This year has been undeniably tough for many small businesses. If you’re a small business owner, you may be dreading this coming tax season. Here at Bowman & Company, we know that far too many small business owners end up overpaying when tax season comes around. As tax planners, we’d like to share some tips that might help you save money on taxes this year.
Use Fringe Benefit Plans
One of the best ways for small business owners to save money on taxes is to offer fringe benefits to their employees. As a small business owner, it’s not always easy to tell which benefits are tax-exempt and which are not. For your convenience, we’ve compiled a list of a few non-taxable fringe benefits you should consider offering your employees:
- Disability insurance
- Dependent Care Assistance Programs (DCAP)
- Health insurance sponsored by the employer
- Adoption assistance
- Meals provided by the employer (will cease being tax exempt as of 2025)
This is just scratching the surface. If you work with us, we can help advise other tax-exempt fringe benefit plans to offer your employees.
Utilize Accountable Plans to Reimburse Employees
Does your small business often reimburse employees? If so, it’s a wise idea to use accountable plans. If you’re not familiar, an accountable plan follows regulations set by the IRS to prevent reimbursement from qualifying as taxable income—both for employers and employees. So if you do not already offer accountable plans to your employees, they will probably request that you do so before long.
If you’ve been in the game for a while, you’ve likely encountered a situation or two where you could not deduct an entire eligible expense due to a limit. In situations such as these, carryovers can be a great way to look out for your future self and save money in coming years.
If you use a carryover, you can claim either credits or deductions for one expense over multiple years.
Keep in mind, however, that this won’t work for every expense. The government will not allow you use a tax break beyond the year it was accrued for certain expenses. But here are a few expenses that typically do allow carryovers:
- Contributions to charities
- Energy credits
- Capital or net operating losses (with limitations)
Partner with a CPA
It can be extremely difficult for the layperson to keep track of all the different ways for small businesses to save money during tax season. For this reason, it’s a smart idea to partner with a CPA.
Bowman & Company offers tax planning services for small business that will maximize your savings when tax season comes around. We have years of experience doing so, and have established a long list of satisfied clients throughout the region. We believe we’d be a great fit for you.
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services are aimed at decreasing your taxes and increasing your net worth through responsible, timely, and accurate record keeping. We offer our services to clients throughout the Washington, D.C. metropolitan area including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.