Four Small Business Year-End Tax Planning Tips for 2022
Q4 has already started. Small business owners are aware that tax planning for 2023 should begin right away. Whether you’ve been in business for a while or have just celebrated your first anniversary, you are aware of the extensive preparation required to operate a successful company.
Between marketing tactics, inventory, budgeting, and taxes, there is a lot to juggle. To get a head start on the forthcoming tax season, spend some time reading up on this small business end-of-year tax advice. Your future self will appreciate it.
Planning for Small Business Taxes in 2022: What’s New?
Much of 2020 and 2021 were dominated by the COVID-19 epidemic. It’s not surprising that inflation has become a fresh subject of great scrutiny this year.
Americans have been greatly influenced by inflation, from the petrol station to the grocery store.
The IRS released its annual inflation adjustments for the 2022 tax year in November 2021. Here are a few significant adjustments to take into account when small firms are tax planning:
- Account for Medical Savings: The minimum annual deductible for those covered by this kind of plan is $2,450, an increase of $50 from 2021. The maximum deductible has increased by $100 to $3,700 from the prior year.
- Every type of taxpayer can now take advantage of a higher standard deduction. The standard deduction for married couples filing jointly will be $25,900 (an increase of $800), while the standard deduction for heads of households will be $19,400 (an increase of $600). The standard deduction for single taxpayers and married individuals filing separately is now $12,950, an increase of $400.
- Earned Income Tax Credit: For taxpayers with three or more eligible children, the IRS has boosted this benefit to $6,935 per year.
Small Business Year-End Tax Planning Tips
When it comes to overseeing their companies’ money, small business owners have a lot of daily duties. If you have employees, you might also need to know how to manage payroll in addition to small company bookkeeping. Additionally, there is the issue of small business taxes, which can be challenging for the typical business owner.
If you adhere to some tax advice for small businesses, the process of calculating your small business taxes will be simpler. To guarantee the procedure goes without a hitch, take into account the following actions:
1. Keep Accurate Records
Regardless of the cost, make sure you regularly record your business spending. Don’t put off thinking about your spending on things like advertising or business-related travel until the end of the quarter or the year. You’ll find it much simpler to write off these costs during tax season if you keep thorough and precise records and keep all relevant documents and invoices.
2. Understand Your Credits and Deductions
You may be eligible for several tax deductions and credits depending on the type of employment you conduct. Small business entrepreneurs and self-employed people frequently qualify for various deductions and credits that can go unnoticed. To optimize your savings, it’s critical to be aware of these things.
3. Watch Out for Scams
Avoid becoming a victim of con artists who use numerous cunning strategies to exploit taxpayers. Some popular IRS scams are perpetrated by criminals posing as the IRS, while others are the result of taxpayers attempting to evade taxes. Every year, the IRS publishes a list of the “Dirty Dozen” con artists that affect both taxpayers and tax professionals.
4. Consult a CPA
One of the wisest moves you can make is to hire a Certified Public Accountant (CPA) to manage your small business taxes. You won’t have to worry about missing important information or deadlines because CPAs keep up with the most recent tax rules and regulations. This crucial area of your company can be outsourced to save money and free up your time and effort for other crucial activities.
With Your Part Time Accountant, You Can Prepare Your Small Business Taxes
This year-end tax advice for small businesses might help you get ready for 2023. In the end, however, it’s wise to seek advice from a qualified CPA. Since no two businesses are comparable in every way, it is best to work with someone familiar with the particular rules and legislation that will apply to yours.
The staff Your Part Time Accountant can provide you with tax advice and make sure you get the most out of your small company tax savings.