There’s no doubt that 2020 has delivered its share of twists and turns, and that businesses are ready to hop off this roller coaster as soon as possible. It’s understandable many are unsure about what’s to come, including future shutdowns, the fate of the Paycheck Protection Program and the possibility of another round of stimulus.
In a world where we feel like we have less and less control, here’s a checklist of some things you can do to get ready for 2021:
- Thanks to recent clarity from the IRS, it’s a good idea to go ahead and get started on the PPP loan forgiveness process
- Maximize the 20 percent Qualified Business Income (QBI) deduction
- Consider switching to a cash method of accounting which more quickly recognizes your business’s revenue and expenses, which can make it easier to do accurate planning for 2021
- Use the Section 179 deduction to buy new equipment and then deduct the full purchase price from your business’s gross income
- If you’re a C-corporation, you can potentially lower your tax obligations for 2021 by accelerating next year’s income or deferring some deductions from this year
- Consider deferring a debt-cancellation event until 2021 and disposing of a passive activity in 2020
Everyone’s circumstances are different so not all these suggestions might fit your business’s needs. This also isn’t an exhaustive list, so your business might need to take a look at a few other things that might provide some benefit.
At Padgett, we have a trusted team of tax experts, accountants and business advisors that can help your business make a plan that suits your needs. Get in touch with one of our offices today, and let us help you tailor a plan to move your business forward.