We want you to pay the IRS exactly what you owe….not a penny more or a penny less. We’ve written this article as a way to tell you about important ways you could be saving money on your tax return
Tax Law/Requirements
One of the most important things to do when tax planning for a new year is to check changes/updates to tax law and requirements. This matters because the more you know- the more capable you will be to take advantage of savings and avoid penalties. Here’s a quick video of some of these changes/updates: Tax Law Changes Part 1
For Businesses Considering Entity Changes
Remember that becoming a new entity takes time and it won’t probably affect you for the past year’s (2023) tax return. However, getting started on the process is a great idea so you can take advantage of the benefits of your new entity for the next year.
To learn more about the types of entities, click here: Business Entities Chart
Ways to Save with Tax Deductions at End-of-Year (EOM):
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Consider investing in a business retirement account (IRA’s, SEP IRA’s and 401(k) plans): This could help you save since contributions made and any plan earnings aren’t taxed until withdrawal. So your tax obligation to that money would be deferred some years down the road. For more information about retirement plans:https://www.businessinsider.
com/personal-finance/best- retirement-plans -
Take inventory and restock on office equipment: Why? Under Section 179, Congress allows eligible businesses to write off the costs in the year the qualifying items are purchased and placed in service. (For more information on Section 179.) Another option is that businesses can take 100% bonus depreciation on certain kinds of equipment bought. This depreciation can apply to new as well as specific used equipment. (We have team members specialized in working with this topic. If you are interested, schedule a call with us today. Helping others save money is a passion of ours!)
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Carefully look for any areas to delay money coming in or accelerate money going out: This tax tip must be used with extreme caution. When you have the option, sometimes it is wise to hold on collecting money or sending invoices until after January 1st. This is because the money you receive will not be counted until the year it is received in. Additionally, you could accelerate or pre-pay expenses up to 12 months in advance (without a challenge, adjustment, or change by the IRS due to the Safe Harbor Rule). These payments may count towards write-offs or deductions. As we mentioned, keep the future in mind with decisions like these. Don’t make uninformed or rushed decisions that could end you in a disadvantaged place in future years.
Final Words
A common theme for all these tax saving/planning tips is to keep good records. Without your books in order, you won’t be able to know where you stand. For example, when you don’t have updated financials or projections of how the year will end it is difficult to build tax planning scenarios.
Bookkeeping can be a daunting task. Don’t be shy to ask for help. We have a brother company: Group 1826, that can address any and all of your bookkeeping needs. If you need a reliable, trustworthy, and high-quality bookkeeper, click here:https://group1826.com/contact/
If you have any questions regarding end of year or if you want someone to take the whole load off your hands- schedule a consultation call with one of our team members! (The first call is completely free)
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Disclaimer: This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. We encourage you to should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matters pertinent to your individual situation.
