Paychex, Inc. has pointed out a way for small businesses to lower their tax exposure at the last minute: establish a retirement plan.
Employers are always looking for ways to cut their tax bill for the year, even in the limited amount of time left before the calendar page changes.
They’d also certainly like to avoid tax headaches in the year to come by complying with regulations before deadlines pass.
To help them out on both counts, Paychex identified five different tax regulations that small business owners need to consider before the current year ends.
Highlighted among those regulations is the one that not only offers a method for potential tax savings for small business owners, but is likely to be popular among their employees as well: the implementation of a retirement plan.
Small business owners who establish a new 401(k) plan by December 31 of this year may not be aware that they can claim a federal tax credit for the first three years of the plan to offset the costs of launching the plan.
Among startup costs eligible to be counted in that tax credit, Paychex explained, are expenses necessary to set up and administer the plan, as well as the costs for employee education about the plan.
In addition, a percentage of the employer’s contributions are tax deductible as well.
Other regulations highlighted in Paychex’ checklist include these:
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the need for detailed informational reporting on health care coverage offered to full-time employees
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the extension of a number of popular business-friendly tax breaks
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potential changes to online sales tax levies
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and the requirement by a number of states and the District of Columbia that W-2s and Annual Reconciliations both be filed by January 31
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