For self-employed individuals, balancing today’s financial needs with future security is crucial. One powerful strategy to achieve both goals is setting up a retirement plan designed specifically for small business owners and freelancers. Not only do these plans help secure your retirement, but they also provide immediate tax savings. Let’s dive into the available options, their benefits, and how to choose the best one for your situation.
When you work for yourself, you’re responsible for your retirement — there’s no employer 401(k) match or corporate pension to fall back on. A self-employed retirement plan helps you:
Each retirement plan has unique advantages and requirements. Here’s a breakdown of the most popular ones:
When selecting a retirement plan, consider:
Most self-employed retirement plans allow contributions to be deducted from your taxable income, reducing your overall tax bill. Some plans, like Solo 401(k)s, also offer Roth options for tax-free withdrawals in retirement.
Deadlines:
Let’s explore a few scenarios:
Case 1: Sarah, the Freelancer
Case 2: James, the Consultant
A good retirement strategy evolves as your income and business grow. Consider:
Setting up a self-employed retirement plan isn’t just about securing your future — it’s a smart tax-saving strategy today. By choosing the right plan, you can maximize contributions, minimize your tax bill, and create long-term financial stability.
👉 Ready to get started? Consult with a tax professional or financial advisor to choose the best retirement plan for your business and make 2024 the year you invest in your future!
As we approach the end of 2024, strategic tax planning can greatly impact your business’s financial health. Implementing smart tax deductions now can lead to significant savings when you file your return. Here, we’ll discuss six practical tax strategies that can help your business minimize its tax liability and, in some cases, defer income to the following year.
One of the most straightforward ways to accelerate deductions is by prepaying certain expenses. Thanks to the IRS safe harbor rule, cash-basis taxpayers can prepay qualifying expenses up to 12 months in advance without any challenge, adjustment, or change. This means that as long as the expenses don’t extend beyond the following tax year, you can claim them in 2024.
Examples of qualifying expenses:
Illustration: If you pay $3,000 per month for rent, prepaying the entire 2025 rent of $36,000 before December 31, 2024, allows you to claim that deduction on your 2024 taxes. The payment date is what determines the deduction, not when the landlord receives the check.
If you run a cash-basis business that operates on a calendar year, delaying invoices can effectively defer income to the next year. This approach is particularly useful for service providers like consultants, lawyers, or medical practitioners.
Example: Jake, a dentist who typically bills patients at the end of each week, can hold off on sending his December invoices until January 2025. By doing so, Jake shifts that month’s income into the next tax year, reducing his 2024 taxable income.
Investing in new or used office equipment before year-end can yield substantial deductions. Thanks to Section 179 expensing and bonus depreciation, eligible purchases made and put into service by December 31 can be written off immediately.
Items eligible for these deductions include:
Benefit: This strategy can lead to a significant reduction in taxable income, allowing you to make necessary investments in your business while enjoying a tax break.
When running a business as a sole proprietor or single-member LLC, the date you charge an expense to your credit card is considered the date of payment. This means you can deduct qualifying expenses as soon as they are charged, even if you pay off the card later.
Key points to remember:
By making last-minute purchases with your credit card, you can maximize deductions for office supplies, marketing materials, or other business essentials needed for the new year.
It’s crucial to document all eligible business expenses, even if they result in a net operating loss (NOL). An NOL occurs when your deductions exceed your business income, which can be carried forward to offset taxable income in future years, providing a potential cash flow advantage down the road.
Advice: Always keep thorough records of your deductions, and don’t hesitate to claim legitimate expenses even if they create a loss. This can turn into valuable tax benefits for future years.
Qualified Improvement Property refers to improvements made to the interior portion of non-residential buildings, such as offices and retail spaces. QIP does not include structural enlargements, elevators, or internal structural framework.
Why it matters:
Deadline: To claim these deductions for 2024, improvements must be placed in service by December 31.
Implementing these tax-saving strategies can make a significant difference in your year-end finances. From prepaying expenses and delaying income to making strategic equipment purchases and handling QIP correctly, there are ample opportunities to reduce your taxable income. Keep meticulous records, consult with a tax professional for personalized advice, and take action before the year’s end to maximize your potential deductions.
Taking these steps now could be the difference between paying more than necessary or enjoying the financial flexibility that comes with effective tax planning.
Tax season can be an unpleasant time of year for a lot of taxpayers, especially if you owe money to the IRS or State. The one thing you can do is, be proactive, and prepared, and engage a tax resolution specialist to help guide you.
If you owe back taxes to the IRS, then read every word in this article very carefully because what you do next can impact your financial stability and peace of mind. Today I will share with you what tax resolution is and how it can help you.
Before we jump into it, if you have a back tax debt or years of unfiled tax returns, contact our firm for a consultation https://calendly.com/premierbusinessstrategist/virtualconsult. We always recommend that you do not talk to the IRS without representation as, many times, it makes your situation worse.
The IRS can be an intimidating agency to speak with and will do everything in its power to collect what is owed to them. Connect with one of our tax resolution specialists for a no-obligation consultation so we can review your case and guide you to the best option for your specific situation. You won’t have to talk to the IRS; our firm can provide the peace of mind needed to resolve your tax issue.
What is Tax Resolution?
Tax resolution, also known as IRS Representation, or Tax Controversy, is the process of resolving back tax issues with the IRS or state tax authorities. It generally involves negotiating a payment plan or a settlement agreement for less than you owe. Many times, for a lot less if you’re eligible.
There are several options available for resolving taxes owed including:
How Can Tax Resolution Help You?
If you find yourself in the unfortunate situation of owing back taxes to the IRS, then here is how tax resolution can help you in several ways:
In conclusion, tax resolution is a way to settle tax debt and get back on track financially. It involves negotiating a payment plan or settlement agreement with the IRS or state tax authorities. By avoiding penalties and interest, reducing your tax debt, protecting your assets, and improving your credit score, tax resolution can help you achieve financial stability and peace of mind. If you owe back taxes, it is important to take action sooner, rather than later, and explore your options for resolution.
Our firm specializes in tax resolution, even if you have years of unfiled tax returns, or owe the IRS over $10,000 we can help! If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem. https://calendly.com/premierbusinessstrategist/virtualconsult