Small Business End-of-Year Tax Tips for 2022

November 20, 2022
Published by Gonzales Group CPA

As the end of the year approaches, it’s important to consider a variety of financial elements that could help you increase your deductions and thus reduce the amount of tax you need to pay for your small business. Still, it’s important to have a clear understanding of your current financial situation and you will need to understand the timing for certain decisions. Your best bet to make the most of tax breaks and deductions is to use a San Antonio CPA like Gonzales Group. We can help you with all of your year-end tax planning.

It’s always a good idea to look for as many deductions as possible. One simple way is to stock up on inventory and to replenish office supplies and other items that you use regularly. Definitely look for any discounts available at this time of year to help you save money, while still using available cash or business credit lines to pay for these items, which can be deducted.

You should also go through any equipment and see if its value has decreased or it has become obsolete and valueless. For example, any broken equipment, such as computers that have had to be replaced this year, can be deducted. If an item is damaged, but still functions, you can list the reduction in value as an expense. Write-downs and write-offs can be claimed as deductions.

Unfortunately, there are times when you end up with bad debt, i.e., uncollectable debt. As long as you can show that you’ve made a serious effort to collect this debt, it can be written off and deducted from your taxable business income.

If you have employees – and even if you’re the sole proprietor – setting up a 401(k) or some other type of retirement plan lets you claim a tax credit for your business for the cost of setting up and administering the plan for the first three years.

Another way to build good will with your employees, while also being able to make tax deductions is by giving year-end bonuses. As long as they’re considered payment for services, they can be deductible. In some instances, holiday parties and gifts may also be deductible if they’re not routinely given throughout the year.

Finally, depending on your situation this year versus what you expect next year to be like, you may be able to defer some income until next year. This will give you more time to save, particularly if you expect the next year to be stronger financially for you. If you’re unsure, you may not want to add to potential costs. This is why having a qualified CPA is so useful.

These are just a few things to consider as the end of the year rolls around and you start seriously thinking about any deadlines for deductions, etc.. It’s good to have some idea of what may be possible for you, but it’s also a good idea to work with our excellent team to make the best financial decisions to end this year. Contact Gonzales Group, an experienced San Antonio CPA, to ensure you are positioned to take advantage of any year-end deductions.

Categorised in: Common Mistakes Small Businesses Make, IRS Tips, Small Business End-of-Year Tax Tips for 2022, Top 3 Reasons Small Businesses Should Hire a CPA

This post was written by Gonzales Group CPA