Strategy Spotlight Q4 2024

11 minute read

Featured in this issue:

Year-End Planning for Individuals and Business Owners

As we approach the end of the year, it's crucial to start thinking about your year-end tax planning. Whether you're an individual looking to reduce your personal tax burden or a business owner aiming to optimize your company's finances, there are several strategies you can implement now to ensure you're in the best possible position when tax season arrives.

For Individuals:

Maximizing deductions is one of the most effective ways to lower your tax liability. Consider making charitable contributions before December 31 to take advantage of deduction opportunities. You may also want to prepay state and local taxes, provided you're not subject to the SALT cap. Additionally, increasing contributions to tax-advantaged retirement accounts, such as IRAs or 401(k)s, can reduce your taxable income and help you save for the future.

Don't overlook potential deductions for medical expenses. If you expect high medical costs this year, it might be worth scheduling elective procedures before year-end to increase the total deductible expenses. Keep in mind that certain deductions, like mortgage interest and education expenses, may offer further opportunities for tax savings.

Lastly, if you've had significant capital gains this year, you may want to review your portfolio for potential tax-loss harvesting. Selling underperforming investments to offset capital gains can help lower your overall tax bill.

For Business Owners:

If you own a business, year-end planning is equally important. One major opportunity lies in reviewing and maximizing your deductions for business expenses. Have you documented all travel, meal, and home office expenses? Are there outstanding expenses that could be paid before the end of the year to help reduce your taxable income?

Another key area for business owners is compensation planning. Paying bonuses or additional compensation to yourself or your employees before year-end can help minimize your tax liability. Similarly, reviewing retirement plans like SEP IRAs or Solo 401(k)s can provide significant tax savings while preparing for the future.

Business owners also have the advantage of making strategic equipment purchases before year-end. Under Section 179, you can immediately deduct the cost of qualifying equipment, potentially saving thousands in taxes. This is particularly beneficial if you plan on purchasing new machinery, computers, or office equipment.

Don't forget to assess your business’s overall financial health as well. Reviewing your cash flow, profits, and losses now allows you to make informed decisions before the books close. Could it be time to rethink your current business structure? Many business owners benefit from an annual review of their entity type (such as LLC or S Corporation) to ensure they're optimizing their tax strategy.

Final Thoughts:

Year-end planning is more than just ticking off a few tasks—it's about making smart decisions that can significantly reduce your tax burden and set you up for success in the new year. Whether you're an individual or a business owner, a proactive approach to tax planning is the key to minimizing liabilities and maximizing savings. What steps are you taking to ensure a smooth and profitable year-end?

How the Presidential Election Might Impact Taxes

With the upcoming presidential election, many business owners and individuals are wondering what impact the outcome might have on their taxes. While it’s impossible to predict specifics, historically, elections often result in tax law changes that could affect everything from income tax rates to deductions.

If the new administration leans toward higher taxes, individuals and businesses might see an increase in rates. This could mean accelerating income or capital gains into this year to avoid potential increases. On the other hand, a more tax-friendly administration might introduce new deductions or reduce tax rates.

The key is to stay informed. If you have significant tax planning decisions on the horizon, it might be worth discussing potential outcomes with your tax advisor.

Have you considered how the election could affect your current tax strategies?

1099 Reporting: Are You Ready?

As the end of the year approaches, now’s the time to ensure you’re ready for 1099 reporting. Whether you’re issuing 1099s to contractors or reporting income from various sources, compliance is essential. But do you know which form to use?

If you've paid independent contractors or service providers $600 or more, you’ll need to issue a 1099-NEC. The 1099-MISC is used for rents, prizes, and other miscellaneous payments, while the 1099-K is required if you've processed transactions through third-party payment processors like PayPal.

Mistakes or missed filings can lead to penalties, so it’s important to verify that all necessary forms are ready to go.

Are you sure you're using the correct forms for your payments?

Outsourcing Payroll: Is It Right for Your Business?

Managing payroll can be a time-consuming and complex task, especially for small businesses. Between tax compliance, calculating deductions, and ensuring timely payments, it's easy to become overwhelmed. Outsourcing payroll to a third party can help alleviate these challenges, freeing up valuable time to focus on growing your business.

But is it the right move for you?

Consider the benefits: payroll services can help ensure compliance with ever-changing tax regulations, reduce the risk of errors, and handle everything from direct deposits to year-end reporting. The downside? There's an added cost, and you’ll need to carefully vet providers to ensure they’re reliable.

Outsourcing payroll can be a game-changer for some businesses, but the decision depends on your unique needs.

Is your payroll process costing you too much time?

Equipment Purchases: Maximize Your Year-End Deductions

Planning to invest in new equipment for your business? Now’s the time to act. The IRS allows businesses to immediately expense up to $1,160,000 of qualifying equipment under Section 179. This means that instead of depreciating the cost over several years, you can deduct the entire amount in the year the purchase was made.

This can significantly reduce your taxable income for the year. But be mindful: not all equipment qualifies, and there are limits to how much you can deduct. Leasing and financing options may also affect your eligibility.

If you’re planning a big equipment purchase, now is the time to take action before the calendar year closes.

BOI (Beneficial Ownership Information): What You Need to Know

Starting January 1, 2024, the new Beneficial Ownership Information (BOI) reporting requirements will take effect. If you own or manage a small business, you’ll need to report certain information to FinCEN. This includes details on who owns or controls 25% or more of your company. Failure to comply could result in hefty fines.

Why does this matter? These new regulations are aimed at increasing transparency and preventing fraud. Now is the time to review your ownership structure and ensure you have the necessary documentation in place.

This may seem like just another task, but staying ahead of these changes can save you a lot of headaches later. If you're not sure where to start or need more details, we've covered everything in our latest blog post.

Entity Review: Is Your Business Structure Still Right for You?

Your business structure—whether it’s an LLC, S Corporation, or partnership—plays a huge role in how your business is taxed. But as your business evolves, your entity choice may no longer be the most tax-efficient.

For example, if you’re an LLC but have started making substantial profits, converting to an S Corporation might offer tax savings by reducing the amount of self-employment taxes you pay. Alternatively, if you're an S Corp but face cash flow challenges, switching back to an LLC could provide more flexibility.

An annual entity review ensures you’re optimizing your tax situation.

When was the last time you assessed your business structure?

Budgets: Setting Yourself Up for Success in 2025

As the year winds down, it’s the perfect time to review your budget and plan for the year ahead. Budgeting is more than just a financial exercise—it’s a roadmap that ensures your business is on track to meet its goals.

Start by comparing your actual expenses to your forecast. Are there areas where you overspent? Are you falling short in key areas? Adjusting your budget now can help you prepare for upcoming tax obligations, capitalize on deductions, and plan for growth.

Budgeting isn’t just about cutting costs—it’s about being proactive and strategic.

Have you built flexibility into your budget to accommodate any tax law changes or unexpected expenses?

Interested in our services? We’re here to help!

We want to know your needs exactly so that we can provide the perfect solution. Let us know what you want and we’ll do our best to help.

Book an appointment

Newsletter