Tax Planning for Business Expansion

Expanding your business brings new tax considerations. Here's how to plan ahead.

Hiring Employees

Payroll Taxes:

• Employer portion of Social Security and Medicare
• Federal unemployment tax (FUTA)
• State unemployment tax (SUTA)
• Workers' compensation insurance

Tax Credits:

• Work Opportunity Tax Credit
• Employee Retention Credit (if applicable)
• Research and Development credits

New Location Expenses

Deductible Costs:

• Rent and utilities
• Improvements and renovations
• Equipment and furniture
• Signage and marketing

Depreciation:

• Leasehold improvements
• Equipment purchases
• May qualify for Section 179

Equipment Purchases

Section 179:

• Deduct up to $1.16 million (2025)
• Can write off entire cost in year of purchase
• Great for expansion year

Bonus Depreciation:

• 60% first-year bonus (2025)
• Can combine with Section 179

Business Structure Changes

Consider S-Corp:

• If adding employees
• If profits are growing
• For SE tax savings

Multi-State Considerations:

• May need to register in new states
• State tax obligations
• Sales tax collection

Financing Expansion

Loan Interest:

• Business loan interest is deductible
• Personal guarantees don't affect deductibility

Equity Financing:

• Different tax implications
• May affect business structure
• Consider tax consequences

Timing Considerations

• Time major purchases for maximum deductions
• Consider year-end timing
• Plan for estimated tax increases

Record Keeping

• Track all expansion expenses
• Separate new location costs
• Document business purpose
• Keep receipts for all purchases

How FileJoy Helps

FileJoy helps you track expansion expenses, calculate depreciation, and ensures you're maximizing deductions during growth phases.

Next Steps

1. Plan expansion expenses
2. Time major purchases strategically
3. Update business structure if needed
4. Track all new expenses carefully

Proper tax planning during expansion can significantly reduce your tax burden while you grow.