Running a business comes with its fair share of challenges—missing out on tax savings shouldn’t be one of them.

Still, many business owners overlook tax strategies that could put more money back into their businesses and their own pockets.

Whether you’re seasoned or just starting out, you want to maximize every (legal) tax benefit available. So here are a few overlooked tax-saving strategies that can help you reduce your tax bill and keep more of your hard-earned money.

Write off 100% of equipment costs

Buying equipment, machinery, furniture, and other long-term assets typically means capitalizing them (i.e., adding them to your balance sheet) and depreciating the cost over several years. But the tax code offers several ways to write off 100% of those costs.

• The Section 179 deduction allows you to deduct the entire purchase price of qualifying equipment and software in the year you buy it. For 2024, the maximum deduction limit is $1,220,000, with a spending cap of $3,050,000.
• Bonus depreciation allows you to write off 60% of the cost of eligible new and used equipment purchased during 2024. Currently, the bonus depreciation limit is scheduled to drop by 20% per year until it’s entirely phased out in 2026. However, you can combine Section 179 and bonus depreciation to write off significant fixed asset purchases.
• The de minimis expensing safe harbor allows you to immediately expense items costing $2,500 or less (per invoice or item) without tracking and depreciating them over time.

By combining these strategies, you can potentially write off 100% of the cost of qualifying equipment, helping you keep more money in your business.

Claim the home office deduction

If you’re using part of your home regularly and exclusively for business, you might qualify for the home office deduction. This deduction lets you write off some of your living expenses like mortgage interest, utilities, insurance, and repairs. The IRS even offers a simplified option to deduct $5 per square foot, up to 300 square feet.

So, that spare bedroom or cozy corner of your living room where you conduct all your business meetings? Yep, it could be a tax deduction in disguise.

Hire family members

Hiring your spouse, children, or other family members can be a smart tax-saving move. You can deduct their salaries as a business expense, reducing your taxable income.

If you employ your child under age 18, their wages are exempt from Social Security and Medicare taxes (FICA) and federal unemployment taxes (FUTA). Your spouse’s wages are subject to income and FICA taxes, but not FUTA.

Save for retirement

Contributing to a retirement plan, like a SEP IRA or 401(k), helps secure your future and provides tax benefits today. Contributions are typically tax-deductible, reducing your taxable income.

Want to save even more? Consider a defined benefit plan. For the right business owner, these plans provide a six-figure tax deduction while allowing you to keep the money for retirement.

It’s like future-you sending a thank you card to present-you for being so financially savvy.

Defer expenses and accelerate income (or vice versa)

If your company operates on a cash basis for tax purposes, you have some wiggle room when reporting income and expenses.

For example, say you expect to be in a lower tax bracket this year because business was slow or you invested heavily into the business. You might want to accelerate income this year to pay taxes on that income at a lower rate.

How? Send invoices early in December and offer customers a small discount if they pay before year-end.

The same idea works for expenses: If you’re in a high tax bracket this year, you might want to accelerate expenses into the current year to reduce your taxable income. Maybe you need a new piece of equipment and plan on buying it in February of next year. It might make sense to buy it in December of this year and take advantage of the higher Section 179 expensing limits.

Track your vehicle mileage

Whether you use a personal vehicle for business purposes or have a fleet, vehicle deductions can add up quickly. You can either deduct the actual expenses (like gas, maintenance, and insurance) or use the standard mileage rate, which is 67 cents per mile for 2024.

The key is to track your business miles if you use your personal vehicle for business. You can track your mileage the old-fashioned way with a logbook in your glove compartment or use an app that tracks your mileage and lets you classify each trip as personal or business.

Haven’t tracked any miles this year? It’s not too late to rebuild those records! Use your calendar to figure out when you drove to meet with a client, run business errands, or attend networking events.

That’s right—your car is more than just a way to get from point A to point B; it’s also a tax deduction on wheels.

Pay for health insurance

If you’re self-employed, you can deduct the premiums you pay for medical, dental, vision, and long-term care insurance for yourself, your spouse, and your dependents. This deduction is available even if you don’t itemize deductions.

Got employees? You might be eligible for the Small Business Health Care Tax Credit. This credit, for businesses with less than 25 full-time equivalent (FTE) employees, is worth up to 50% of the premiums you pay, and it’s available for two consecutive tax years.

Carryforward losses

If your business experienced losses in previous years, you may be able to carry those losses forward to offset future profits.

A net operating loss (NOL) occurs when a business has more deductions than income. You can use an NOL to write off up to 80% of your taxable income in future years and carry losses forward indefinitely.

It’s like a silver lining for those tough years—a way to turn past lemons into future lemonade.

Consider a change in business structure

As your business grows and evolves, the structure you initially chose might not be the most tax-efficient option anymore. Whether you started as a sole proprietor, partnership, LLC, or corporation, it’s worth taking a second look every once in a while to see if that entity structure still aligns with your goals and the tax code.

For example, if you’re currently operating as an LLC, you might be able to reduce your self-employment tax burden by making an S Corp election. Or, you might elect to be taxed as a C Corporation to take advantage of the low corporate tax rate and more options for bringing on outside investors.

There’s no one-size-fits-all business structure, so discuss the pros and cons with your tax advisor.

Use accountable plans

Do you reimburse employees for business travel expenses and other costs? Use an accountable plan to deduct these expenses without reporting the reimbursement as taxable income for the employee. This reduces your taxable income and employment taxes.

For expense reimbursements to qualify as happening under an accountable plan, they need to:

• Have a business connection
• Be substantiated by a receipt, invoice, or other documentation

Employees must return any excess reimbursements within a reasonable period—usually 120 days.

Bonus tip: get help from a tax advisor

One of the best things you can do as a tax-savvy business owner is to work with an advisor who’s proactive about tax planning. Business taxes are complicated, and the rules change often.

Believe it: paying for professional advice costs less than missing out on tax-saving strategies or owing penalties for mistakes and oversights.

If you need help keeping more of your profits and investing in your business’s growth, please reach out. Because taxes might be inevitable, but overpaying them isn’t.