As a business owner, you know that staying on top of your finances is no small task. But don’t worry—today, I’m going to hit 10 strategies to consider for your year-tax planning. No need to panic—we’re here to make taxes a little less taxing.
Let’s kick things off with something that sounds a bit boring but could save you a lot of money—reviewing your corporate structure. Whether you’re a sole proprietor, LLC, S Corp, or C Corp, your structure affects how you’re taxed. And trust me, tax laws are as dynamic as my wife’s wardrobe changes—always evolving and keeping us on our toes. Now’s the time to check in with your tax advisor and make sure your structure is still working in your favor.
Next up—retirement contributions. The end of the year is a perfect time to bulk up those contributions to your retirement plan. Whether it’s a SEP IRA, Solo 401(k), or your regular company plan, putting money into these accounts now could lower your taxable income. You don’t want to miss out on the chance to invest in both your business and your retirement at the same time.
Alright, business owners, let’s talk about something that’s not always top of mind—business transition planning. I know, it’s like planning your exit strategy from a party you don’t want to leave, but trust me, the earlier you plan, the smoother it’ll go. Whether you’re passing the torch to a family member, a co-owner, or even selling to a stranger (don’t worry, we’ll help you vet them), proper planning can save you a lot of tax headaches and ensure your legacy lives on. Think of it like preparing for a road trip—if you don’t map out your route, you might end up lost, with no snacks, and a much bigger tax bill.
On to wealth transfer. The holidays are coming, and no, we’re not talking about holiday gifts. But you can still give. Year-end gifting is a great way to reduce your estate tax burden while spreading a little cheer—whether to family or charities. You can gift up to $18,000 per person, tax-free. And don’t worry, gifting doesn’t mean you’ll be getting an ugly sweater in return. It’s tax-efficient generosity at its finest.
For all the business owners out there who like to invest in equipment, Section 179 is your friend. You can expense up to $1.22 million in qualifying property this year, so if you’re planning on purchasing equipment, why wait? Buy it now, and you might be able to deduct the full cost. It’s like buying a shiny new toy for your business—and getting a hefty tax break to boot.
Bonus depreciation is another key strategy. You can claim deductions on new or used property in the year it’s placed into service, and in 2024, that means 60% of the cost. Think of it as a massive ‘thank you’ from the tax code for investing in your business. But remember, the phase-out begins soon, so if you’ve been eyeing that new equipment, now’s the time to pull the trigger.
The Qualified Business Income (QBI) deduction is like finding a golden ticket to the tax savings factory—up to 20% of your business income can be deducted. But, there’s a catch—like with all good things in life, the QBI deduction comes with a few rules. You’ll want to keep an eye on your taxable income and be strategic about deductions. But don’t worry, if you do your homework, that golden ticket could be yours.
Alright, online sellers—this one’s for you. If you’re accepting payments through platforms like PayPal, Venmo, or Amazon, keep an eye out for the new 1099-K forms. The IRS wants to make sure every penny is accounted for, so if your business processes payments online, the threshold is $5,000 for 2024. Stay ahead of the game and get ready for these forms to show up like an uninvited guest at the tax party.
Let’s talk about going green—or at least saving green. If your business is considering energy-efficient upgrades or investments in clean technologies, there are plenty of tax credits to tap into. And if you’re investing in innovation, the Research and Development (R&D) tax credit is another great opportunity. These credits can help offset some of those upfront costs while helping your business become more eco-friendly or forward-thinking.
Finally, the Corporate Transparency Act. If your business is required to report its ownership structure, the deadline is fast approaching. Don’t let this catch you by surprise—get organized now so you’re not scrambling at the last minute. Think of it as preparing for a test. You’ll feel much better once you’ve studied ahead of time.
Those are the top 10 year-end strategies that could make a huge difference for your business. Remember, planning ahead isn’t just smart—it’s essential. And don’t forget, taxes don’t have to be a four-letter word. If you need help making the most of these strategies, Frame Wealth Partners is here to guide you every step of the way. Thanks for watching—and may your taxes be ever in your favor.
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