But one item you should also add to your to-do list: make your last-minute tax maneuvers to reduce your bill come April. This will help reduce your concern over taxes throughout the year.For those that had a strong 2022 and know they plan on big spending in early 2023, then consider making the purchases now.
You want to pay the least amount required, based on your yearly results, while avoiding penalties. For those that have seen profits rise, then they will need to ensure that they pay enough to guarantee that while your accountant may figure out ways to save later, you’re not adding penalties to the total bill today. To do so, it requires that you at least pay 100% of the tax liability that you had the previous year.
If you’re in this position, then connecting with your accountant to determine your total expected tax bill may be worthwhile.One underutilized method to reduce taxes among small business owners is the use of the S-Corp designation. While many companies and single entities will sign up for a limited liability company as its business design, it will then choose to be taxed as a sole proprietor.
While the deadline for this maneuver is March 15, 2023, it’s important to begin making this calculus now if you expect pay to surpass what you would reasonably earn in a similar position if you worked in-house somewhere.When it comes to investing in an IRA or retirement account, while it goes towards 2022 taxes, you typically have until April 2023 to add funds to reach the annual limit.
The S Election status section needs to clarify it will be for the upcoming year and going forward; not the current year