5 things your banker can teach you about tax planning

Key takeaways:

• By utilizing your banker’s knowledge, you can better manage your business’ finances for optimal tax benefits.  
• Solid financial management and organized records throughout the year will help make your business’ tax filing less of a hassle.
• Planning for deductions can help you understand where to shift your money now for more savings when filing your business’ taxes.  

Tax season may have just ended, but that doesn’t mean you should stop thinking through ways to improve your business’ finances for next year.

With a wealth of experience, your banker can help you understand ways to enhance your business’ money management. Here are just a few ways your banker can help you plan for the next time you file your business’ taxes.

1. Tax law changes. Your banker stays up-to-date on federal changes that could affect your business’ finances. Sometimes the changes are favorable and could help you save money. Other times, it’s important to plan for changes that could cost your business. Knowing about the changes is half the battle. That way, you can properly prepare your taxes.
2. Organized records. Scrambling to get your books together in January is a bad idea. Utilize your banker to help understand how to keep consistent records. With detailed documents, you can take better advantage of tax incentives for your business.
3. Retirement savings. There are many ways you can utilize your retirement plan to save money. One option is a tax-deferred retirement plan that allows business owners to claim a deduction without having to give up the money spent for the tax benefit. That money just has to be kept in a retirement account until a certain age and is taxed when a distribution is taken. Your banker can help you select an option that works for your business and you.
4. Mortgage deductions. If you own your business space, you can deduct mortgage interest. Unlike interest on a personal residence, there isn’t a cap on the size of loan on which interest can be claimed. If you have your mortgage at the same bank as your other accounts, your banker can help you better understand those costs so you can determine what you could claim.
5. Business loans. With a variety of business loans, your banker can help you apply for the loan that best suits your business needs. Then, pending the loan, you may be able to deduct the amount you paid in business loan interest.

It’s important to understand your business finances, so you can optimize your tax filing. If you have questions about your business account, visit your local MidWestOne branch.

MidWestOne Bank does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.