2023 Tax Planning for Small Businesses Professional Tax Services

Although it is unlikely that we will see new legislation that will impact small businesses for 2023, some may see tax increases due to changes in deductions by the IRS. This includes having to amortize research and development (R & D) expenses over five years. Additionally, write-offs of bonus depreciation, such as the cost of new assets like computers, machinery, and equipment, are being phased out. Small businesses will only be able to write off 80% instead of 100% for the initial year.
Despite these limitations, there is some positive news. The Inflation Reduction Act does provide some incentives for businesses purchasing electric vehicles and other green energy products.
If deductions could allow you to pay less tax than taking the standard deduction for 2023, we recommend seeking advice from your tax professional long before the end of the year. Your advisor can help you take advantage of the deductions and credits you qualify for.
Tax deductions for 2023 include:
• Work-related car use
• Work-related expenses
• Business travel
• Business and liability insurance
• Home office use and upgrades
• Employee salary, benefits and other related expenses
• Office supplies
• Internet and phone expenses
• Business loan interest
• Business equipment
• Depreciation
• Professional service fees, including legal and accounting
• Sub-contractor fees and expenses
• Pass-through deductions
• Advertising and promotion
• Education
• Dependent and child care
• Charitable contributions
• Medical expenses
• Sales taxes
• Client and employee entertainment
• Moving expenses
• Office rental and real estate loans
• Books
Deductions have certain requirements and restrictions that must be fulfilled. We suggest you have your tax professional advise you.
In addition to tax deductions, there are business tax credits to consider including
• Research and development
• Work opportunity
• Disabled access credit
• A healthcare tax credit for small businesses that provides health insurance coverage
• Employee retention credit
• Qualified Community Development Entities (CDEs) for investments in low-income communities
• Paid medical and family leave tax credits
As you can see, there is plenty of tax planning to be done to ensure you take full advantage of tax deductions and credits. For our existing and new tax clients, we provide unlimited complimentary tax planning advice.
Professional Tax Services is a locally-owned provider serving over 3,500 local residents and businesses. For more information, call 661-259-1967 or visit www.scvprotaxservices.com.