8 Year-End Tax Planning Strategies

December 17, 2024 / Kristin Gunderson
Year End Tax Tips: Save Big in 2024

As the year wraps up, small business owners have a golden opportunity to take action and reduce their tax burden for 2024. Planning ahead can mean the difference between overpaying on taxes or maximizing deductions to keep more money in your pocket.

Here are 8 essential tax planning strategies to implement before the year ends:

1. Establish Your Payroll Level for 2024

Set your compensation and payroll levels now to ensure your income aligns with tax efficiency strategies for next year. Being proactive allows you to balance salary, distributions, and other income effectively.

2. Pay Your Kids

If you have kids, putting them to work in your business can be a smart tax move:

  • Under 18: You can pay them tax-free for legitimate work in your business, up to the standard deduction amount. This reduces your taxable income while teaching them about responsibility.
  • Over 18: Use these earnings to fund a retirement account like a Roth IRA or save for college expenses.

3. Buy a Vehicle Before 12/31

Thinking of purchasing a business vehicle? Now is the time!
Thanks to Section 179 and bonus depreciation, you can deduct part (or all) of the cost of a qualifying business vehicle this year, helping to offset your taxable income.

4. Purchase Equipment

Need new tools, technology, or office equipment? By investing in business equipment before December 31st, you can claim deductions now instead of waiting for next year. This is a great way to upgrade your business and save on taxes.

5. Roth Conversion

Consider converting some or all of your traditional IRA funds to a Roth IRA. While you’ll pay taxes now on the conversion amount, you’ll benefit from tax-free growth and tax-free withdrawals in retirement. This strategy works best in years where your income is lower or you have room in your tax bracket.

6. Shift Income and Expenses

Shifting income or expenses to a different tax year can help you reduce your taxable income:

  • Defer income if possible to next year to lower this year’s taxable amount.
  • Accelerate expenses like vendor payments, business supplies, or repairs to claim deductions now.

7. Charitable Contributions

If you’re feeling charitable, you can support causes you care about while lowering your taxable income. Make contributions to qualified charities before December 31st, and be sure to keep your receipts for tax documentation.

8. Get Your Books in Order ASAP

Good bookkeeping is the foundation of smart tax planning. Ensuring your records are accurate and up-to-date will help you find every deduction available, stay compliant, and avoid last-minute stress when tax season rolls around.

Ready to Take Action?

Implementing these strategies before year-end can help you save thousands on your taxes and set your business up for a successful 2024.

📺 Watch My Full YouTube Video on Year-End Tax Planning Tips:
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Don’t wait—these strategies are time-sensitive. Start planning now to keep more money in your business and save on taxes!

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