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Best Tax Strategies for Business Owners in Ohio

Best Tax Strategies for Business Owners in Ohio

10 Feb 2022

Your tax strategy as a business owner has the potential to be just as important as the merit of your unique value offering.  Develop your business tax strategy with the assistance of experienced financial advisors in Canton, OH and you could save thousands or even tens of thousands of dollars.  

There is no shame in admitting you are not well-versed in the nuances of the tax code as it applies to businesses.  Even if you understand tax law, you probably aren’t aware of the best strategies to reduce your tax burden.  This is where the expertise of our investment advisors comes into play.

Maximize Deductions with the Help of Fee-Only Fiduciaries

Did you know that Ohio business owners who are self-employed as sole proprietors qualify for the same deductions as incorporated businesses?  Whether you make money in the form of an S Corporation or as a sole proprietor, you should take full advantage of all available tax deductions.  Instead of investing your limited time in mastering the subtleties of each individual tax deduction available to Ohio businesses, lean on our fee-only fiduciaries for guidance.  We are fiduciaries, meaning we owe a duty of care to our clients.  

 

Need tax strategies for your business? Contact McGervey Wealth Management and get some tax tips!

 

Working From Home Might Minimize Your Tax Burden

As a business owner, you might be able to take advantage of the home office tax deduction.  Shift your operations to your home, conduct the majority of your business from an office or other space in your home and you just might qualify for the home office tax deduction.  However, there are nuanced rules pertaining to the types of businesses that qualify for this deduction and the percentage of work that must be completed at home as opposed to other sites.   

Above all, be sure to keep the receipts for items and services you pay for in relation to your business.  If your business qualifies for the home office deduction, the receipts and invoices pertaining to everything from computers to printers, internet service, and beyond will prove essential to minimizing your tax obligation.

Bonus Depreciation

Bonus depreciation for qualified assets will save you a bundle of money when tax season arrives.  New equipment as opposed to that which is used qualifies for this tax break.  Computer software is also applicable.  As long as the qualified assets were put into service in the tax years of ’15 through September 25 of ’17, the bonus depreciation  is 50%.  

If your Ohio business has eligible property put into service after the 26th of September, 2017 and prior to January 1, 2023, you are empowered to deduct 100% of the cost right away.  Bonus depreciation gradually shifts downward across nearly half a decade with an 80% downward shift in ’23, a 60% downward shift in ’24, a 40% downward shift in ’25, and a 20% downward shift in ’26.  

Section 179 Expensing

Section 179 expensing in 2021 empowers you to promptly deduct $1.05 million of the initial $2.62 million of equipment that qualifies instead of depreciating it over time.  However, the equipment must have been put into service in the current tax year.  The equipment can be either used or new.  

Most Ohio business owners are surprised to learn certain software programs fall under the umbrella of eligible equipment for Section 179 expensing.  Furthermore, equipment that is depreciable and used in a home office is also eligible.  

The deduction was indexed to inflation in the tax years that followed ’18.  This deduction was even enhanced through the 2017 Tax Cuts and Jobs Act, expanding its applicability to enhancements of qualified real property that is non-residential.  Examples of such real property include business HVAC systems, security systems, fire protection, and even roofs.

Take Full Advantage of all Applicable Expenses 

Did you know the meal expenses your Ohio business racks up might qualify as legitimate tax deductions?  As long as you or your employees discussed business during the meal or met with others

to discuss business during the meal, the cost can be used as a deduction to reduce your tax bill.  Though few local business owners know it, the IRS has the potential to dig down deep into the details of the nuances of your business meals to determine if the setting was conducive to discussing business.  

Defer Pre-Tax Dollars to a Variety of Qualified Plans 

Often times business owners are unaware of strategies available to reduce pre-tax earnings.  Based on the unique tax objectives of your business and

word tax 2022 on calculator

your available cash flow, work with an Ohio financial planner to develop a pre-tax deferral strategy to minimize both your personal and business tax obligation.  Depending on your needs, these tactics can reduce your annual tax obligation by tens of thousands of dollars.

It is in Your Interest to Start Tax Planning Now

Most Ohio business owners are understandably hesitant to start tax planning before the spring.  Though no one wants to ponder just how significant their business’s tax burden will be when April rolls around, proactively planning for tax season today is in your financial interest.  The more time you give our team to develop wealth management strategies on your behalf, the less your business’s tax burden will be in 2022 and beyond. 

At McGervey Wealth Management, we get to know you on a personal level and keep things simple, using common language everyone can understand. To learn more about how we can help mitigate tax exposure for your business contact us today.

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More About the Author: Matthew McGervey, CFP®, MBA

As a CERTIFIED FINANCIAL PLANNER™ professional, Matthew has a broad knowledge of personal financial planning strategies and solutions.