November 19, 2024
As we head toward the close of the year, the business tax landscape is beginning to come into focus. We won’t know what tax law changes might be in effect until well into the new year. Regardless of the political climate, however, we recommend common sense tax planning considerations you should undertake now as part of your year-end business review.
- Gather documentation and start resource planning – proper tax preparation and planning requires adequate documentation and resources. Do not wait until it is too late to understand the type of support needed and how you will obtain it.
- Evaluate bonus depreciation and business expensing opportunities – Tax Cuts and Jobs Act implemented a phase out of bonus depreciation through 2026. Qualifying assets placed in service prior to December 31, 2024, will qualify for 60% bonus depreciation, while assets placed in service in 2025 will qualify for 40% bonus depreciation.
- Manage the pass-through business income deduction – if your business is structured as a pass-through entity, you may be eligible for the qualified business income (QBI) deduction, up to 20% of your QBI from a trade or business. Use the end of the year to review your business income and deductions, as well as qualifying wages and property of your business, to ensure you are obtaining the maximum benefit allowable.
- Review year-to-date business results – obtain an understanding of the year-to-date income and deductions of your business. Proper planning may allow for acceleration, or deferral, of income recognition or tax deductions. Additionally, if your business is structured as a pass-through, review your estimated payments or year-to-date withholdings to determine if an adjustment is appropriate for your tax needs.
- Review research and development expenses for required capitalization – R&E costs incurred must be capitalized and amortized over a 5-(domestic) or 15-(foreign) year period. If applicable, R&E costs incurred should be reviewed to determine its overall impact to your tax calculations.
- Prepare for form 1099 and other ancillary returns – Some filings, such as informational forms 1099 and payroll, must be filed shortly after the new year. Review your requirements and ensure the proper information is obtained (i.e. vendor W-9’s) as early as possible.
Tax planning for your business takes time. We encourage you to spend time before the new year to review and discuss strategies with your tax advisor. GRF CPAs & Advisors has a dedicated team of professionals to assist with all types of tax scenarios. We are closely monitoring the changing tax laws and are here to help provide solutions tailored to each business’s needs. Schedule your consultation to discuss in more detail the strategies that may be right for you and your business.
