Tax planning strategy isn’t one-size-fits-all, but there are some approaches that are generally accepted as smart and effective for small businesses. If you’re looking to minimize what you could owe on income taxes, the following strategies could help.

Time Income and Expenses

A tried-and-true tax strategy for small business owners is to micromanage year-end business taxable income in order to minimize taxes. One way to do this is to defer income and accelerate expenses. You can defer income by delaying some fourth quarter invoices until the end of the year, so you won’t collect payment—and therefore owe taxes on that income—until the next year. You can accelerate expenses by shifting some expenses due next year into this year, which will reduce your taxable income this year.

Accelerate Depreciation

Small business owners can take tax write-offs when you make business purchases like equipment, machinery, vehicles, and software. Section 179 deductions allow businesses to take an instant depreciation deduction for qualifying new and used assets that are put to use before the end of the year. This could allow you to pay lower taxes in the current year and still buy or lease more equipment to write off in subsequent years. Be aware that there are many rules to follow with this tax write-off, including some limitations and exceptions, so it’s best to consult with a tax professional.

Take Advantage of the Qualified Business Income Deduction

The qualified business income deduction (QBI) allows eligible pass-through entities—sole proprietorships, S corporations, and partnerships—to deduct up to 20% of their qualified business income on their taxes. In general, total taxable income in 2022 must be under $170,050 for single filers and $340,100 for joint filers. If your income is over that limit, you might still qualify for either a full or partial deduction, according to complicated IRS rules, so it’s best to consult with a tax professional.

Start a Retirement Plan

Consider funding a qualified retirement plan to decrease taxable income. Corporations can contribute up to 25% of their salary to a tax-deferred plan such as a 401(k) or a 403(b), and sole proprietors can put up to 20% of earnings into a tax-deferred SEP-IRA account.

Take Tax Credits

Small-business tax credits can be extremely effective tools in reducing your tax bill. Not to be confused with tax deductions, which decrease your taxable income and can thereby push you into a lower tax bracket, tax credits reduce your tax bill on a dollar-for-dollar basis. For instance, if your small business owes $10,000 in taxes, a $2,000 tax credit means you can subtract $2,000 from your tax bill. Some of the most common small-business tax credits include:

• Credit for Small Business Health Insurance Premiums: for companies that provide small-business health insurance to their employees
• Employer Credit for Paid Family and Medical Leave: for companies that provide paid leave to employees
• Work Opportunity Credit: for companies that hire veterans, ex-felons, recipients of family assistance or food stamps, and more
• Credit for Increasing Research Activities: known as research and develop (R&D) tax credits for science, medical, and technology businesses, though other types of companies might qualify as well
• Disabled Access Credit: for companies that make their location accessible to customers and employees with disabilities
• Credit for Employer-Provided Childcare Facilities and Services: for companies that pay for their employees’ child-care expenses
• Alternative Motor Vehicle, Electric Vehicle, and Alternative Fuel Credits: for companies that produce or use alternative fuels, use an electric vehicle, or use a vehicle that runs on alternative fuel
• Tax Credit for Small Employer Pension Plan Startup Costs and Auto-Enrollment: for companies that establish a retirement plan for their team
• New Markets Credit: for companies that invest in Community Development Enterprises (CDEs) and Community Development Financial Institutions (CDFIs)