Dominic Rovano
Dominic Rovano

As we approach the new year, many companies—including PR and marketing agencies—are turning their focus to year-end tax planning to help position their business for success in 2024. By developing a strategic plan with a knowledgeable tax professional and implementing proactive measures, PR firms can minimize tax liabilities, uncover hidden opportunities, optimize cash flow and prepare for a prosperous and tax-efficient year ahead.

The following points provide a high-level overview of recent tax-law changes, general tax planning insights and important tax reminders to help you prepare for the year ahead, including the timing of Qualified Business Income deductions, using net operating losses to your advantage, updating your retirement plans and more.

Evaluate your business and tax plans before year-end

Before you begin your 2024 planning, reviewing your current business model can help you determine if it requires any changes or adjustments. Various business models may have different tax implications due to factors such as the classification of income, deductions, credits and compliance requirements. It’s also a good time to review new deductions and credits that may reduce your overall tax liability, such as small business or R&D tax credits.

Revisit retirement plan

Due to an update from the SECURE Act, businesses now have until the 2024 tax extension date to amend or enhance their retirement plans with a retroactive date of December 31, 2023. Businesses can take advantage of the extra time to evaluate retirement plan options and discuss with their tax advisor and pension consultants.

Contributions to retirement plans also increase every year. Make sure to encourage your employees to revisit their contributions for possible increases effective January 1, 2024. In addition, your HR and Finance teams should be ready to communicate these changes and monitor compliance as we settle into the new year.

Carry Net Operating Losses (NOLs) forward

Since there is no limit on the amount of NOL that a business can carry forward to future tax years, businesses can take full advantage of any losses their company may have incurred throughout the year. As your business profitability may vary over the years, carrying NOLs forward can help neutralize your taxable income in more profitable years.

Utilize Qualified Business Income (QBI) deductions

The QBI deduction is a tax benefit that can be beneficial for a variety of business owners. It allows eligible taxpayers to deduct up to 20 percent of qualified business income from pass-through entities such as partnerships, S corporations and certain trusts and estates. It may be beneficial to work with your tax professional to help you prepare an income and tax projection and review key requirements for QBI deductions such as qualified income level, wage expense and qualified fixed assets.

Consider paying your accounts payable by year-end

Cash-basis taxpayers who pay accounts payable before the end of the tax year can reduce their taxable income and deduct the expenses associated with the payable in the current year. However, it’s important to evaluate your specific cash flow capabilities to ensure that paying off AP doesn’t cause undue strain on your working capital.

Review ERC claims not received with reputable CPA firm

As the year draws to a close, businesses are reminded of a crucial deadline that could impact their financial landscape. The IRS has recently issued an update to its moratorium on processing claims for the Employee Retention Credit (ERC). The IRS encourages companies that have applied for credits but have not yet received them to have their credits reviewed by a reputable CPA firm. If you feel you claimed a refund under false pretenses, you have until January 1, 2024, to withdraw your application without penalties or fees. In addition, the IRS is allowing businesses that have already received ERC money but have later found that their applications were submitted using incorrect information, to return funds by January 1 without penalties or fees.

If you applied for or received ERC money through a company that guaranteed qualification, the IRS advises a swift review of your original application with a reputable CPA firm. Some warning signs include:

  • Contracts fees contingent upon ERC dollars.
  • ERC estimates provided before eligibility was assessed.
  • Supply chain disruption as the reason for qualification.
  • Federal guidelines (OSHA, etc.) used in place of applicable restrictive government orders.

Standard mileage rate

While the standard mileage rate hasn’t yet been announced for 2024, keep in mind that the IRS should be revealing the updated information soon. The current standard rate is 65.5 cents per mile for business travel. Be sure to alert your HR or Finance team so that reimbursements made in 2024 are provided using the most current rates.

As PR and marketing agencies navigate the complex landscape of year-end tax planning, strategic steps taken now can pave the way for financial success in the coming year. By working with a tax professional to leverage deductions and capitalize on incentives, agencies can optimize their financial positions and use tax savings to invest in their business.

We saw deal flow slow down a bit as we closed out 2023. We anticipate the M&A market to pick up again during the first two quarters of 2024. I will provide some insights into the latest market in our next article.


Dominic Rovano, CPA, is a Partner at Armanino LLP.