Smart Moves to Lower Your Future Business Tax Bill

With the slower pace of summer upon us, there’s finally a moment to take a breath—and take stock. It might seem like tax season is a world away, but now is the prime time for strategic financial planning to improve your 2025 bottom line. Proactive planning can lead to significant savings and reduced stress when filing time rolls around. Here are five strategies to help cut your future tax bill and ensure your business's long-term financial health.

Review Your Business’s Deductions

A mid-year review of your business expenses can reveal significant opportunities for deductions you might have missed. Keep precise records of deductible expenses, such as travel, office supplies, and insurance. This attention to detail can lead to substantial tax savings and improve the accuracy of your financial statements.

Take Advantage of Section 179 Deductions

The Section 179 deduction allows businesses to deduct the full purchase price of qualifying equipment and software purchased during the tax year. This can be a considerable advantage at tax time, as it provides an immediate reduction to your taxable income. Consider what investments could benefit both your 2025 tax bill and your business operations.

Maximize Retirement Contributions

Contributing to retirement accounts such as a 401(k), IRA, or SEP IRA not only reduces your taxable income but also bolsters future financial security. The earlier you contribute in the year, the more compound growth potential you have, which enhances the tax savings benefit over time.

Make Note of Tax Credits

Tax credits can be powerful tools, often more valuable than deductions since they reduce your tax bill dollar-for-dollar. Explore available credits for initiatives like energy efficiency upgrades, increased accessibility, or innovations in your product line. Understanding the criteria for these credits in advance makes it easier to plan and act on them.

Accelerate or Defer Income and Expenses

Strategically timing income and expenses according to anticipated profits can lead to significant tax benefits. If you expect higher earnings next year, consider deferring income to lessen this year’s tax burden. Conversely, accelerating income and expenses when profits are expected to dip can balance the tax load over multiple years.

Applying these strategies can significantly lower your 2025 tax bill and solidify your business’s financial standing. Remember, you don’t have to navigate this alone; consider scheduling a mid-year tax check-in with financial professionals to get personalized advice. Addressing these financial strategies proactively can pave the way for a more financially secure future.