Forward-thinking is a must in business. As forward-thinking goes, taxes are more than a “once a year” obligation. You need to optimize your taxes All. Year. Long.
You can implement numerous practical strategies in your business: Accommodating estimated payments in your budget, deduction-minded travel planning and timing your expenses, to name a few.
Tax-optimizing your business starts by knowing what the IRS has made available to you as a business owner. But even more than that, it’s knowing how to take advantage of what’s available… and Uncle Sam has made sure that this is not easy.
Getting into planning mode requires that you actively carve out time in your busy business owner schedule. That’s whether you’re facing doing your own taxes (do not recommend), or meeting up with your favorite tax pro (wink, nudge).
Let’s start that conversation here:
The TCG Accounting Team’s
“Real World” Business Strategy Note
Planning for the Rest of 2023
“Luck had nothing to do with this. It was good management and hard work.” – the Goose from Charlotte’s Web
Now that covid-related tax relief is fading for most companies, it’s worth honing in on tried-and-true tax strategies for your small business. After this years taxes are filed comes the rest of 2023, and determining the best plan for this year and beyond.
But First Thing Is First: Filing This Year
Make sure your documentation is on hand for your business expenses. Take a look at your company’s return(s) from last year. Think about what you and your company did through 2022 to qualify for evergreen tax concerns – including capital purchases, payroll, maybe a home office deduction and others. We can also discuss this together.
A few general reminders regarding 2022 taxes:
- You are not yet responsible for kicking out IRS Form 1099-Ks for transactions exceeding $600. The IRS put that requirement off a year.
- Net operating loss carryforwards are again capped at 80% of your taxable income after a brief reprieve in previous years. The thresholds for excess business losses are $270,000 , $540,000 if Married Filing Jointly.
- After December 31, 2021, you have to amortize your research and development expenditures over five years.
- The first-year bonus depreciation deduction was 100% through the end of 2022. As of 2023, it’s scheduled to reduce every year.
- As of last year, the amount of net business interest expense you can deduct from taxable income is further reduced — but there is an exemption for companies with average gross receipts of $27 million or less for the three most recent tax years.
- Standard mileage rates for 2022 were 58.5 cents per mile from January 1 through June 30, and 62.5 cents per mile from July 1 through December 31.
Speaking of which, your mileage may vary, since your deductions depend on the circumstance of your small business. Check with us about this.
Ok, now looking ahead
The end of tax season doesn’t mean it’s the end of the tax year. There’s a lot of 2023 left to do business tax planning. What should you be looking at in general?
Business tax-filing deadlines are your first planning details. Through the rest of 2023, there are more than a dozen federal ones beyond Tax Day on April 18, depending on your business structure. Check out the IRS filing schedule for this year here, along with extension deadlines and details — and you can always check with us, too.
Beyond just knowing when and what you’ll have to file, having that schedule will help you budget throughout the year if you deal with obligations like paying quarterly estimated taxes.
Planning strategically often makes tax liabilities a little easier to swallow — and can make saving taxes and improving your business easier, period. Consider:
- Is 2023 the year to restructure your company? People in some partnerships, LLCs, and S corporations get a 20% tax deduction on their “qualified business income.” As this break may or may not disappear three years from now, maybe now’s the time to take advantage.
- Hiring family members can save on taxes if you follow IRS income tax thresholds. Under some circumstances, hiring your spouse can let you double your retirement plan contributions, though you will owe payroll taxes on their income.
- Starting this year (thanks to the SECURE 2.0 Act), small companies can get a juicy credit for starting a pension plan. You can also match employee contributions on a Roth on an after-tax basis, among other changes. Details also include some caps and phase-outs.
- Think green: The Inflation Reduction Act turned energy saving into a tax-saving move for some companies. Commercial buildings now have to cut energy use by only 25% (used to be 50%) to get a deduction. You might also be able to snag up to a $7,500 tax credit if you buy certain electric vehicles for your company.
Further down the road
Make some preliminary notes for four or five months from now, when you’ll be closing in on the final quarter of 2023. That’s the time to put your plans to action and accelerate, or defer, into 2024 income or expenses. It all depends on your tax situation, and we can help you decide.
And we’ll keep you up to date on tax developments that affect your business as the year progresses, such as the increasingly tricky rule about far-flung tax jurisdictions and remote workers. Taxes never stop — so our tax planning shouldn’t, either.
We’re here to help you build the best future possible for your business. That includes setting you up for success, both during tax season and throughout the rest of the year.
Always here to help,
The TCG Accounting Team