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Year End Tax Tips: How Businesses Can Benefit From a Net Operating Loss

Posted by Denise Hozza on Wed, Dec 16, 2015

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tax_tips-_businesses.jpgIs 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

Topics: Business tax planning

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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