Are You Giving Your Hard-Earned Money Away?
With 2022 coming to an end, self-employed individuals and businesses are looking for ways to reduce their tax bills. One of the methods is to start by pre-paying your expenses such as pre-paying rent, insurance and other expenses that you typically have to incur by first quarter of the following year. For instance, you can write and mail a check for your office rent for Q1 2023 on New Year’s Eve. This way, your landlord gets three months’ rent in advance, and the amount you pay will be taxable for 2022.
Another straightforward way for businesses who report their income on cash basis is to stop billing customers until December 31, 2022. This way, you can move the income you earn during this period to 2023 and not get taxed for it this year.
If you need to invest in new machines and equipment, you should purchase what you need and place it in service before end of the year. With this move, you can qualify for bonus depreciation and take advantage of 100% deduction.
Another tax strategy to consider is by charging legitimate business expenses to your business credit card. If you charge your business expenses to your “personal” credit card, you can get reimbursed for them by your corporation. However, you’ll need to submit an expense report and return the payments before midnight on December 31, 2022.
When it comes to tax planning, the most common mistake to avoid is to implement tax strategies blindly without understanding your tax bracket and your effective tax rate. Blindly implementing tax saving strategies could hurt your cash flow position if you are not careful. Before applying these last-minute income tax deduction strategies, we recommend speaking to an experienced CPA to guide you and assist with the required paperwork and necessary documentation to stay out of trouble with the IRS. So, call us immediately at 832 295 3353 and let us help you save valuable tax dollars. You do not want to give you hard earned money away. #tax #business #cpa #help #insurance #money #planning #strategy #payments #taxlaws #taxsavings