Many small business owners start thinking about tax planning at the beginning of the calendar year in preparation for tax season. However, getting organized now with a tax professional can help you by finding opportunities to save on your small business taxes, as well as potential issues you may have missed before it’s too late to change them. These tips can help you fully prepare toward the end of the year and make it easier for you and your small business when you’re ready to file.
Ensure you have a good tracking/filing system in place.
Depending on the type of business you have, you may have already been filing quarterly taxes. But if you’re not as organized as you’d like to be, and you don’t have a bookkeeping team in place, you could be missing out on tax savings or accidentally increasing your tax liability. Now is a good time to check on your files and documents - are they where they should be? Are you documenting miscellaneous receipts that might be on your desk or in your car? Ideally, you want your important business tax information and receipts in one place; when it’s time for your tax appointment, you’ll have everything ready to go.
Don’t miss out on tax deductions or tax credits.
Common small business tax deductions include everything from payroll to applicable travel expenses to office supplies.
If your business is a pass-through entity, you may be able to deduct 20% of Qualified Business Income (QBI) - provided your taxable income is $182,100 or less as a single filer or $364,200 or less if you’re married filing jointly. Note that QBI is set to sunset in 2025 when certain Tax Cuts and Jobs Act (TCJA) provisions end.
With the holiday season approaching, your business may be charitably donating goods and services. If you are planning on deducting charitable contributions, be aware that there are specific rules as to what counts as a charitable donation and how much you’re allowed to deduct depending on your business type.
As a small business owner, you may be eligible for tax credits that could help reduce your overall tax liability. Credits may be available for health insurance premiums and “going green” through the use of electric vehicles. Discuss your options with a tax professional to see which tax credits you qualify for.
Don’t forget to contribute to your retirement plan.
Retirement plans like SIMPLE IRAs or individual 401ks are available for small businesses. If you haven’t contributed to your plan much during the year, you can do so now to maximize your
retirement savings and potentially lower your business taxable income. If you don’t have a retirement plan for your business, check out this IRA guide as a good place to start!
Small Business Tax Planning with Chatterton & Associates
As a small business owner, trying to keep all of your tax documents and applicable receipts organized, as well as knowing which credits and deductions to take, can be stressful. The team at Chatterton and Associates offers full tax planning, strategy, and bookkeeping services to help keep your business optimally running so that you can focus on your business needs.
The Team at Chatterton & Associates