Year-Round Tax and Financial Planning Strategies for Powersports Dealers
Powersports Dealers Encouraged to Adopt Year-Round Tax and Financial Planning Approach
As the tax filing deadline fades into memory, powersports dealer principals find themselves in various mental states. Now is the perfect time to shift focus from the immediate rush of the tax season to a more proactive approach: year-round tax and financial planning.
By revisiting key planning tips and strategies, powersports dealers can fortify their financial position, minimize surprises, and set a solid foundation for the year ahead. Steve Blake, CPA and managing director with the CBIZ Dealership Team, emphasizes the importance of continuous financial and tax foresight.
One key aspect of year-round tax planning is safe harbor and estimated tax payments. CPAs often use prior-year records to estimate tax payments, but economic shifts or revenue projections can render this baseline irrelevant. Powersports dealers are encouraged to share projected budgets with their CPAs to determine the lowest safe harbor tax payment and review financials quarterly to ensure accurate tax planning.
Another important consideration is adjustments, write-offs, and bonus depreciation. Bonus depreciation allows dealerships to deduct a substantial portion of the purchase price for eligible business assets, but the rate is gradually decreasing. Powersports dealers should schedule quarterly meetings with their CPAs to address key questions and ensure eligibility for bonus depreciation.
Cost segregation is also a valuable tax strategy for dealers undertaking building improvements. This strategy frontloads depreciation deductions for real estate assets, potentially placing dealers in a lower tax bracket. Powersports dealers who recently completed major improvements without a cost segregation study can still benefit from a one-year catch-up deduction.
In light of significant tax law changes in recent years, powersports dealers should consider their specific circumstances when developing a tax and financial plan. Strategies such as 529 college accounts, retirement plans, and other tax-advantaged accounts can help dealers capitalize on tax benefits tailored to their dealership, family, and goals.
Overall, powersports dealers are encouraged to adopt a year-round tax and financial planning approach that extends beyond the tax filing deadline. By implementing these strategies, dealers can strengthen their financial position and set themselves up for success in the year ahead.