Post-Tax Time Resolutions for Next Year’s Business Tax Planning
Your business taxes have been filed, but that doesn’t mean you should put taxes on the back burner until the next deadline. Placing tax matters on your regular to-do list can significantly reduce hassles and potentially decrease tax liability when it’s time to file again.
Make these business tax planning resolutions now for a better tax filing experience next year.
- Tighten up record-keeping.
Keeping good records takes the stress out of filing business taxes. However, it’s also essential if you want a clear snapshot of where the business is now so you can make informed decisions about where you want to take it.In addition, proper records are a must-have to protect yourself in the event of an audit. Overall, the chances of being audited by the IRS range from 0.4 percent for an S corporation to 12.2 percent for a large corporation. If you’re one of those businesses, it’s essential to maintain proper records to support the tax documents you’ve filed.
Learn more about supporting tax documentation in Record Retention: What to Do with Your Tax Records.
- Start a workplace retirement plan if you don’t already have one.
Employment-based retirement plans are smart tools to attract and retain top talent, and they also offer business tax planning benefits. Employer contributions are tax deductible, and if you have a qualifying business, it may be eligible for an additional tax credit to offset retirement plan startup costs.
- Know where you’re doing business.
In an increasingly global economy, it’s not uncommon for a business to conduct transactions in another state or country. Make sure your team keeps track of all jurisdictions in which your company does business and is familiar with relevant tax laws in those locations.Even if your customer base isn’t global, your workforce may be, whether you contract with a freelance writer in Canada or hire a remote developer in India. Keep tabs on where remote employees or contractors are based so you can meet any relevant tax responsibilities in each jurisdiction.
- Stay updated on the Affordable Care Act (ACA) and its impact on your business.
The uncertainty regarding the ACA has been frustrating for employers and employees of all political stripes. Since its status is still in flux, it will be important to stay informed of new legislation as well as changes to the current law.Stay alert throughout the year for potential business changes that impact ACA-related exemptions, credits, or liabilities. For example, if your workforce remains under 25 fulltime employees and you offer health insurance, your business may be eligible for small business health care tax credits.
However, if your workforce grows from an average of fewer than 50 fulltime employees to 50 or more and you don’t offer “minimum essential coverage” for health care, you could be liable for an employer shared responsibility provision payment the following tax year.
- Create or update your business succession plan.
If you own a closely held business, it’s worth your time to create or update a succession plan. A well-thought- out succession plan does more than simply outline how you will exit the business; it can also help minimize transfer taxes and give your estate liquidity.
Take control of business tax planning now.
Place tax matters on your year-round priority list so you can make informed business decisions, support the company’s filing during an audit, and minimize tax liability.
Start a conversation with a Simon Lever tax consultant for updated guidance and seasoned advice.