By: Joshua Finley
Running a business comes with financial challenges, and without an efficient strategy, it’s easy to lose money. This is why it pays to have an efficient business strategy that focuses on annual taxes. It’s a great way to gain a financial edge year after year.
The Effective Tax Strategies – Gear Up and Dive In
One good tax strategy can change your business’s bottom line. However, before you dive in and learn what the premier strategies are, there are a few steps that you’ll need to take to prepare for the journey. Here’s your roadmap for success:
- Be tactical and automate bookkeeping
- Open a business bank account
- Keep track of all business expenses
- Become a master of tax deductions
The final point is the important point because if you leverage the power of deductions, you could save money every tax season, and your business will have a greater opportunity to grow.
How to Start the Small Business Year-End Savings Bonanza
No matter if your business is new or established, you can trigger a year-end saving bonanza. Success awaits, so pull up a seat, take notes, and follow these steps.
Accelerate Deductible Expenses
Accelerating deductions can help you reduce your taxes during tax season. There are a few ways to pull this off. For starters, if you work on your own, you could wait until December before you start processing your invoices. You could also buy new equipment for your business in December instead of January to score a deductible.
If your business is about to move to a higher tax bracket, there are additional steps that you’ll need to take. Here’s the breakdown:
- Identify your capital gains
- Leverage your stock options
- Identify your deferred income
- Take advantage of a Roth IRA
Leverage Section 179
Section 179 for 2024 has had changes due to inflation. The deduction limit is now $1,220,00 for qualifying equipment, and the phase-out threshold is $3,050,000.
Bonus depreciation has changed as well. You’ll now get a 60 percent bonus if you service your equipment between Jan 1 and December 31.
Harnessing the Power of Section 179 – Getting the Deduction
This particular tax deduction is not automatic; it must be elected. To get started, you’ll have to submit a 4562 tax form to the IRS.
Boost Retirement Contributions
Contributing cash to an IRA is a smart way to reduce your taxable income, but there is a catch. How much you can save will greatly depend on the structure of the IRA. From a financial standpoint, a traditional IRA is the premier because it will gradually increase your income. However, it is not for everyone; if your income level does not meet the requirements, you won’t be able to deduct the contributions.
Get the Facts for Business Tax
If you need further assistance with tax savings, the team at Sandoval Tax can offer guidance. Visit www.sandovaltax.com to learn more about how they can help your business.
Disclaimer: “The information provided in this article is for educational purposes only and does not constitute legal or tax advice. Always consult with a qualified tax professional before implementing any strategies.”
Published by: Josh Tatunay
