Year-End Tax Planning Tips Every Business Owner Should Know
As the year ends, businesses have a chance to review their finances. They can make smart moves to reduce tax liabilities and position themselves for success.
Be Proactive, Not Reactive
Year-end tax planning isn’t just about filing on time. It’s about taking advantage of deductions, credits, and strategies before December 31st.
What This Blog Covers
This blog outlines essential year-end tax planning tips. These strategies help you maximize savings and stay compliant with tax regulations.
Review Income and Expenses
Look at your income and expenses for the year so far. If your income is higher than expected, consider accelerating certain deductible expenses, such as equipment purchases, employee bonuses, or office supplies, before the year ends. This strategy reduces taxable income and may help you stay in a lower tax bracket.
Take Advantage of Section 179 and Bonus Depreciation
If you plan to purchase equipment or technology, Section 179 allows you to deduct the full purchase price of qualifying assets. Bonus depreciation offers additional savings opportunities, especially for larger purchases. These incentives can provide significant year-end tax relief.
Maximize Retirement Contributions
Contributing to retirement accounts like a SEP IRA, SIMPLE IRA, or 401(k) is a great way to reduce taxable income while building long-term financial security. Ensure contributions are made before deadlines to maximize your tax benefit.
Review Tax Credits
Don’t overlook the Work Opportunity Tax Credit (WOTC), Research & Development (R&D) Credit, or Small Business Health Care Tax Credit. These credits directly reduce the amount of tax you owe, offering even greater savings than deductions.
Manage Accounts Receivable and Payables
Consider delaying billing until January to defer income to the next tax year. Likewise, pay outstanding bills before December 31st to increase deductible expenses. This simple strategy can help balance your current and future tax obligations.
Plan for Estimated Taxes
If you’re required to make quarterly estimated tax payments, review your expenses against your income. Making adjustments before year-end can prevent underpayment penalties and cash flow issues.
Meet with Your CPA or Advisor
Year-end is the perfect time to schedule a tax review with a CPA. They can help identify opportunities specific to your business, ensure compliance with the latest laws, and provide personalized advice that software alone can’t match.
Final Thoughts
Year-end tax planning can significantly impact your business’s financial outlook. By taking proactive steps now, maximizing deductions, reviewing credits, or contributing to retirement plans, you can reduce your tax liability and start the new year strong.
📌Schedule a consultation with JoQuin Associates today to create a tailored year-end tax strategy that protects your bottom line and sets your business up for long-term success, or contact us here to get started.