Don’t Wait to Start 2015 Tax Planning for Your Business
posted May 12, 2015 by Andrew D’Aiello, MST in the Global Tax Blog
When it comes to tax planning, waiting until year end is approaching is all too common. Tax planning should be a year-round activity – especially for businesses. Now that your 2014 filing is behind you (or perhaps on hold until the extended filing deadline in the Fall), it’s a good time to take a look at your business’s year-to-date income and deductible expenses and its outlook for not only the rest of 2015 but also 2016.
Investing in Your Business and People
If income is up, that’s great news for your business, but it could mean a larger tax bill. You can put a dent in that bill by investing more in your business and your people, which has the added benefit of helping you grow your business further.
One area of investment that can bring some immediate deductions is equipment and certain other tangible assets. Unfortunately, bonus depreciation and enhanced Section 179 expensing both expired at the end of 2014 and haven’t been extended to 2015 (though they might still be). But you can still enjoy larger benefits in the year that an asset is purchased and placed in service with the Modified Accelerated Cost Recovery System. By making investments in the second and third quarter of the year, rather than the fourth, you can avoid the unfavorable mid-quarter convention.
Another tax-saver to think about if you’re having a good year and expect that to continue into the future is expanding the employee benefits you offer. Beyond health care coverage and a qualified retirement plan, there are many benefits you can offer that will both reduce your tax bill and help you attract and retain the best employees.
Consider statutorily excluded fringe benefits. You can deduct the portion of the benefit you pay, yet that amount isn’t included in employees’ taxable income. Examples include educational assistance (up to $5,250), dependent care assistance (up to $5,000), parking (up to $250 per month), mass transit / van pooling (up to $130 per month, unless Congress extends parity with parking), and term life insurance (up to $50,000).
These are just a few of the tax-savings opportunities that may be available to your business, and the right strategies depend on your specific situation. Contact us to assess where your business is right now and to project where it will be through the end of this year and into 2016. We can work with you to determine which strategies will save you the most taxes while helping you achieve your other business goals. The sooner you begin, the sooner more opportunities will be available.