Develop a Customized Financial and Tax Plan
As we wrap up 2023, it’s important to take a closer look at
your tax and financial plans and discuss
steps to reduce taxes and help you save for your future. With the current
political climate, there has been minimal tax legislation. Looking to the
future, the potential for change is on the horizon, and we continue to closely
monitor any potential tax legislation and update you accordingly.
We’re here to help explain tax and financial planning
opportunities. Please contact us at your earliest convenience to discuss your
situation so we can develop a customized plan. In the meantime, here’s a look
at some issues impacting small businesses to consider as we approach year-end.
Analysis of your financial statements
Look at where your business is positioned with income and
expenses to close out the tax year. This may mean getting caught up on your
bookkeeping to have a better picture of where your tax situation stands. We can
help you analyze your financial statements for tax savings and planning
Deferral of income and accelerating expenses
Many times, there may be strategies such as deferral or
acceleration of income or prepayment or deferral of expenses, that can help you
save taxes and thereby strengthen your financial position. For example, in
terms of property and equipment purchases, you may benefit from making these
purchases before the end of the year. Many purchases can be completely written
off by businesses in the year they are placed in service. Plus, there are
tax-favorable rules that permit qualified improvement property to qualify for
15-year depreciation and, therefore, also be eligible for 80% first-year bonus
depreciation. The percentage for first-year bonus depreciation is set to
decrease to 60% for 2024 unless Congress passes legislation. Thus, it’s
important to consider the timing of your capital purchases. Let us help you
receive the best tax treatment.
As you enter the holiday season and have more social
gatherings with your customers and employees, keep in mind the rules for
business meal deductions. The 100% deduction for restaurant meals is not
available for 2023, but there are circumstances where certain business meals
may qualify for a 100% deduction. It is important to properly categorize your
Net operating losses (NOLs)
If your deductions for the year are more than your income
for the year, you may have an NOL. In general, you can use an NOL by deducting
it from your income in other year(s), but it is limited to 80% of your taxable
business income in any one year. We can advise you on any potential tax
benefits and limits.
Energy tax incentives
There are many tax incentives to encourage businesses to
decrease their carbon footprint and become more environmentally sustainable.
When certain criteria are met, businesses may be able to claim tax credits for
items such as:
produced from certain renewable sources (including geothermal, solar and wind
• Energy efficient
home improvements (only available to eligible contractors and manufactured
• Alternate fuels
In addition, businesses may be eligible for a tax deduction
based on the energy savings generated for qualifying energy efficient
commercial building property. The rules are complex, and careful research and
planning now can be beneficial.
Beneficial ownership interest (BOI) reporting
The Corporate Transparency Act (CTA) requires the disclosure
of the beneficial ownership information of certain entities to the Financial
Crimes Enforcement Network (FinCEN) starting in 2024. This is not a tax filing
requirement, but an online report to be completed if applicable to FinCEN.
There are severe penalties for businesses who willingly do not comply with the
Additional tax and financial planning considerations
• Employee retention
credit (ERC) –– The IRS warned employers to be cautious of third parties taking
improper positions related to ERC eligibility, as claiming the credit
inaccurately can result in severe consequences. We can help you appropriately
navigate the ERC.
contributions –– For tax year 2023, the maximum allowable contribution
deduction is limited to 10% of a corporation’s taxable income. Flow through
entities’ charitable contributions may be limited based on the owner’s taxable
income. Careful planning is needed to capture the tax benefit potential of
between business and the owners –– Transactions between a business and its
owners carry significant tax considerations. This includes aspects such as
loans, distributions, and salaries. Our expertise lies in structuring these
elements in a manner that is most beneficial from a tax perspective.
• Partnership audit
and adjustment rules –– Changes to the partnership audit and adjustment rules
have been in effect for a few years but we are still seeing some partnerships
and their partners blindsided at the unpleasant consequences that can arise
from these rules. Careful planning today can help mitigate any unfavorable
consequences to both the entity and the partners themselves.
Also, be aware that even if your business isn’t a
partnership, you’ll want to evaluate the effect these rules could have if
you’ve invested in any partnership.
• IRS Forms K-2 and
K-3 –– These forms can require much effort and potentially apply to even
smaller entities. Let’s discuss how these schedules apply to your situation and
strategize to comply with this important requirement.
• Digital assets and
virtual currency –– The sale or exchange of virtual currencies, the use of such
currencies to pay for goods or services or holding such currencies as an
investment, generally have tax impacts –– and the IRS continues to increase its
scrutiny in this area. We can help you understand any tax and investment
• State and local tax
considerations –– Businesses have numerous state and local tax matters to
consider for compliance and planning purposes, including where income and sales
are subject to tax, sourcing of income and the application of elective taxes
that many states have for partnerships and S corporations. Let us help you with
your state and local income tax needs, including sales/use and franchises
• Preparing for
disasters –– Do you have a disaster recovery plan in place for your business
and, if so, have you updated it recently? We can help you review your plan,
especially as it relates to financial information.
• Retirement plans ––
Have you revisited your company’s retirement plan lately? Recent legislation
has provided new opportunities to consider. Let’s look at the many retirement
savings options to make sure that you are taking advantage of tax deductions as
well as providing ways for employees (and owners) to save for retirement.
• Estimated tax
payments – Let’s review estimated tax payments and assess any liquidity needs.
Year-end planning equals fewer surprises
Whether it’s working toward a tax-optimized business
succession plan or getting answers to your tax
and financial planning questions, we’re here for you. lease contact our
office today at 919-377-1097 to set up your year-end review. As always planning
can help you to minimize your tax bill and position you for greater success.