--- title: Year-End Tax Planning Tips for Small Businesses and HR Professionals   description: "#post_excerpt If you want to maximize tax returns or minimize liabilities, a handful of end-of-year tips can help." url: "https://bizzmarkblog.com/year-end-tax-planning-tips-for-small-businesses-and-hr-professionals/" published: "2024-10-14T09:23:10+01:00" modified: "2024-10-14T09:23:12+01:00" author: Elaine Bennett type: post schema: Article language: en-US site_name: Bizzmark categories: [Small Business] tags: [finance, HR, small business] --- # Year-End Tax Planning Tips for Small Businesses and HR Professionals   ![tax](https://media.bizzmarkblog.com/2024/10/pexels-tima-miroshnichenko-7567533.jpg) As a business operator or HR professional, you hopefully [stay on top of your taxes](https://hires.shareable.com/blog/five-quarterly-tax-tips-for-small-businesses) throughout the year. Even when that is the case, the end of the year represents the final opportunity to get taxes under control. If you want to maximize tax returns or minimize liabilities, a handful of end-of-year tips can help. ##**Review Your Tax Status**The end of the year is a great time to revisit and think about your business’s tax status. Especially with small businesses, it’s common to set things up as a sole proprietorship, LLC, or similar status. With these configurations, all of the company’s income is the owner’s income and taxed accordingly. Another option is to set up a pass-through business. This style uses an S-corp. The company pays the owner a reasonable wage (or salary), and the rest of the owner’s profits are treated as “pass-through” income. That latter income is taxed at a lower rate (in many cases). It is possible to change the tax status for a business, and when you do your end-of-the-year taxes, you can see if the switch would save money. Now, you can’t retroactively change your tax status, but you can start making moves to [save money in the future](https://bizzmarkblog.com/10-free-ways-to-improve-your-financial-situation/). ##**Organize Your Deductions**A few deductions are pretty standard and obvious, but others are easy to miss. A common business deduction is the specific service trade or business (SSTB) deduction. This applies to professional services where the expertise or reputation of the business owner affects business outcomes (e.g. doctors, lawyers, etc.). If you run a service business, see if you qualify for SSTB deductions. There are restrictions to consider, but this deduction can apply to up to 20 percent of your business income. It’s a big one. Beyond that, review business expenses as deductions. You can look into equipment expenses, professional service expenses, depreciation values, and more. Maximizing your deductions goes a long way toward helping your final tax bill. A final technique can also leverage gifts. If you plan to help friends or family pay for things, you can give away money (or pay off expenses), but there are concerns with taxes. [Look into gift taxes](https://blog.turbotax.intuit.com/tax-planning-2/5-simple-tax-tips-for-end-of-the-year-giving-15938/) and see if end-of-the-year accounting supports doing that now or waiting for the next year. ##**Check for Tax Credits**While you investigate tax deductions, you can also look into tax credits. Certain equipment purchases can qualify for tax credits. You can also look into green energy credits when they apply. Other credits relate to your interactions with employees. Work opportunity credits apply if you hire and train people. A disabled tax credit can help pay for accessibility investments at a storefront, office, or place of business. You can also consider a small employer health insurance credit that helps you pay for insurance benefits for employees (the business must have fewer than 25 total employees). There are always more tax credits hiding under a rock somewhere, so dig deep (or work with a tax professional) to make sure you get the most from these benefits. ##**Leverage Retirement Plans**Once you get through deductions and tax credits, it’s time to start controlling your taxable income. Deductions get the process started, but specific (and potentially large) deductions deserve their own consideration. If you support retirement plans, you have access to major tax benefits. As a business operator, you can use a 401k, IRA, or other tax-advantage retirement plan to lower your effective income for the year. That’s a great starting point, but it goes further. Many companies can also contribute to employee retirement plans and deduct those totals from their annual taxable income. It’s a great way to take care of your people while improving your bottom line. ##**Make Investments**Aside from retirement plans, you can use deductible expenses to keep your income below certain tax thresholds. Equipment investments and retirement plans could technically fall in this category, but you have many more options. Potentially, real estate investments, additional business investments (like putting money into a new business project), and even charitable donations can all help you control your income and improve your tax outlook.  Remember one thing as you go through all of this. Tax deductions don’t make you more money. Instead, they help you take money that would be lost to taxes and direct it into an expense that produces more value. Always try to keep the idea of “value” in mind when you use these techniques. ##**Adjust Income**So far, we’ve been talking about deductions to lower your taxable income. For many businesses, you can use the cash accounting method to change your actual income. Here’s how it works. Many businesses do not claim income until a customer successfully pays for the product or service. For example, a lawyer might send a bill to a client, but they don’t count income until the bill is paid and the money hits the business bank account. This is a normal, legal way to operate, and it’s commonly referred to as cash accounting. If you do your accounting this way, then you can either defer or accelerate payments at the end of the year to try and adjust your taxable income and tax bracket. If you’re worried about income bumping you into a new bracket, simply send the bill late and collect the money in the next year. Obviously, you can’t do this infinitely, but if it’s mid-December, you could defer a bill until January. This helps you control your income right at the end of the year. On the other hand, if you aren’t close to hitting a higher tax bracket, you could try to accelerate income at the end of the year. This allows you to collect money and pay taxes at your current rate — potentially avoiding higher taxes next year. When you work with your accountant, end-of-year income adjustments often provide that last little push to help you manage tax liabilities. ##**Account and File**At the end of all of this work, get your paperwork in order. As you go through the accounting process, you’ll see how much you might owe and what papers are missing or incomplete. This will help you stay ahead of deadlines in the next year (like sending out W2s on time). --- ## Related Content - [How Custom Packaging Helps E-Commerce Businesses Increase Sales](https://bizzmarkblog.com/how-custom-packaging-helps-e-commerce-businesses-increase-sales.md) - [Designing Handovers That Don't Lose the Client Relationship](https://bizzmarkblog.com/designing-handovers-that-dont-lose-the-client-relationship.md) - [Using Chatbots To Improve Customer Service In Small Businesses](https://bizzmarkblog.com/using-chatbots-to-improve-customer-service-in-small-businesses.md) --- *Source: [https://bizzmarkblog.com/year-end-tax-planning-tips-for-small-businesses-and-hr-professionals/](https://bizzmarkblog.com/year-end-tax-planning-tips-for-small-businesses-and-hr-professionals/)* *Generated by FAII AI Tracker v3.4.1*