As we approach the end of the year, it’s crucial for businesses to take proactive steps to optimize their tax position. While the specifics of any forthcoming tax law changes remain uncertain, prudent tax planning is a smart move. Here are essential considerations to incorporate into your year-end business review.

1. Document Gathering and Resource Planning
Solid tax preparation hinges on thorough documentation and adequate resources. Don’t wait until the eleventh hour to assess your documentation needs and devise a plan to acquire essential resources.

2. Bonus Depreciation and Business Expensing
The Tax Cuts and Jobs Act initiated a phase-out of bonus depreciation through 2026. Assets placed in service before December 31, 2024, are eligible for a 60% bonus depreciation, while those in 2025 qualify for 40% bonus depreciation. Evaluating these opportunities before year-end is crucial.

3. Pass-Through Business Income Deduction Management
If your business is a pass-through entity, you may qualify for the qualified business income (QBI) deduction, potentially allowing for up to 20% of your QBI from a trade or business. Review your business income, deductions, wages, and property to maximize this benefit before the year ends.

4. Year-to-Date Business Results Review
Gaining an understanding of your business’s year-to-date income and deductions is key to effective tax planning. Proper analysis may enable you to accelerate or defer income recognition or tax deductions. For pass-through businesses, assess estimated payments and withholdings for potential adjustments.

5. Research and Development (R&E) Expenses
R&E costs incurred may need to be capitalized and amortized over a period of time. Evaluate the impact of R&E costs on your tax calculations and consider any potential allowances or deductions available for these expenses.

6. Preparation for Form 1099 and Ancillary Returns
Anticipate the preparation and filing of information returns such as Form 1099 and payroll-related filings, ensuring that essential information, such as vendor W-9s, is obtained promptly.

Proactive tax planning is time-intensive and best approached before the new year. We encourage business owners to engage in comprehensive discussions with their tax advisors. At Keystone CPAs & Advisors, our dedicated professionals are equipped to assist with a wide range of tax scenarios. We remain vigilant in tracking evolving tax laws and stand ready to offer tailored solutions. Schedule a consultation to delve into the specific strategies most suitable for your business.

Optimize your tax position for 2024 and ensure your business is well-prepared for the upcoming year. Contact Keystone CPAs & Advisors to embark on a strategic discussion that could shape your business’s financial future.