Top Tax Strategies for Houston Small Businesses in 2024
Running a small business in Houston comes with its challenges, and taxes are often at the top of the list. With the right strategies, you can lower your tax burden and keep your business thriving. Here’s a breakdown of the top tax-saving strategies for Houston small businesses in 2024.
1. Maximize Deductions with Section 179
The Section 179 deduction allows businesses to fully deduct the cost of qualifying equipment, software, and machinery. In 2024, businesses can deduct up to $1.16 million of equipment purchases, as long as total purchases don’t exceed $2.89 million.
Why it matters in Houston: Many small businesses in Houston rely on equipment to grow. Taking advantage of Section 179 can reduce your taxable income and improve cash flow.
Need expert help? Our tax services in Houston, TX, USA, can guide you through maximizing deductions like Section 179, ensuring you make the most of your savings.
2. Use the Research and Development (R&D) Credit
The R&D Tax Credit helps businesses that are investing in new products or improving existing ones. In 2024, the credit has become more accessible to small businesses, making it a great way to offset research and development costs.
Did you know? About 75% of eligible businesses don’t claim this credit, even though they qualify. If your business is involved in innovation, you could be missing out on significant savings.
3. Leverage the Texas Franchise Tax Exemption
In Texas, small businesses earning less than $1.23 million in revenue are exempt from paying franchise taxes. This exemption can help businesses reinvest those savings into growth or new opportunities.
With so many small businesses booming in Houston, this exemption can be a game-changer for businesses looking to expand without the burden of additional taxes.
Have questions about Texas tax exemptions? Get in touch with our experts for reliable tax services in Houston, TX, and ensure you qualify and make the most of this opportunity.
4. Take Advantage of the Home Office Deduction
For many Houston small business owners working from home, the home office deduction is an easy way to save on taxes. You can deduct a portion of your mortgage, utilities, and other home office-related expenses. The IRS allows deductions of up to $1,500 using the simplified method.
With the rise of remote work, this deduction helps service-based businesses and solopreneurs reduce their taxable income.
5. Deduct Business Miles with the IRS Standard Mileage Rate
If you use your car for business, you can deduct your mileage. In 2024, the IRS has set the standard mileage rate at 65.5 cents per mile, up from 58.5 cents in 2023. This applies to business-related trips, whether you’re visiting clients or traveling to events.
Pro Tip: Track your miles using apps or a logbook to ensure you don’t miss out on deductions.
Wondering how to track and deduct business miles? Connect with our team for personalized advice from the best tax services in Houston, TX, to maximize your deductions.
6. Set Up a Retirement Plan for Employees
Setting up a 401(k) plan or a SIMPLE IRA for your employees can reduce your taxable income, while also helping attract and retain talent. Contributions made by employers are tax-deductible.
With the competitive job market in Houston, offering retirement benefits helps keep your team happy while also cutting down on taxes.
7. Explore Tax-Advantaged Health Plans
Health plans like Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs) offer tax-free contributions. As a business owner, you can also deduct contributions to these plans, reducing your taxable income.
With Houston’s growing healthcare industry, offering tax-advantaged health plans can keep your business competitive and help save on taxes.
8. Use Net Operating Loss (NOL) Carryforwards
If your business has experienced losses in the past, you can use those losses to offset future income with Net Operating Loss (NOL) carryforwards. This strategy helps reduce taxes when your business is back in the black.
If your business has struggled in previous years, NOL carryforwards are a great way to lower future tax bills when your profits return.
9. Hire Family Members for Tax Savings
Hiring family members for business tasks like bookkeeping or administration can lower your tax burden. Their wages are tax-deductible, and if they earn below the IRS threshold, their income is tax-free.
Many small family-owned businesses in Houston use this strategy to save on taxes while giving family members valuable work experience.
Curious about hiring family members for tax savings? Contact us today for expert guidance from the best tax services in Houston, TX, to ensure you’re fully compliant while saving money.
10. Work with a Local Tax Professional
Working with a tax professional familiar with Houston’s business landscape can make a big difference. They can help you navigate both Texas state laws and federal tax regulations, ensuring you never miss an opportunity for tax savings.
A local expert understands the ins and outs of Houston’s business environment and can offer tailored advice to keep your business financially healthy.
Reach out to the best tax services in Houston, TX, USA, and let our team help you navigate the complexities of business taxes, ensuring maximum savings for your business.
Conclusion
Tax laws in Houston are constantly changing, but staying informed and using these tax strategies will help your small business save money, stay compliant, and grow. Whether it’s taking advantage of local exemptions, maximizing deductions, or setting up employee benefits, these strategies are designed to help you thrive.Partner with us for the best tax services in Houston, TX, to ensure you’re making the most of your opportunities in 2024 and beyond. Stay proactive in your tax planning to avoid costly mistakes and keep your business on the path to success.