As we approach the culmination of 2023, business leaders are confronted with an array of critical decisions that can significantly impact their tax liabilities and overall financial health. The interplay of income deferral, strategic spending, and proactive tax planning becomes paramount. Here, we unravel eight strategies to guide your business through the intricate landscape of year-end tax planning.
1. Deferring Income and Expenses:
- Adjust your tax position by strategically deferring income and expenses. Analyze when revenue was earned to decide whether it should be attributed to this year or the next. Utilize the cash or accrual system based on your business structure, optimizing deductions or accelerating efforts accordingly.
2. Investing in Equipment:
- Leverage IRS Section 179 deduction to deduct the entire purchase price of equipment, tools, and technology for your business. The Tax Cuts and Jobs Act of 2017 allows a deduction of up to 100%, providing an advantageous opportunity to reduce taxable income.
3. Contributing to Retirement Plans:
- Encourage employees to maximize contributions to workplace retirement plans before December 31. Capitalize on personal tax deductions while fostering a secure financial future. Stay abreast of the annual contribution limits for 2023.
4. Maximizing Energy Tax Credits:
- Explore tax credits for energy-efficient initiatives, from vehicles to building upgrades and solar investments. The Inflation Reduction Act of 2022 extended these credits, offering a dual benefit of tax advantages and positive environmental contributions.
5. Coordinating with Remote Employees:
- Navigate the complexities of remote work by addressing potential tax responsibilities for employees working in different states. Stay compliant with payroll tax regulations, report health insurance amounts accurately, and explore tax incentives for job creation in diverse locations.
6. Anticipating New 2024 Tax Benefits:
- Familiarize yourself with the enhanced small business research and development (R&D) tax credit and extended Affordable Care Act’s premium subsidies. Consider how these changes align with your business goals, potentially influencing budget allocations.
7. Preparing for More Tax Audits:
- Recognize the likelihood of increased IRS enforcement and audits, particularly with the additional funding allocated by the Inflation Reduction Act. Ensure your tax planning is meticulous, and be prepared for potential changes in state payroll taxes.
8. Meeting with Your Tax Planner:
- Schedule a meeting with your tax advisor to review bookkeeping, estimate tax obligations, explore deduction opportunities, and discuss implications of new laws. Lay the groundwork for a proactive tax strategy as you transition into 2024.
Elevate your business’s financial strategy with Boa & Co’s expert guidance. Connect with us at 1300 952 286 or via email at info@boanco.com.au. Visit our office at Level 2, 7 Railway Street, North Tower, NSW 2067 Sydney, NSW, Australia 2067. Explore the possibilities at www.boanco.com.au.