ROSE Report – 2023 Tax Planning Strategies for Business Growth and Efficiency

As the end of the year approaches, strategic tax planning becomes critical element for businesses aiming to minimize taxes, maximize cashflow and pave the way for growth. Leveraging smart tax strategies can reduce taxable income, enhance operational resilience, and improve cash flow. Exploring available tax credits and deductions specific to your industry provides an opportunity for substantial reductions in taxable income and tax expense. These incentives, specifically designed for various sectors, allow businesses to minimize tax liabilities while improving cash flow. In this article, we would like to present a list of tax deductions and strategies for organizations looking to navigate tax planning for 2023 and beyond.

Electric Vehicle Tax Credits

Electric vehicle tax credits can also be beneficial for businesses, providing up to $7,500 in tax credits. Requirements for this credit are contingent on the vehicle and its manufacturer. One of the requirements for this credit is vehicles must be placed in service by the end of 2023 to qualify for the credit in the same tax year. According to the IRS website, the vehicle must be “new, qualified plug-in EV or fuel cell electric vehicle (FCV)”. Moreover, the vehicle must be utilized primarily in the US and not be purchased for resale.

Employing Children in the Business

Business owners can also employ their children to work in their company and benefit from deductions up to a certain amount. The child will increase the overall deductible expenses of the business since the wages, employer portion of payroll taxes, and additional fees paid to a payroll service provider are all deductible. An increase in organizational expenses reduces the overall taxable income for the company, decreasing taxable income overall. Finally, engaging their children in their company empowers parents’ business interests and enables them to initiate an early retirement plan for their children, securing enduring familial benefits in the long run. The IRS requires that all employees have a valid business purpose.

Section 179 Deduction and Bonus Depreciation

Businesses have diverse avenues for tax benefits, such as the Section 179 Deduction or Bonus Depreciation, enabling full deduction if certain criteria are met. Section 179 allowed qualified companies to immediately deduct the full cost of tangible capital assets immediately after they are acquired rather than depreciating them over their useful life. On the other hand, bonus depreciation permits organizations to deduct additional depreciation for the cost of qualifying business property. Bonus depreciation was limited to 80 percent in deduction 2023 and is generally disallowed in most states. However, Section 179 is permitted by many states and is a hundred percent deductible if an organization meets certain criteria.

Resource Spotlight: Rose Financial Solutions' 2023 Year End Tax Planning Webinar

Business leaders seeking to align their strategies with regulatory shifts and long-term objectives can benefit immensely from the insights offered by industry experts. Rose Financial Solutions is hosting the "2023 Year-End Tax Planning: Mastering Your Strategy for Year-End Tax Planning and Beyond" webinar.

This exclusive webinar is configured for entrepreneurs and business leaders, aiming to provide valuable insights into the nuances of tax planning essential for financial efficiency. Join us to gain expert perspectives, strategic tips, and actionable strategies for optimizing tax planning in 2024.

View the webinar here.