YOU ASKED: What are most eyecare business owners not currently doing to optimize their tax savings?
WE ANSWER: There are several areas where they might not be fully leveraging available opportunities. Here are some to consider:
1. Maintaining accurate records constantly. Poor record-keeping can cost you deductions and credits. It’s crucial to maintain accurate and detailed records of all business expenses.
2. Maximizing deductions and credits. These can include costs related to office enhancements, supplies, equipment or employee training among others.
3. Utilizing retirement plans appropriately. Small-business owners often underestimate the benefits retirement plans such as solo 401(k)s, SEP IRAs, or SIMPLE IRAs offer; these provide considerable tax advantages alongside bolstering future security.
4. Inefficient business structure. The choice of business structure (sole proprietorship, partnership, LLC, S Corporation, etc.) can impact tax liabilities. Reassess whether yours is still the most tax-efficient as your business grows.
5. Accounting for tax changes proactively. Tax laws and regulations change frequently. Not staying updated can result in missed tax savings.
6. Regular consultations with industry-specific tax professionals. Sometimes, eyecare biz owners might not engage regularly with a tax professional who is familiar with the industry. Regular consultations can help identify specific opportunities for tax savings relevant to their business.
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7. Maximizing local and state tax opportunities. Beyond federal taxes, there may be state and local tax credits, incentives, or deductions that are not being fully utilized.
8. Reviewing depreciation. Many owners may not be fully capitalizing on the tax benefits of depreciation. It’s important to make strategic decisions with your tax pro on which depreciation elections would be most beneficial, especially for high-value assets like advanced optical equipment.
9. Optimizing tax deferral strategies. Strategies such as deferring income to the next tax year or accelerating deductions into the current year can be effective for managing tax liabilities, but they require careful planning and timing.
Specific applicable strategies depend on the individual business’s circumstances. It’s always advisable to consult with a tax professional to ensure effective optimization of tax savings.