ONeill & Bergado’s Tips for 2023 Small Business Tax Planning

Forward-thinking is a must in business… that goes for your taxes too. And I’m going to dive into what that looks like today. 

But first, let’s talk about your tax filing. The S corp and partnership filing deadline is coming up (March 15 to be exact). While we’ll probably file an extension for you if you’re in this category and just now looking at your taxes, you’ll want to dial in VERY soon. 

But also, there’s little more than a month before personal tax returns are due. Let’s set procrastination aside and get on those returns so you can get Uncle Sam off your back and keep your San Francisco Bay Area business functioning optimally:
Patto (408) 775-7790  Gale 408-775-7800

(And, of course, we will put clients on extension as needed.)

Now, let’s get back to that forward-thinking…

Taxes are more than a “once a year” obligation. They’re something you want to optimize for all. year. long. 

There are numerous practical strategies you can implement in your business — accommodating estimated payments in your budget, deduction-minded travel planning, and timing your expenses, to name a few. 

Tax-optimizing your San Francisco Bay Area business starts by knowing what the IRS has made available to you as a business owner. But even more than that, it’s knowing how to take advantage of what’s available… and that ain’t easy – Uncle Sam’s made sure of this. 

Getting into planning mode is going to require you actively carving out some time in your busy business owner schedule… whether you’re facing doing taxes on your own (not recommended) or meeting up with your favorite tax pro (wink, wink). 

In the interest of offering you some of my expert insight at no extra cost to you, I’d like to start the small business tax planning conversation here…

ONeill & Bergado’s Tips for 2023 Small Business Tax Planning
“Luck had nothing to do with this. It was good management and hard work.” – the Goose from Charlotte’s Web

Now that covid-related tax relief is fading for most companies, it’s worth honing in once again on tried-and-true small business tax planning strategies.

Of course, we first want to get you through the spring’s filings of tax returns — but after that comes all the rest of 2023, with plenty of tax developments that determine the best plan for this year (and beyond). 

Small business tax planning insight #1: Get ready for filing

Make sure your documentation is on hand for your business expenses. Take a look at your company’s return(s) from last year and think about what you and your company did through 2022 to qualify for evergreen tax concerns such as capital purchases, payroll, maybe a home office deduction, and so on. If you have questions, reach out as soon as you can.

A few general reminders for 2022 taxes:

• You are not yet responsible for kicking out IRS Form 1099-Ks for transactions exceeding 600 bucks; the IRS put that requirement off a year.
• Net operating loss carryforwards are again capped at 80% (after a brief reprieve in previous years) of your taxable income, and the thresholds for excess business losses are 270,000 dollars (540,000 dollars if Married Filing Jointly).
• After December 31, 2021, you have to amortize your research and development expenditures over five years.
• The first-year bonus depreciation deduction was 100% through the end of 2022. As of 2023, it’s scheduled to reduce every year.
• As of last year, the amount of net business interest expense you can deduct from taxable income is further reduced — but there is an exemption for companies with average gross receipts of 27 million or less for the three most recent tax years.
• Standard mileage rates for 2022 were 58.5 cents per mile from January 1 through June 30 and 62.5 cents per mile from July 1 through December 31. 

Speaking of which, your mileage may vary. (Your deductions depend on the circumstance of your small business.) Check with us. 

Small business tax planning insight #2: Looking ahead

There’s a lot of 2023 left for you to do business tax planning. What should you be looking at in general? 

Business tax-filing deadlines are your first planning details, and through the rest of 2023, there are more than a dozen federal ones (depending on your business structure) beyond Tax Day on April 18. You can see the IRS filing schedule for this year here along with details on extension deadlines — and of course, you can always check with us, too. 

Beyond just knowing when and what you’ll have to file, having the schedule at hand will help you budget throughout the year if you deal with such obligations as paying estimated taxes every quarter. 

Planning strategically often makes tax liabilities a little easier to swallow — and can make saving taxes and improving your business easier, period. Considerations: 

• Is 2023 the year to restructure your company? People in some partnerships, LLCs, and S corporations get a 20% tax deduction on their “qualified business income.” As this break may (or may not) disappear three years from now, maybe now’s the time to take advantage. 
• Hiring family members can save on taxes if you follow IRS income tax thresholds. Under some circumstances, hiring your spouse can let you double your retirement plan contributions (though you will owe payroll taxes on their income). 
• Starting this year (thanks to the SECURE 2.0 Act), small companies can get a juicy credit for starting a pension plan. You can also match employee contributions on a Roth on an after-tax basis, among other changes. Details include some caps and phase-outs. 
• Think green: The Inflation Reduction Act turned energy saving into a tax-saving move for some companies. Commercial buildings now have to cut energy use by only 25% (used to be 50%) to get a deduction. You might also be able to snag up to a 7,500-dollar tax credit if you buy certain electric vehicles for your company.

Small business tax planning insight #3: Further down the road

Make some preliminary notes for four or five months from now, when you’ll be closing in on the final quarter of 2023. That’s the time, for instance, to put into action your plans to accelerate or defer into 2024 income or expenses, depending on your tax situation. (We can help you decide.) 

And we’ll keep you up to date on tax developments that affect your business as the year progresses, such as the increasingly tricky rule about far-flung tax jurisdictions and remote workers. Taxes never stop — so your small business tax planning shouldn’t, either. 

We’re here to help you build the best future possible for your San Francisco Bay Area business. That includes setting you up for success, both during tax season and throughout the rest of the year.

Always here to help,

Patti ONeill and Gale Bergado