Navigating the complex world of taxes can be a major challenge for privately-owned businesses and organizations – especially when you’re focused on expanding your company. Our financial experts at SD Associates, P.C. want to offer strategic insights that can help reduce your tax burden and enhance your financial health. Here are some top tax strategies for maximizing deductions and credits, all tailored specifically for businesses like yours.

1. Depreciation

One of the most powerful tools at your disposal is depreciation. This allows you to spread the cost of tangible assets over their useful life, reducing your taxable income each year. For example, the Section 179 deduction and Bonus Depreciation are two key provisions that can significantly lower your tax bill. By investing in new or used equipment, software, and vehicles, you can take advantage of these deductions to offset income.

2. Employee Benefit Plans

Offering competitive employee benefit plans not only helps in retaining top talent but also provides tax advantages. Contributions to retirement plans, health savings accounts (HSAs), and education assistance programs are deductible and can reduce your taxable income. Consider establishing a 401(k) or a similar plan if you haven’t already, and make sure you’re maximizing contributions to these accounts.

3. Tax Credits

There are tax credits that are designed to encourage specific business activities. The Research and Development (R&D) Tax Credit, for example, provides benefits for businesses that take part in qualifying research activities. There’s also the Work Opportunity Tax Credit (WOTC) for employers who hire individuals from certain groups facing employment barriers. Identifying and claiming these credits means you’ll need extra documentation, but the effort is often well worth the savings you’ll see on your taxes. 

4. Deduct Business Expenses

Always make sure you’re deducting all allowable business expenses. This includes not only the obvious costs like rent, utilities, and payroll, but also less apparent ones such as business use of your home, travel expenses, and even certain meals and entertainment expenses under the new tax laws. Keeping detailed records and understanding what is fully or partially deductible can significantly reduce your taxable income. Our financial experts can help you understand what is and isn’t deductible. 

5. Consider a Change in Business Structure

The structure of your business has a big impact on your taxes. Entities like S Corporations and Limited Liability Companies (LLCs) offer different tax benefits, including pass-through taxation. These are all opportunities to save on your business’s taxes. We recommend consulting with our tax professional to determine if a change in your business structure could provide tax advantages. 

Contact SD Associates, P.C. For Expert Financial Advice Today

At SD Associates, P.C., we want to help our clients minimize their business’s taxable income and make the most of any deductions.  Contact us today at 215-517-5600 to learn more about our financial services and schedule your consultation!