Year-end Tax Ideas for Solopreneurs

Year-end tax ideas for solopreneurs

✔️ Update your books. Messy financials = no tax planning, no loans, no clue how your business is doing

👉Bank & credit card accounts are reconciled

👉No transactions sitting in “Ask My Accountant” IYKYK

👉Retained earnings rolls forward from the prior year

A solid bookkeeper/accountant can help you with all of this - and less painfully than you might think. Now you have more free time to generate more revenue. 💰

✔️Run a tax projection:

👉Consider making or even NOT making a Q4 payment by mid-January depending on cash flow, how well the business has done for the year, etc.

👉Back into balances due in April and decide whether to prepay.

👉Possibly shift revenues and/or expenses between 2022 and 2023. Might 2022 be a lower tax bracket year than you expect for 2023? Consider pulling 2023 revenue into 2022 + pushing 2022 deductible expenses into 2023. Vice versa if 2023 might be down from 2022.

✔️ Many states now have so-called “SALT workarounds” in place. These strategies allow pass-throughs like partnerships and S Corps to pay state income tax so owners can avoid the $10K state tax deduction cap at the federal level. Does this make sense for you and what do you need to do to have this executed before year end?

✔️ Consider your business STRUCTURE. Is it still serving you? There’s no one-size-fits all; a change in your business model could mean a change in structure is worth looking into. For example, your tax structure + other factors impact the Qualified Business Income deduction. If 2023 might be a good year to change things up, you’ll want to start that analysis sooner rather than later.

Bonus Idea:

Recent solopreneur? Does buying an existing business or franchise sound appealing? Be careful. ✋ Some of the funding strategies pushed for their alleged tax benefits are actually sophisticated - even abused - tax shelters. Don’t buy before discussing with your tax advisor and corporate attorney.