Prepare to wrap up 2024 on a high note and kick off 2025 with a solid plan! Here are some strategies to discuss with your CPAs at your upcoming year-end meeting.
1. Optimize Your Entity Structure
Do you have the right entity for your needs? Should you make the S-election? Should you have a C-Corp as a management company? E.g. Switching to an S-corp can decrease payroll taxes. Ensure you discuss all the pros and cons to make the right decision for you!
2. Plan for Your Retirement
Do you know how much to set aside to fully fund your 2025 retirement plan? Start planning now to ensure you aren’t scrambling next year to fully fund your plan! Collaborate with your TPA, CPA and your financial advisor to ensure that everyone understands your goals, and they can make the proper recommendations to get you there. Don’t forget to revisit your retirement plan structure, as a new plan might better fit your goals!
3. Maximize Your Deductions
Want to get the tax impact of your expense in 2025 instead of 2026? Consider paying expenses before year end. For example, making the second payment for the CA Pass-through entity tax this December can secure the full federal deduction in the current year. Also, buying a company car or equipment this year allows you to take the current 60% bonus depreciation, which will decrease to 40% next year.
4. Explore Investment Opportunities
Do you have high taxable income? Certain investment opportunities are structured to get that number down. These more advanced tax planning opportunities involve different investment options, entering into partnership structures, and other activities that require the expertise of various professionals.
By considering these strategies, business owners can smoothly transition into the new year and position themselves for financial success.