Corporate Tax Planning Tips for 2023

Small business tax mistakes and how to avoid them - 498390839083

The year 2023 is quickly approaching, and it’s time to start planning for your business taxes Accountants Southend. While you can’t change the year-end, there are some things that you can do this year to help minimize your tax liability in 2023. Here are three corporate tax planning tips that you should consider when starting a new business:

Accelerate Deductions

One of the easiest ways to lower your tax bill is by accelerating certain deductions into 2021 or 2022. For example, if you have an opportunity to accelerate capital expenditures into this year (or next), then do so. This will allow you to write off those expenses sooner, which means less money you have to pay out in taxes later down the road.

Avoid the AMT

Another strategy that businesses can use is called “tax planning around AMT.” This involves taking steps before 2023 to avoid paying the Alternative Minimum Tax (AMT) when filing next year’s return. If your business has experienced some growth over the past few years and has reached a certain size threshold ($100 million+), then it may be worthwhile for you to consider restructuring before 2023.

Tax-Free Spinoff

The Internal Revenue Code allows certain companies to spin off their business assets without triggering taxable gain to shareholders. Spinning off a subsidiary is an effective strategy for distributing your company’s value without paying taxes on it. If you’re considering spinning off a subsidiary, it’s essential to understand how this tax-free process works and whether it will benefit your business.

Consider a Tax Avoidance Plan

Tax avoidance plans save money on taxes by reducing taxable income. This can be done through methods like deferring income or accelerating deductions. You can also consider making charitable donations or paying employees bonuses yearly instead of at year-end. The goal here is to make sure that as much money as possible is paid out before year-end, so it doesn’t get taxed at the highest rate possible.

Plan Ahead for Next Year

If you have Accountants Southend flexibility with timing, then you should use this time to plan for next year’s tax season. For example, suppose you know that you will owe more than usual next year due to an increase in earnings or other factors that may trigger higher taxes. In that case, you should now consider making more significant charitable donations to lower your taxable income for next year-this way, when it comes time to file taxes in 2023.

Write Off Bad Debts That Have Gone Unpaid

If your business has experienced losses due to bad debt, you may be able to take advantage of the Small Business Expense Deduction. This deduction lets you deduct the total value of the particular property purchased and put into service in the current tax year. The property eligible for this deduction includes the following:

  • Equipment.
  • Furniture and fixtures used in your business.
  • Other tangible personal property used in connection with your business.

Wrapping Up

This post showed you three corporation tax planning tips from local accountants in Southend. The last of these was a consideration for 2023. This is important given that Corporate Tax Planning is not something you can wait too long to do because if you miss the deadline for changes in the frequency of reporting, there could be a potential issue for your 2023 tax payments and how they affect your 2026 tax liabilities.

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