Articles

September 01, 2023 | Posted in:

Five Business Tax Planning Ideas for Fall

As summer comes to a close, fall is a great time to start looking at ways to cut your business’s 2023 tax bill. Consider these ideas;

  • Review employee benefits. Benefit programs are often one of the largest expenses in small business. An annual review of health, dental, vision and retirement benefits can not only reduce expenses, but can also be a source of tax benefits for your business. Specific to retirement plans, conduct a review of the available alternatives and consider if a different approach is more appropriate for your situation. Remember there are lots of options, including Roth 401(k)s, Traditional 401(k)s, SIMPLE IRAs, SEP IRAs, and defined benefit plans, just to name a few. Pay special attention to any ownership contribution limits.
  • Plan equipment purchases. You may be able to take advantage of tax savings if you purchase business equipment and have them in service before the end of the year. In 2023, you can expense up to $1.16 million worth of purchases of qualified equipment. Given long lead times on some equipment, now is a good time to start planning so the equipment can be officially up and running by December 31st.
  • Review any changing tax legislation. Every year brings change or suggested change to the tax landscape. Here are three of the biggest changes to consider this summer:
    • New electric vehicle credit. Businesses that purchase a qualified commercial clean vehicle may qualify for a clean vehicle tax credit up to $40,000. There is no limit on the number of credits your business can claim, although the credits are nonrefundable.
    • New Form 1099-K reporting. Your business will receive a Form 1099-K from each credit card company and third-party payment processor from whom you receive $600 or more in payments in 2023. This may add some complexity to next year’s tax return, so start planning now to be prepared when filing your 2023 return.
    • New retirement plan benefit. If your business does not have a retirement plan, setting up a retirement plan is more affordable thanks to new rules. A tax credit equal to 100 percent of administrative costs is available for up to three years for qualifying businesses that set up new plans. Another credit is available based on your employee matching or profit-sharing contributions.
  • Conduct a periodic business organizational review. Changes in your business may cause you to consider an organizational change. Remember, tax rules for partnerships, sole-proprietors, S corporations, and C corporations vary dramatically. So once a year, spend some time considering whether your current structure still makes sense. This review could also include future planning for ownership changes, or adjustments to your current accounting methods. This review can have a tremendous impact on the long-term tax liability of your business.
  • Understand interstate tax risks. If you conduct business in more than one state, your tax review should include a review of state tax liability obligations, as states are getting more creative than ever at putting their claws into your business activity. As long-standing interstate commerce rules become disregarded, you need to understand and plan for any potential tax risks in this area.

Please call us if you have any questions about these tax-saving tips or any other area of your business.

Author:

Empowering business owners and individuals in South Jersey and Philadelphia to feel confident through proactive accounting and advisory solutions.

About Us →    Our Solutions →    Follow @AlloyCPAs on Twitter →