As the year ends, it’s crucial for business owners to take proactive steps to lower their tax liabilities. At Taxmagic, we help businesses like yours make strategic decisions that maximize tax savings. Here are some key ways to legally reduce your business taxes before the year ends:
1. Accelerate Expenses and Delay Income
One way to lower your taxes is by accelerating expenses into the current year while delaying income. This method can help reduce your taxable income by increasing deductions and deferring revenue.
2. Use Section 179 Deductions
If your business has purchased equipment, take advantage of Section 179 deductions. You can write off the full cost of qualifying assets in the year they’re purchased, saving you significant tax dollars.
3. Contribute to Retirement Plans
Contributing to a 401(k) or SEP IRA can reduce your taxable income. For 2025, you can contribute up to $66,000 to a SEP IRA, making it an effective strategy for tax savings.
4. Hire Family Members or Outsource Work
Consider hiring family members or contractors. The total tax burden can be decreased by paying family members, particularly children, who can move their income to a lower tax band.
5. Claim Tax Credits
Don’t overlook available tax credits. If your business qualifies for credits like the R&D Tax Credit or Energy Efficiency Credits, they can reduce your tax liability dollar-for-dollar.
6. Prepay Estimated Taxes
If your business has high earnings late in the year, consider prepaying estimated taxes. This strategy can increase deductions and reduce your taxable income for the year.
7. Review Your Business Structure
Reviewing your business structure (LLC, S-Corp, etc.) with a TaxMagic advisor may reveal opportunities to lower your tax burden, depending on how your business is set up.
By implementing these strategies, you can significantly reduce your business taxes before the year ends. At TaxMagic, we provide expert tax planning and preparation services to help businesses minimize tax liabilities and ensure compliance.
