It might be too late to do anything about this year’s tax bill, but that shouldn’t stop you from planning ahead to minimize taxes on your small business income going forward. Before we get too deep into the current year, take some time to plan ahead to keep your future tax bills low. Here are our top three 2019 tax tips for business owners:
- Restructuring can help. 2017’s Tax Cuts and Jobs Act contains a 20 percent tax deduction for the owners of certain types of pass-through entities, meaning the business’s profits flow from the business to the owner, and that income is claimed on the individual’s income tax return. This includes sole proprietorships, S corporations, partnerships, LLCs, and more. If your 2018 taxes were higher than you’d like, restructuring might be the answer.
- Look ahead. Tax brackets change year to year, or your business may grow and throw you into a higher bracket. Take a look at tax brackets for 2019 and 2020 and project your income and expenses. Would you benefit more from making large, tax-deductible purchases in 2019 or 2020? Planning income and expenses with your tax bracket in mind can take the bite out of your tax bill for both years.
- Save for retirement. Now is a great time to set up a retirement plan for your small business. Those who are self-employed or employed by their own corporations can see significant tax deductions for funds contributed to certain kinds of IRA or 401(k) plans.
Don’t go it alone
We know you’re busy at the first of the year, and topics like tax code, restructuring, and retirement plans are confusing. At Numbers House, we want to take the burden of back-office tasks off business owners and get them back to the work they love. We can help you with business tax planning, bookkeeping, restructuring, payroll, and more. Call us at (865) 294-7300 or email us at firstname.lastname@example.org to get started.