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​2022 Business Tax-saving Tips for Employers

  • Payroll
  • Article
  • 6 min. Read
  • Last Updated: 02/14/2022
Employer working through business taxes with calculator
Check out business tax-saving tips that employers can utilize in 2022 to reduce their taxes & help guide their employees. Get ready for tax season with Paychex.

Table of Contents

With the new year underway, the inevitability of taxes may be top of mind for you and your employees. While you may be wondering about tax strategies for small business, your employees may be wondering how to save on taxes themselves. For employers, options include maximizing deductions, sheltering revenue, and contributing to employee benefit plans. Additionally, your staff can increase tax savings via 401(k) contributions. There may also be relief options available as part of COVID-19 legislation that has been passed since 2020. Planning ahead with the following business tax-saving tips may help you and your staff yield savings this year.

How to Save Money on Taxes for a Small Business

Throughout the year you may wonder, "How do I maximize my business tax return?" It's possible to rein in your tax expenses in 2022 with a number of strategies. Note that you may want to consult your company tax expert for more information.

  • Ensure that you're taking every deduction available. If you don't already use an experienced tax preparer — one who keeps abreast of complex and fluid tax laws — it's likely a worthwhile business expense.
  • Shelter revenue from profits in a qualified retirement plan that gives a tax deduction for your contributions, and defers taxes on earnings until you withdraw from the plan.
  • Consider an accountable plan to save the company and employees on taxes if you reimburse staff for using personal vehicles for company business. IRS Publication 463 describes accountable plans and their use.
  • Defer income to the following tax year and boost deductions in the current tax year by sending out bills a few days later in December. You'll get paid in January, putting the income in the next tax year. Take more deductions in December by paying bills due in January.
  • Ensure that your business is structured properly. Can you gain tax advantages as a C corporation or another structure? Your company's structure determines your tax bracket.
  • If possible, increase your contribution to workers' health insurance premiums.& Doing this in lieu of salary raises means that you and your employees save the attendant income, FICA, and Medicare taxes on bigger paychecks.
  • Offer to match a percentage of employee contributions to the company 401(k) plan — the business's share is deductible. You'll save on taxes and your workers will certainly appreciate the benefit.
  • If it fits your company, establish a section 125 benefit plan, which allows employees to pay medical and dental premiums with pretax dollars and set aside pretax funds for qualified medical and dependent-care costs. A& section 125 flexible spending account can save employees an average of 30 percent in federal, state, and local taxes they already pay out-of-pocket. Your company can save an average of $115 per participant through decreased payroll and tax liabilities for social security, Medicare, and unemployment insurance.
  • Familiarize yourself with COVID-19-related tax benefits for small businesses (more details below). For instance, the Section 139 tax deduction allows employers to provide tax-free disaster relief payments to their employees. There may be many more tax-relief options available to your business as part of the CARES Act or other pandemic-specific legislation, so make sure to consult with a tax professional.

Important Dates in 2022 for Taxes

In addition to maximizing tax deductions, stay on top of tax filing and other important deadlines throughout the year. Keep in mind the following dates as you plan and look for tax savings in 2022:

Jan. 18, 2022

Q4 2021 estimated tax payments due

March 15, 2022

Partnership and S corporation tax returns due for tax year 2021

Last day for corporations to request 6-month tax filing extension

April 15, 2022

Last day to make 2021 IRA contributions

April 18, 2022

Individual, Sole Proprietors and C corporation tax returns due for tax year 2021

Q1 2022 estimated tax payments due

June 15, 2022

Q2 2022 estimated tax payments due

August 1, 2022

Form 5500 - 401(k) Retirement Plan filing deadline

Sept. 15, 2022

Q3 2022 estimated tax payments due

Extended partnership and S corporation tax returns due

October 17, 2022

Form 5500 - 401(k) Retirement Plan extended filing deadline

Jan. 17, 2023

Q4 2022 estimated tax payments due

How Can Business Owners Help Employees Save on Taxes?

Employers want to help their employees in every way possible, including assistance with tax savings. Consider helping workers to reduce what they owe the IRS throughout the year by:

  • Suggesting they maximize their pretax 401(k) contributions. Reducing reportable income means employees have a potentially lower income tax bill.
  • Postponing bonuses until January to keep workers' taxable income for the current year lower.
  • Reminding workers to consider end-of-year charitable contributions that provide tax deductions if they itemize — unless the alternative minimum tax applies.
  • Reminding them to use flexible spending account funds by year-end. These funds let employees set aside pretax money to offset healthcare or childcare expenses. As an employer, you can opt for the IRS-permitted grace period, allowing workers to spend accounts up to March 15, 2022.

Tax Law Changes in 2022

As the new year begins, many people will want to understand tax changes that have occurred and how it could impact their 2021 returns. Laws pertaining to COVID-19 in particular have also added an additional layer of complexity for businesses and individuals. A few notable items include the following:

  • Inflation adjustments: Income tax brackets, eligibility for certain tax deductions and credits, and the standard deduction have adjusted to reflect inflation. This means that the standard deduction will now be:
    • $25,100 for most married couples filing jointly
    • $12,550 for most individuals taxpayers and married individuals filing separately
    • $18,800 for most taxpayers filing as head of household
  • The Consolidated Appropriations Act: This law, which passed at the end of 2020, made notable tax changes that employers should be mindful of at the start of 2022. A few important pieces include:
    • The ability for businesses to deduct 100 percent of certain meal expenses has been extended.
    • The $300 deduction for cash charitable deductions is extended if you claim the standard deduction. For tax year 2021, the deduction increases to $600 for joint filers.
    • Expenses paid with forgiven Paycheck Protection Program (PPP) loans are fully tax-deductible.
  • Employee retention credits: As part of the Infrastructure Investment and Jobs Act, the Employee Retention Tax Credit (ERTC) program end date retroactively changed to Sept. 30, 2021, for most businesses. However, businesses may be able to retroactively claim ERTC, and have up to three years from the sunset of the program to determine if wages they paid after March 12, 2020, through the end of the program are eligible. Read more about updates to this program.
  • Retirement plan distribution changes: Provisions in the CARES Act allowed individuals impacted by COVID-19 to withdraw up to $100,000 of retirement assets without penalty. Taxpayers can report the entire distribution in one tax year or spread it equally over three years (i.e., 2020, 2021, and 2022 tax returns). The CARES Act also waived rules around retirees taking required minimum distributions (RMDs) from their retirement plans in 2020, but RMDs have been reinstituted for tax year 2021.
  • CARES Act provisions: The CARES Act and its many provisions offered financial relief to employers and individuals impacted by COVID-19. While some provisions have been extended, others have since expired. A few notable ones include:
    • Paid Family and Medical Leave Act tax credit for employers has been extended to 2025.
    • Extended unemployment assistance temporarily expanded unemployment insurance eligibility to people who wouldn't otherwise qualify, including self-employed workers, freelancers, independent contractors, and part-time workers (in addition to the millions of workers who lost their jobs as a result of COVID-19). The original $600 per week was reduced to $300 per week after the program was extended by the Consolidated Appropriations Act in Dec. 2020. This relief expired on Sept. 6, 2021.
    • Taxes owed by employees on student loan payments made by employers were delayed until Dec. 31, 2021.

Plan for Ways to Save on Taxes for Small Business in 2022

Waiting until year-end to focus on tax planning and tax saving strategies can bring stress to you and your employees. Fortunately, the start of the year is a great time to consider the many tax strategies for small business as well as individuals that are available. Work with a tax services expert to help identify and maximize opportunities to save money.

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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.