Proactive Tax Strategies – Business

Presented by Marc Aarons 

We made it through another tax season, but that doesn’t mean our work is done! In fact, now is the perfect time for businesses to consider the practices that increase tax efficiency and augment readiness for any scrutiny, such as audits. 

Here are some key ways to increase tax efficiency: 

1. Receipt Management – Keeping track of receipts is vital for substantiating expenses for claiming deductions. Utilize digital tools to scan and store receipts. This not only reduces physical clutter but also makes it easier to retrieve specific documents when needed.
2. Deductible Expenses – Understand what expenses are deductible, and make sure that you are tracking throughout the year to minimize scrambling at year-end.
3. Mileage Tracking –  For business use of a vehicle, keep a detailed log of miles driven for business purposes, including dates, destinations, and purposes of the trips.
4. Meals and Entertainment – Business meals may be deductible under certain conditions, primarily if they are ordinary, necessary, and directly related to your business. Note that entertainment expenses are no longer deductible.
5. Home Office Deductions – If you use part of your home regularly and exclusively for business, you may be eligible for a home office deduction. Keep records of expenses related to this portion of your home.
6. Proactive Tax Planning – If applicable, ensure you’re making estimated tax payments throughout the year to avoid penalties. Additionally, remember that contributions to employee retirement plans can be a significant deduction. Evaluate your contributions to ensure they align with your financial goals and tax strategies.

Here are the types of documents you will need access to in the event of an audit:

• Bank Statements and Invoices – Keep all bank statements and match them with invoices and receipts. This helps verify the transactions recorded in your books.
• Employment Records – Maintain detailed records of employment taxes and filings. 
• Financial Statements – Regularly review and reconcile your financial statements, including profit-and-loss statements and balance sheets.

How We Can Help

Our firm is dedicated to supporting your business’s financial health year-round, not just during tax season. Whether it’s strategizing for tax reductions or preparing for potential audits, we’re here to provide advice tailored to the unique needs of your business.

Marc Aarons may be reached at 714-887-8000 or Email Marc

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This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.