Published May 15, 2023
As we approach the midpoint of the year, May is an excellent time for small businesses to review their financial situation and begin tax planning for the coming fiscal year. Here are some strategies and considerations for effective tax planning in May.
1. Review Your Financials
The first step in tax planning is understanding your current financial situation. By May, you should have a good idea of your business's income and expenses for the first part of the year. Review these figures and compare them to your projections to identify any discrepancies or potential issues.
2. Estimate Your Tax Liability
Based on your current income and expenses, estimate your tax liability for the year. If it looks like you might owe more than you anticipated, now is the time to start setting aside funds to cover the extra expense.
3. Consider Making Estimated Tax Payments
If your business earns income that is not subject to withholding, such as self-employment income, you may need to make estimated tax payments. These payments are due quarterly, with the second payment typically due in June.
4. Review Your Business Structure
Different business structures have different tax implications. If your business has grown or changed significantly since you last reviewed your business structure, it may be worth considering whether a different structure could offer tax advantages.
5. Plan for Deductions and Credits
Start planning now for any deductions or credits you plan to claim on your taxes. This could include expenses for business equipment, office supplies, travel, and education, among others.
6. Consult with a Tax Professional
Tax laws can be complex and change frequently. A tax professional can help you understand your obligations and opportunities, and guide you in making the best decisions for your business.
Remember, tax planning is a year-round activity, not just something to think about at tax time. By starting in May, you give yourself plenty of time to make adjustments and take actions that could potentially save you money come tax time. At Accurate Accounting Solutions LLC, we specialize in helping small businesses with their tax planning needs. Contact us today to learn how we can help you.