2023 YEAR END TAX TIPS FOR SMALL BUSINESS

2023 YEAR END TAX TIPS FOR SMALL BUSINESS

Stock up and pre-pay expenses: Claiming a deduction for eligible business expenses can save money, as deductions reduce your taxable income for the year. If you have any cash sitting around, or you can reasonably use your credit line or a business credit card for purchases, stocking up on supplies or pre-paying certain expenses could give you a larger deduction. For example, you can replenish office supplies or any supplies you use regularly, stock up on inventory, especially if you’re able to find it at a discount, pre-pay insurance coverage for the next year, or switch from a monthly to yearly payment if you use subscription services.

Set up a 401(k) plan for employees: Setting up a 401(k) for yourself and your employees is another way to save on business taxes. You can claim a tax credit for your business for the cost of setting up and administering a 401(k) plan, up to $500 a year for each of the first three years the plan is in existence.

Write off bad business debts: If you have any bad business debts, you can write them off as a loss on your taxes. A bad debt is a debt that is considered uncollectible and has been written off as a loss on your books.

Write off or write down obsolete equipment and inventory: If you have any obsolete equipment or inventory that you can’t sell, you can write it off as a loss on your taxes. If you can sell it, but it’s worth less than what you paid for it, you can write it down as a loss on your taxes.

Give employees bonuses or gifts: You can give your employees bonuses or gifts as a way to reduce your taxable income. Bonuses and gifts are tax-deductible expenses for your business, and they’re not taxable income for your employees if they’re under a certain amount.

Consult with a tax expert: You may want to consider hiring a tax expert to help you with filing business taxes if it’s your first time doing so. A tax expert can help you understand what tax credits you qualify for and how to claim them. They can also help you identify deductions that you may have missed and help you avoid making mistakes on your tax return.

Keep accurate records: Keeping accurate records is important for maximizing your tax deductions and credits. Make sure you keep track of all your business expenses and income throughout the year, and keep receipts and invoices for all your purchases.

Be aware of tax changes: Tax laws change frequently, so it’s important to stay up-to-date on any changes that may affect your business.

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