The last year has flown by, which means that next year’s tax season is right around the corner. As a business owner, you need to begin considering how you can save money when filing your tax return.
From tax deductions to tax credits, there are a variety of ways for businesses to lower their taxable income in time for tax season. To ensure your business starts the new year on a high, follow along as AA Tax & Accounting Services, LLC shares business tax tips you need to know.
Set up a retirement plan
Do you have a funded retirement plan for yourself or your employees?
Setting up and funding a retirement plan can save your business money on taxes. To benefit from a funded retirement plan, you need to make sure that it is a qualified plan recognized by the Internal Revenue Service (IRS) to allow deferment of taxes on earnings until the earnings are withdrawn.
This includes IRAs, as well as a 401(k) or 403(b). A qualified tax professional can assist you in determining which type of retirement plan best aligns with your business goals and needs.
Utilize tax credits
An effective way to lower your business income before tax season is to take advantage of the different tax credits available to you through the federal government. Tax credits are a way for the government to reward businesses doing things that affect the greater good.
Your business may be a candidate for tax credits for employee recruitment, green initiatives, disability initiatives, and more. Your business accountant can walk you through the list of tax credits available to you.
Understand tax write-offs
If you are planning to make any large purchases to benefit your business in the coming months, such as investing in new equipment, machinery, or vehicles, you may be able to take tax write-offs on these purchases.
Look into Section 179 deductions and bonus depreciation which can be utilized during the first year that a business owns and uses the vehicles, machinery, or equipment. If you’ve recently purchased any major assets or are planning to in the coming months, your business accountant can determine if you qualify for any related tax write-offs.
Deduct the cost of gifts
Depending on the nature of your business, you may provide customers or vendors with gifts — especially around the holidays. If you plan on gifting this year, keep all the related documentation because businesses can deduct up to $25 per person for the costs of gifts.
Reduce your taxable income
One of the easiest ways to lower what your business will owe come tax season is to reduce your taxable income. Spend some time towards the end of the year reviewing your accounts to check if there are any outstanding debts.
If you think any debts are unlikely to be paid, you can write off the amounts owed to your business as bad debts and deduct them from your business income.
Hire a tax advisor
Navigating tax season can be tricky, and this year is a bit trickier than most, with so many changes to tax credits and advantages for businesses. To ensure you’re getting the most money back and lowering what you owe, it can be extremely beneficial to hire a qualified tax advisor who can guide any decisions that may affect your business tax return.
Tax Consulting Services in Cedar City, Utah
We recommend consulting certified public accountants like AA Tax & Accounting Services when making any decisions or changes to your business tax return. We have the experience to guide businesses on the best strategies for maximizing their deductions and tax credits with our accountant services.
The AA Tax & Accounting Services team can help you execute the right tax strategies to save you money come tax season. Contact us to schedule an appointment.