Small businesses owners, entrepreneurs, and people with side-hustles should use the start of the new year to get organized and review their business operations. I asked ChatGPT for some suggestions, and I think it came back with a great list of ways for small businesses to save on their taxes in 2023. Let’s take a look at the results.
Here are three things that small business owners can do at the start of 2023 to minimize their taxes:
Review your business structure:
If you’re currently operating as a sole proprietorship or partnership, you may be able to save on taxes by changing to a limited liability company (LLC) or corporation. These business structures offer liability protection and may also offer tax benefits.
Keep track of your business expenses:
It is important to keep thorough records of all of your business expenses, as many of these can be deducted on your tax return. This includes things like supplies, equipment, and travel expenses. There are many tax deductions available to small businesses, including deductions for business expenses such as rent, supplies, and employee salaries. Make sure you’re taking advantage of all the deductions you’re eligible for to reduce your taxable income.
Consider tax-advantaged retirement plans:
Setting up a retirement plan for your business, such as a 401(k) or SEP IRA, can help you save on taxes. Contributions to these plans are tax-deductible, and the money in the plan grows tax-free until it’s withdrawn in retirement. This can be a win-win: not only will you save on taxes now, but you’ll also have a nest egg for the future.
Bonus item:
It’s also a good idea to consult with a tax professional or financial advisor to discuss the best tax-saving strategies for your specific business.