KPMG Spark Blog
In order to run a successful business, you need to have a solid financial foundation. Planning to pay taxes is an important part of building this foundation. Join us as we discuss tax planning strategies to help your business plan for tax season.
In order to run a successful business, you will need to have a solid financial foundation. Planning to pay taxes is an important part of building this foundation. Business profits are subject to federal (and sometimes state and local) income taxes. As a new small business owner, you may only think about taxes after the fact, when you need to file a tax return. This may lead to missed opportunities to reduce your tax burden, control when you pay taxes, and strengthen your company’s financial foundation.
Many tax planning strategies are available to entrepreneurs — some are aimed at your individual tax situation and some at the business itself. For example, you may be able to:
The QBI deduction allows owners of pass-through businesses to claim a deduction worth up to 20% of their share of the business’s income. There are several rules and limitations to claiming the QBI deduction, depending on whether your business qualifies as a “specified service trade or business,” your taxable income, wages paid by the business, and how much property the business owns. Your KPMG Spark tax advisor can help you determine whether your business qualifies and estimate the potential tax savings.
Getting your business off the ground can be expensive, and some startups take a year or two to turn a profit. When your company’s tax deductions are higher than taxable income, you have a net operating loss (NOL), which you can use to offset taxable income in future years (or prior tax years, in some cases).
Tax credits are a dollar-for-dollar reduction in the amount of tax you pay to the IRS or your state revenue department. These tax credits are usually designed to “reward” business owners and individual taxpayers for certain activities, such as hiring workers, performing research and development, providing employee benefits, saving for retirement, and more. Identifying and planning for claiming these credits can dramatically improve your company’s bottom line by reducing your tax burden.
Most small businesses use the cash method of accounting on their books and tax returns. Under the cash method, you recognize income when it’s received and expenses when paid, i.e., when cash changes hands. This could create tax planning opportunities. If you anticipate being in a lower tax bracket next year, you may be able to defer income to next year to pay tax on that income at a lower rate. Likewise, you can accelerate expenses in the current year — such as pre-paying next month’s rent or next quarter’s property taxes — to reduce your taxable income this year.
Saving for your own retirement and setting up and contributing to a retirement plan for employees allows you to take advantage of potential tax deductions and credits this year and establish a solid financial foundation for you and your employees in retirement.
These are just a handful of ways that tax planning can help you build a strong financial foundation for your business. Every tax situation is unique, so it’s important to discuss tax planning strategies with your adviser before making any significant moves. Your team at KPMG Spark is well equipped to help you plan your tax strategy. Schedule a consult and give us a call at 1-855-777-7696 to get started with KPMG Spark!
Sign up for our newsletter
When doing your finances and accounting, you want to make sure you have the best services available for your business and have what fits your business needs.
How to get the most from your online bookkeeping software with tax write off tips from experienced virtual bookkeepers.
When you first open your business, you might be able to run everything by yourself. Eventually, hiring a bookkeeper will become a vital step to help ensure continual growth for your business. Continue reading for 5 signs that indicate it’s time to hire a bookkeeper for your business.
Maintaining a healthy business cash flow is one of the most important building blocks for any business to be able to build a strong financial foundation. Continue reading for a few best practices for ensuring your organization has enough cash on hand.
Join us to learn how your bookkeeping may be holding back your business from functioning at its peak performance.
KPMG Spark works with many business owners and executives to simplify their bookkeeping. Continue reading to learn how keeping up with your bookkeeping will help you build a solid financial foundation for your business.
There are many important differences between an employee and an independent contractor that can affect the financial foundation of your business. Continue reading to learn some of the financial impacts you should consider when making this decision.
Running a successful business depends on a solid financial foundation. You can have the most sought-after products or services, a killer marketing strategy, and loyal customers, but if you don’t have a solid financial foundation to manage cash flow and support other business decisions, it can all come crumbling down. Continue reading to learn how selecting an entity structure can help build your financial foundation.
Real-time bookkeeping uses live data to give you visibility into your current income and expenses, balances, and more. The visibility that real-time bookkeeping provides allows business owners to gain valuable insight into both their finances and businesses. Continue reading for 5 valuable insights you can gain from real-time bookkeeping.