Expert Tips on Year-End Tax Strategies for Small Business Owners

Before you know it, 12/31/23 will be gone, and we will be in 2024. 

In this episode, Mike focuses on year-end tax strategies for businesses. He emphasizes the importance of timely action for implementing various tax-saving measures before the end of the year. Key topics include prepaying expenses, managing income and deductions, using business credit cards for immediate deductions, and considering Roth conversions in low-income years. Mike also discusses strategies for supporting family members in lower tax brackets and making charitable contributions before year-end. 

Leverage existing tax laws and opportunities to optimize financial outcomes by tuning in!

[02:11] Prepaying Expenses

• IRS regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge, adjustment, or change by the IRS

[03:52] Stop Billing your Customers, Clients, and Patients

• Customers, clients, patients, and insurance companies oftentimes don't pay until billed
• Not billing customers and patients is a time-tested tax-planning strategy that business owners have used successfully for years

[05:30] Buying Office Equipment

• Bonus depreciation in 2023 is at 80%, but that will be reduced each year

[07:40] Use Your Business Credit Card

• You get a deduction when that item gets put on that credit card
• The day you charge a purchase to your business or personal credit card is the day you deduct the expense

[08:22] Don't Assume You Are Taking Too Many Deductions

• If your business deductions exceed your business income, you have a tax loss for the year
• If you are starting your business, you could very possibly have an NOL

[10:11] Convert to a Roth IRA

• Consider converting your 401(k) or traditional IRA to a Roth IRA, especially if you are in a down income year.

[13:34] Charitable Contributions

• To get an advantage for charitable contributions, you need to be taking itemized deductions

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Key Quotes:

"If you're running at a loss, you can carry forward those losses to offset future income." - Mike Jesowshek, CPA

"If you know you're going to pay something, rent's a great example, insurance a great example, you're going to need accurate bookkeeping no matter what." - Mike Jesowshek, CPA

"Do not buy things you don't need just to get a tax deduction. That is a lose-lose-lose situation." - Mike Jesowshek, CPA

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

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Podcast Website: https://www.TaxSavingsPodcast.com

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