Maicher CPA Pllc provides a full range of tax services to businesses.  The end of tax year, 2023, draws near.   Below are some tax strategies businesses might consider before year end.  

1. Utilize the Qualified Business Income Tax Deduction.  If your business is a pass-through entity (a sole proprietorship, an S corporation, LLC, or partnership) that passes its income and deductions down to its shareholders, partners, or owners to report on their personal returns, it might be possible to deduct 20% from its qualifying business income.   The QBI deduction is subject to several conditions, including the amount of taxable income. Maicher can advise you in these matters.  
2. Consider Funding a Retirement Plan. Establishing and funding a retirement plan for yourself and/or your employees can reduce taxes. The plan must be a “qualified plan” recognized by the IRS which in general allows deferment of taxes on earnings until the earnings are withdrawn. Common examples of such plans include: IRAs, 401(k)s and 403(b)s.
3. Identify Possible Tax Credits To Lower Business Income.  Common examples of tax credits include: hiring certain employees (e.g. those with certain disabilities), providing employee health coverage and undertaking certain kinds of environmentally friendly activities.  
4. Buy Equipment and Vehicles for Depreciation Deductions.  Depreciation deductions are available for certain purchases of business equipment, machinery, vehicles, and certain real estate. The rate that the deduction may be applied varies.  Sometimes the entire deduction can be taken in the first year of ownership and use. The most common types of such accelerated depreciation are Section 179 deductions.  Section 179 deductions allow immediate deduction of the costs of certain assets the instant the assets are used.  We can advise you as to the applicability of Section 179 to your acquisitions.  
5. Coordinate the Timing of Your Business Income and Expenses.  Timing income or timing expenses involves moving them from one year to another depending on what best reduces taxes.     Review possible expenses before the end of the year and prepay some of those amounts if it makes sense to reduce income for the current year.  Similarly, it might make sense to increase expenses and decrease income by making certain expenditures before year end (e.g. buying supplies.).
6. Consider Writing Off Bad Debts To Reduce Income.  If your business operates on the accrual method, review customer accounts before year end.  Identify customers unlikely to pay then consider writing off those amounts as “bad debts” so that they can be used to reduce business income.

Take-away:  Maicher has years of experience advising businesses on tax matters.   Call us today for an appointment to put your best strategy into action before 2023 comes to a close.  

Sources:

“2023 Tax Updates: What’s New On The Business Front As Year-End Looms,” Forbes. (November 9, 2023).

IRS Pub. – “Qualified Business Income Deduction” (March 17, 2023).