Smart Tax Moves for 2024: Your Business’s Guide to Saving Big
Hey there, fellow business owners! If you’re anything like me, the end of the year is a whirlwind of closing projects, planning for next year, and—oh yes—thinking about taxes. Let’s face it: tax season isn’t exactly the most exciting time of year, but it’s essential. With a few proactive steps now, you can set yourself up for some serious tax savings that will leave you breathing a little easier come filing time.
Let’s dive into some strategies that could keep more of your hard-earned money in your pocket.
- Make the Most of Section 179 Deductions
Do you need to upgrade your equipment or finally buy that software that will make your workflow smoother? The Section 179 deduction is a fantastic opportunity to write off the full purchase price of qualifying items you buy or finance this year. Think of it as a little gift to your future self—better tools *and* a lower tax bill. Just make sure those items are up and running before December 31, 2024, to take advantage of this deduction.
- Put More into Your Retirement Plan
I know, I know—it’s easy to put off planning for your future when you’re busy running your business. But increasing your contributions to your 401(k), SEP IRA, or SIMPLE IRA is one of the simplest ways to cut your taxes *and* invest in your future. If you don’t have a plan in place yet, now’s the perfect time to set one up. Trust me, your future self will thank you for this one.
- Use Bonus Depreciation to Your Advantage
Buying new assets for your business? Consider using bonus depreciation, which allows you to take a significant tax deduction upfront. Although this benefit has been scaled back a bit in recent years, it’s still a great way to boost your savings. Just remember—assets need to be in use by December 31st, so don’t wait until the last minute!
- Don’t Overlook the R&D Tax Credit
This one’s a hidden gem. If your business has spent time or money innovating—whether tweaking a product, creating new software, or refining your services—you might qualify for the R&D tax credit. It’s not just for giant corporations; small and mid-sized businesses can benefit too. It’s worth checking out, especially if you’ve been working hard on fresh ideas.
- Review Your Business Structure
When was the last time you reviewed your business structure? Whether you’re operating as an LLC, S-Corp, or C-Corp, the structure impacts your tax bill in a big way. For instance, S-Corps can offer significant tax savings by allowing you to pay yourself a reasonable salary and take the rest of your income as distributions, which are not subject to self-employment taxes. If it’s been a while since you checked, now’s the time to sit down with a tax advisor and make sure you’re set up in the best way possible.
- Prepay Certain Expenses
Prepaying expenses like rent or insurance can help you reduce your taxable income for 2024. This strategy works especially well for cash-basis businesses, as you can take deductions when you pay. It’s a simple step that can make a meaningful difference on your final tax bill.
- Defer Income Strategically
If 2025 looks like it’ll be as strong as, or stronger than, 2024, consider deferring some income. This can be as simple as delaying invoices or timing billings to push revenue into January. A little planning now could mean a lower tax bill when you file in 2024.
- Max Out Health Insurance and HSAs
As a business owner, you may be paying health insurance premiums for yourself and your family. The good news is that these costs could be deductible, which helps lower your tax liability. Don’t forget about Health Savings Accounts (HSAs), which come with a triple tax benefit—deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses.
- Utilize the Qualified Business Income (QBI) Deduction
Ever heard of the QBI deduction? If not, you could be missing out on a significant tax break. It lets eligible business owners deduct up to 20% of their qualified business income. There are a few rules and limits, so it’s worth having a conversation with your tax professional to see if you can take advantage of it.
Final Thoughts: We’re Here for You
Listen, I know that running a business comes with enough daily challenges—tax planning shouldn’t be one of them. At Lembo Accounting Solutions, we’ve got your back. Our goal is to take the guesswork out of taxes so you can focus on what you do best: running and growing your business. If you want to dive deeper into any of these strategies or talk through your unique situation, reach out! We’d love to help you start 2025 in the strongest position possible.
Here’s to making smart tax choices, saving money, and feeling confident as we wrap up 2024!
