finance
It ’ s A Wrap Year-End Tax Strategies for Dental Practices
by Tasha Ravinowich
With the end of 2022 in sight , now is the time to take a few minutes to set yourself up for a successful year-end . With increased appointments as patients look to maximize their flex spending plans or previously paid deductibles , the fourth quarter can be a chaotic time of year for most business owners . However , spending the time to maximize deductions now will pay off when the 2023 filing season begins . Below are several items to consider before year-end that can dramatically impact your company and personal tax position .
Accelerating Deductions : Cash-basis taxpayers should try to pay any open invoices before the end of the year , particularly in high-revenue years . If a large invoice is expected in early January , reach out to see if it can be posted before year-end . Paying business property taxes or January ’ s rent in December may be an option to reduce your 2022 tax liability . Accelerating deductions and deferring income are basic tenants of any tax strategy .
New Assets and Bonus Depreciation : The generous bonus depreciation rules that have been in effect since 2018 begin to phase out in 2023 . In 2022 , business owners can generally deduct 100 % of any equipment or furniture purchased as a current year expense . Starting in 2023 , the bonus depreciation deduction is limited to 80 % as a current year expense . Look towards the company ’ s imminent needs over the next twelve months and consider purchasing any required equipment before year-end to take advantage of the full 100 % bonus deduction in this calendar year .
Business Meals : Business meals are typically subject to a 50 % limitation . As a way to encourage spending at restaurants during the pandemic , the IRS allowed a 100 % deduction for business meals in 2021 , which will continue through 2022 . Take advantage of this limited time deduction by squeezing in business meals before the 50 % haircut resumes in 2023 .
Year-End Bonuses : Bonuses are a great way for practices to incentivize employees while simultaneously managing their tax position . Regardless of entity structure ( Partnership , S-Corporation or C-Corporation ), the concept of using bonuses has variables that must be taken into consideration . These variables include but are not limited to ; payroll and payroll tax deadlines , cash-flow management , retention , and the impact on required retirement plan contributions . Bonuses can be tailored to accomplish your individual goals depending on the specific situation .
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