For many small business owners, tax planning is only a twice-yearly endeavor. If you’re one of them, do you know you could be missing great opportunities? With the year almost ending, you should consider reevaluating your finances and taking steps that would benefit your tax bill.
Here’s how to make tax planning in Salt Lake City this year easier:
Evaluate your Business’s Profitability
If this year is shaping up to a great one for your business, consider saving taxes while you expand. You could buy equipment up to $510,000 rather than reduce what you spent over several years. You could likewise save more for retirement while reducing your taxes via qualified retirement plan contributions. You could also consider growing your team, keeping in mind the tax breaks when you hire veterans or those from other qualified groups.
Reassess Payments for Income Tax
If you are paying income taxes on your profits via estimated taxes, you could still get your payments right in time for January. But be sure to avoid underpaying, which could lead to hefty tax penalties, or overpaying.
Consider Issuing Stocks
If your business structure is a C corporation in the wholesale, retail, technology, or manufacturing industry, you might be eligible to issue stocks, which will eventually enable your shareholders to receive tax-free capital gains. This holds true if you start issuing stocks now and shareholders hold them for five years or more. Shareholders could acquire stocks in exchange for services, property, or money, which you could then use to reward your employees and get more investors.
Extend Your Research and Development Efforts
Whether you conduct R&D to find more effective business processes, perhaps by investing in specialized software, or you develop new products, you could be eligible for tax credits. These credits could help you cover the costs of research and development efforts.
Before the year ends, do not miss the chance to reassess your tax position. This will help you determine specific strategies that you could use to optimize your business’s tax bill.