So you never scheduled that tax consultation with your CPA, and now it's too late. Yikes!
While many tax planning strategies are typically implemented throughout the tax year, there are still several effective options available to small business owners after the year has ended. It's important to note that tax laws and regulations can change, so it's advisable to consult with a tax professional to ensure compliance with the latest rules. In this blog are some tax planning considerations for small business owners after the year has concluded.
Tax Saving Opportunities After December 31
Business owners have the opportunity to make contributions to retirement accounts even after the end of the tax year. For example, contributions to a Simplified Employee Pension (SEP) IRA can be made up until the business's tax-filing deadline, including extensions. This can provide a deduction for the previous tax year.
Health Savings Accounts (HSA)
If the business owner is eligible and has an HSA, contributions to the HSA for the previous tax year can typically be made up until the tax-filing deadline, including extensions. HSAs offer tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
While many businesses plan depreciation throughout the year, it's worth reviewing whether any additional accelerated depreciation options are available. Some assets may qualify for bonus depreciation or Section 179 expensing, providing opportunities to increase deductions for the prior tax year.
Take a close look at business expenses to ensure that all eligible deductions are claimed. This includes reviewing and documenting business-related expenses such as travel, meals, and entertainment. Ensuring accurate and thorough record-keeping can maximize deductions.
Some tax credits may be available to businesses after the year has ended. For example, businesses that hire certain targeted groups of employees may be eligible for the Work Opportunity Tax Credit (WOTC). Research and development tax credits and energy-related credits are other examples that may be available for review.
Estimated Tax Payments
Business owners should review their estimated tax payments for the prior year and make any necessary adjustments. Underpayment of estimated taxes can result in penalties, so it's important to accurately estimate the tax liability and make any additional payments if needed.
Who's your Tax Pro?
Given the complexity of tax laws and the unique nature of each business, seeking advice from tax professionals is crucial. Tax advisors can provide personalized guidance, helping businesses navigate the intricacies of the tax landscape and identify the most effective strategies for their specific situations.
To make the most of all available deductions for small business owners, Dillon Business Advisors implements a Team of 3 accounting, tax, and advisory professionals in small businesses to reduce the tax burden and keep more money in the business's coffers.
At Dillon Business Advisors, we work with owners just like you. Let’s schedule a call to start planning for your future.