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Jan. 1, 2023-
Many business owners find they can plan their futures, operate their businesses more efficiently year-round, and take maximum advantage of tax savings when they file their returns.
Ask your tax advisor about these eight strategies:
1. If you need equipment and the price is right, make your purchases.
You can take advantage of Section 179 deductions.
Section 179 of the IRS tax code is an incentive to stimulate economic growth that encourages companies to invest in themselves by purchasing equipment and software. It allows businesses to write off or deduct such purchases bought or financed in the tax year. The amounts are deductible from the gross business income.
For example:
Your business can deduct the full cost of equipment — either new or used up to $1,080,000 — from 2022’s taxable business income.
So again check with you tax advisor or visit: https://www.irs.gov.
2. Enhance your retirement account.
Many baby boomers have learned about retirement the hard way because they weren’t proactive. Retirement has come before they knew it.
It’s much easier to make contributions to a qualified retirement plan periodically throughout the year instead of waiting until the last second.
Again, the IRS-information source to start: https://www.irs.gov.
3. Include a vacation on your business trips.
Personal expenses for recreation, of course, aren’t deductible. But business expenses are deductible eight ways.
4. Look for reasons to entertain your customers.
If you can have a substantial business discussion, fully 50 percent of the entertainment and meal expenses qualify as write-offs. A husband-wife business team will find this to be a wonderful practice.
5. Entertain your employees.
You can celebrate holiday occasions, such as July 4th or Labor Day, and deduct 100 percent of the expenses if you include all employees. (Again, ordinarily, only 50 percent of business entertainment expenses are deductible.)
You can write off minor repairs. But know the difference between repairs and improvements.
6. If you forecast an S-corporation loss, plan to recoup your money.
S-Corp shareholders can deduct losses up to their stock value. So if you’re forecasting a loss this year, increase your basis in your stock, if necessary to avoid a big hit.
In such a loss, you have two options — lend money to the S corporation or add capital to it.
7. Launch a startup.
You can write off the expenses in starting your business.
Note: Turning a hobby into a business can be tricky. You must be able to demonstrate your hobby has become a business with the goal of earning profits.
Documentation counts. You can’t deduction a loss otherwise. If you can provide documentation, the IRS will penalize you under its “hobby loss” rules.
8. Make repairs.
You can write off minor repairs. But know the difference between repairs and improvements. It might seem odd, but the IRS will treat painting the premises or major overhauls as improvements, which aren’t deductible.
From the Coach’s Corner, more tips:
11 Payroll and Tax Tips for Small Businesses — To stay competitive in this difficult marketplace, it’s vital to be proactive on your taxes.
4 Tax Tips for Your Home Office Write Offs — The best tip I ever got from a CPA was to move my firm from a rented office space to my home. But it was important to understand the tax code for qualified write offs.
Keys to Protect Yourself from Skyrocketing Trend – Tax Identity Theft — Tax identity theft is increasingly victimizing Americans, according to the Internal Revenue Service. As many as 1.5 million Americans were hit by tax-refund fraud in 2013, according to IRS Special Agent Kenneth Hines in a 2014 published report.
Financial Tips for Taking the Plunge to Buy a Business — So you’ve decided to take the plunge in buying a business. Congratulations. I salute such bravery. Owning a business represents one of America’s great fundamentals — our free-enterprise system. You’ll have multiple financing options.
“The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”
-Will Rogers
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