Key Takeaway
You don't have to choose between your financial goals. Start by taking advantage of available employer benefits, then balance your remaining savings between short-term priorities and long-term financial growth. Keep money needed in the near term in an appropriate low-risk option, and consider the tax implications before using long-term savings.
It’s not too late for business owners to make strategic tax deductions before the end of this year. Here’s how:
- Prepay expenses using the IRS safe harbor allowing cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance. Qualifying expenses include lease payments on business vehicles, rent payments on offices and machinery, and business and malpractice insurance premiums.
- Stop Billing Customers, Clients, and Patients until after December 31, 2023 if you are a cash based business operating on the calendar year. Customers, clients, patients, and insurance companies generally don’t pay until billed and this enables you to postpone to 2024 paying taxes on your December 2023 income.
- Buy office equipment. Qualifying Section 179 and bonus depreciation purchases include new and used personal property such as machinery, equipment, computers, desks, furniture, and chairs (and certain qualifying vehicles).
- Use your credit cards correctly. Consider using your credit cards for last-minute purchases of office supplies and other business necessities prior to Dec. 31 and if you operate your business as a corporation and are the personal owner of the credit card, be sure the corporation reimburses you before midnight on December 31
- Qualified improvement Property (QIP) is any improvement made by you to the interior portion of a building you own that is non-residential real property. QIP is 15-year property, eligible for immediate deduction using Section 179 expensing, and 80 percent bonus and MACRS depreciation. To get the QIP deduction in 2023, you need to place the QIP in service on or before December 31, 2023.
We can help you take advantage of these last minute deductions with a free Discovery Session. Just visit New Client Application or https://calendly.com/d/46r-49m-93k/10-minute-intro-call.
