Is it looking like your business expenses will exceed your income this year?
Especially if you’re a new business, don’t fret. This is common for many start-up companies and it can help reduce your tax burden in future profitable years.
If your business expenses exceed your income, it’s called a net operating loss.
You can have a lot of flexibility in using a net operating loss to your advantage for tax purposes. You can elect to carry back the net operating loss for up to two years, recouping taxes paid in those earlier years, or you can choose to carry the loss forward for up to 20 years.
Once you start experiencing profits, this year’s loss can save you on taxes in those future years. Or if you’ve had a fluke down year, an upside can be experiencing tax savings through applying your net operating loss to prior profitable years.
Check out our prior year end tax tips, and look for more in the coming days and weeks. Check back here regularly for more tips - or call us for custom advice for your business or personal tax returns