax planning.
With proper timing, your income and deductions could become even more valuable. Yes, tax planning takes time, but we all know time is money and, in this case, spending extra time can put extra money in your pocket.
Tax Planning with Kowal Financial Advisors
To better understand these tax moves and which opportunities are best suited for your business you will need to work with a professional. Our team of fiduciary advisors are here to help. Schedule your complimentary review with Kowal Investment Group today!
*More About First Year Bonus Depreciation
First-year bonus depreciation lets businesses immediately deduct a significant percentage of the cost of qualifying assets purchased and placed in service during the tax year. For 2024, this deduction is 60%, down from 80% in 2023. The deduction will continue to decrease in future years, dropping to 40% in 2025 and 20% in 2026, before phasing out entirely in 2027 unless new legislation changes this.
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