For business owners, the end of the year is a time when tax planning is particularly top of mind. Tips and strategies for maximizing savings was the topic addressed by MCB’s Tax Supervisor Lisa Popa at a virtual business roundtable hosted by the Arlington Chamber of Commerce on October 29.
Popa began her presentation reviewing the reasons why year-end tax planning is particularly important. She included reducing tax liability, maximizing business deductions, taking advantage of section 179 and bonus depreciation, preparing for year-end reporting, and simply avoiding common tax-planning mistakes as benefits. She also stressed the importance of accurate record keeping. “Not only is it required by the IRS, it keeps your business compliant, helps with budgeting, and improves cash flow and the tax preparation process,” she stressed.
Popa went on to outline deductible business expenses, including travel and meal expenses, vehicles used for business, home office expenses, accounting and bookkeeping fees or software, professional fees, utilities, rent, insurance, employee benefits and wages, and supplies. Expenses incurred to generate sales, such as marketing, advertising, conferences and networking expenses, are also deductible. Popa advised business owners to keep separate accounts for meal and travel expenses, and stressed that any expenses related to employee events (such as holiday parties) are 100% deductible.
Popa also shared several “last-minute” tax saving tips, including making planned purchases and charitable contributions before December 31. She suggested implementing income deferral techniques, such as invoicing for work completed late in the year in January. She also added the consideration of starting a retirement plan, as there may be tax credits available to offset costs. Finally, she suggested the use of safe harbor rules to avoid any underpayment penalties.
“It’s critical to work with a tax professional,” Popa stressed. “Not only are there benefits to a year-end consultation, there is the advantage of strategy planning for the following year.”
Lisa Popa is a Tax Supervisor at MCB, and is an Enrolled Agent with more than 20 years of corporate accounting experience focused on preparing complex partnership and S corporation, as well as individual, tax returns. She may be reached at [email protected].
For more information about Arlington Chamber of Commerce programming, visit https://www.arlingtonchamber.org/events.html.