You are probably getting lots of advice on how to run your business. But what if thinking ahead for year-end tax planning makes the difference in how successful your year can be? This could be the key to putting more money back into your business and setting yourself up for a fantastic year ahead.
What’s in It for You?
Let’s cut to the chase. Smart tax planning can help you avoid nasty surprises when it’s time to file and get a handle on your cash flow for the coming year. It can also potentially reduce what you owe Uncle Sam
Sounds good, right? So, let’s dive in and see how we can make this work for your manufacturing business.
Getting Ready for Your Tax Planning Session
Think of tax planning as preparing for a big project. You need the right plan and materials to get started. In this case, that means:
- Your business forecast for the rest of the year
- Your latest paystub with year-to-date info
- Any investment income summaries
The more info you can bring to the table, the better we can tailor our solutions to your specific situation. It makes the job easier for you and your tax advisor.
To Buy or Not to Buy: That is the Question
I bet you’re wondering, “Should I splurge on that new piece of equipment to save on taxes?” It’s a great question, and the answer is… it depends.
Here’s the deal: In 2024, you can depreciate 60% of the cost for most equipment and tools immediately with bonus depreciation. Plus, Section 179 lets you fully depreciate most equipment in the year you buy it. But remember, this only makes sense if the equipment is something your business really needs. No need to purchase new equipment just to save on some taxes.
As for vehicles under 6,000 pounds, keep in mind there’s a cap of $20,400 for depreciation in 2024. So don’t expect to write off that fancy new truck all at once!
Supercharging Your Retirement (and Your Tax Savings)
Now, let’s talk about one of my favorite strategies: beefing up your retirement contributions. It’s a win-win! You’re saving for the future and reducing your tax bill at the same time.
There are lots of options out there, from SEP IRAs to 401(k)s, and we can help you figure out which one fits your business best. Plus, if you’re starting a new plan, you might even qualify for a tax credit to offset the setup costs.
Hidden Treasures: Tax Credits You Might Be Missing
Here’s where it gets interesting. There are several tax credits that many business owners don’t know about. For example:
- If you’re developing new products or processes, you might qualify for the Research & Development Credit.
- Expanding and creating jobs? Look into Jobs Creation Tax Incentives from states and cities.
- Hiring veterans or other individuals from certain groups? Check out the Work Opportunity Tax Credit.
These are just a few examples. We’d love to sit down with you and see which credits could apply to your specific situation.
Staying Ahead of the Game: 2024 Tax Changes
There are some changes coming in 2024 that you should know about. Things like increased contribution limits for retirement accounts and changes to standard deductions. Your tax advisor can go over how these might affect your specific situation.
What’s Next? Let’s Plan
Ready to turn tax planning from a chore into a powerful tool for your business? Here’s what I suggest:
- Let’s set up a time to meet. We’ll bring the tax expertise, you bring your business knowledge, and together we’ll create a plan that works for you.
- Start gathering those financial documents we talked about earlier. The more prepared you are, the more we can accomplish.
- Think about your goals for the coming year. Where do you want your business to be this time next year?
We aren’t trying to tell you how to run your business, but combining your vision for your business with our tax knowledge to create a plan can exponentially help you achieve your goals.
Ready to engineer a more profitable future for your business? Connect with us! Let’s grab a coffee and start planning. Your future starts now, and we are right there with you. Let’s build it together.
By Daniel Scott (Zanesville Office)