Running a small business comes with its own set of challenges, and taxes shouldn’t be one of them. In 2024, let’s break down tax planning for small businesses into simple tips and best practices:

1. Keep Immaculate Records

Why it matters: Good record-keeping is the foundation of effective tax planning. Keep track of your income, expenses, receipts, and any important financial transactions. This will make tax time a breeze and help you claim all the deductions you’re entitled to.

2. Leverage Small Business Tax Deductions

What to consider:

• Business Expenses: Deductible business expenses can include office supplies, travel, and even a portion of your home office expenses.
• Startup Costs: If your business is just starting, you may be able to deduct certain startup costs.
• Vehicle Expenses: If you use a vehicle for business purposes, you can deduct related expenses. Keep a mileage log to track business-related travel.

3. Take Advantage of Section 179 Deduction

What it is: Section 179 allows you to deduct the full cost of qualifying equipment and software purchased or financed during the tax year.

Why it matters: It’s a way to get a significant deduction upfront, rather than depreciating the asset over several years.

4. Understand Pass-Through Deductions

What it is: Many small businesses, like sole proprietorships, partnerships, and S corporations, are pass-through entities. This means business income “passes through” to the owners’ individual tax returns.

Why it matters: Depending on your income, you may qualify for the Qualified Business Income Deduction, allowing you to deduct up to 20% of your business income.

5. Stay Informed About Tax Law Changes

What to do: Keep yourself updated on any changes to tax laws that might affect your small business. Laws can change, and staying informed ensures you’re taking advantage of all available benefits.

6. Contribute to Retirement Plans

What it is: Contributing to a retirement plan, such as a Simplified Employee Pension (SEP) or a Solo 401(k), can offer tax advantages for small business owners.

Why it matters: It not only helps you save for the future but can also provide tax deductions for contributions.

7. Work with a Tax Professional

Why it matters: Tax laws can be complex, and a tax professional can help you navigate them. They can provide personalized advice based on your specific business situation, ensuring you maximize your tax savings.

Conclusion

Tax planning for small businesses doesn’t have to be daunting. By keeping accurate records, understanding deductions, and staying informed about tax laws, you can make tax season a smoother process. If in doubt, seek the assistance of a tax professional to ensure you’re making the most of your small business tax opportunities.

Here’s to a financially successful 2024 for your small business!

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Dan W. Nowell Wealth Management and not necessarily those of Raymond James. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.