📊Tax planning time again, part deux
Everyone is winding down for the year.
Time for holiday parties, ugly sweaters, and Secret Santas 🎅 with suspicious budgets. But while some of you are debating whether to spike the office cider, some of us still have anxiety about tax time.
Last week I gave you 6 year-end tax moves for individuals. This week it's time to help the business owners. If you're an LLC hoarder, the S Corp dabblers, or part of the “what even is accrual accounting” crowd, this one is for you.
So, before you O.D. on eggnog and you return your "White Elephant" Target🧤mittens, let’s get serious for a second (I'm sorry).
Here are 5 tax-smart moves business owners should make before Dec 31:
5 Tax Planning tips for Businesses
🧾 Prepay Expenses (Yes, Even on Credit Cards)
↳ Pay January’s expenses in December and write them off now.
↳ Even on a credit card. IRS says it counts when you charge it, not on the date you pay the credit card balance.
↳ Think rent, software, contractors (but don't be cute. Not a 3-year supply of logo hoodies.)
🧮 Defer Income
↳ Hold off on December invoicing? Push it to January to dodge 2025 taxes.
↳ Only works for cash-basis businesses. Accrual folks? No deferral for you.
↳ No funny business. The check has to hit in January.
🧰 Buy Equipment (Section 179 + Bonus Dep)
↳ New laptop? Espresso machine? $90K Ford F-250 for your “construction biz”?
↳ Deduct it all this year, as long as you are using it and it’s in service by 12/31.
↳ If it’s still in a box or not delivered by January 1st, no🎲dice.
💼 Start a Company Retirement Plan
↳ SEP, SIMPLE, or Solo 401(k) = big deductions. Bigger than any IRA.
↳ Plus, you might qualify for a tax credit just for setting it up.
↳ Yes, a credit. Meaning dollar-for-dollar tax reduction, not just a deduction.
🏛️ Reevaluate Your Tax Structure
↳ Big year? It might be time to upgrade from LLC to S Corp.
↳ S Corps can save thousands in self-employment tax, but it’s not for everyone (no matter what the TikTok gurus tell you).
↳ Good news: you can retroactively elect S Corp status in 2025 (if you act soon).
Handle your tax moves now, because for some of you, January will be too late.