Proactive Tax Strategies: Optimize Your Business Savings

As we hit the mid-year mark, it's an ideal moment for business owners to reevaluate their tax strategies. Thoughtful tax planning now can unveil opportunities for deductions and credits that help reduce your tax burden. By taking action today, you position your business to maximize available benefits while some options still apply.

Qualified Business Income Deduction

If your business operates as a sole proprietorship, partnership, S-Corp, or LLC, you may be eligible for the Qualified Business Income deduction. This allows you to deduct up to 20% of your qualified business income, but be aware—this opportunity is slated to expire at the end of 2025. Don't miss out on this advantageous deduction.

• Home Office Deduction: For those using a portion of their home exclusively for business purposes, consider deducting expenses related to rent, utilities, and internet services. Proper documentation and regular use are key to taking advantage of this deduction.
• Business Vehicle Expenses: You can deduct vehicle expenses through actual expenses or the standard mileage rate. Maintaining a precise mileage log will ensure you claim every mile you’re entitled to.
• Research and Development Tax Credit: This credit isn't limited to tech companies. If you've improved processes or products, you might qualify. Explore this credit to potentially lower your tax responsibility significantly.

Section 179 Deduction and Bonus Depreciation

When acquiring new equipment or software, you might be able to deduct the full cost thanks to the Section 179 deduction. Additionally, bonus depreciation allows deductions on new and used property, promoting investment in business expansion while reaping tax benefits.

• Meals and Entertainment Deduction: You can still deduct 50% of qualifying meals with clients or staff. Clarify which types of business meals are deductible to avoid disallowed claims.
• State and Local Tax Deductions (SALT): Consider PTE elections to navigate federal limits on SALT deductions. This tactic can be beneficial for pass-through entities aiming to optimize their tax strategy.

Remember, not every deduction will apply universally. Each business has its own unique circumstances, which makes mid-year an opportune time for a tax review. Consider consulting with a tax professional or reviewing your current tax strategy to ensure you're primed for savings. Thoughtful planning now sets the foundation for financial success and potential tax relief.