.png)
If you own an HVAC company, here's some of the best advice we can provide to help you reduce taxes and grow your business.
After working with countless HVAC contractors across the country, we've identified eight impactful tax reduction and growth strategies. Committing to these could save tens of thousands of dollars annually and significantly boost your sales.
For example, Strategy #1 alone can reduce your Social Security and Medicare taxes by $2,000 to $15,000 annually. Many companies overlook this entirely.
HVAC Bookkeeping Services & Tax Accountant for HVAC Companies
We are Passageway Financial, a dedicated team providing outsourced accounting, bookkeeping, tax, and tax reduction services for contractors, especially HVAC companies.
Our services ensure you have perfect books each month, upgrade your accounting system for scaling, handle tax returns, and implement strategies to minimize taxes.
If you don't have a proactive CPA helping to lower your taxes and grow your business, contact us for a free tax reduction analysis today!
Maximizing the benefits of an S-Corporation can significantly cut your Social Security and Medicare taxes.
Without an S-Corp, you pay a 15.3% self-employment tax on all net profits. With an S-Corp, you'll pay yourself a reasonable salary—subject to these taxes—but the remaining profit can be taken as a distribution, which is not subject to self-employment tax.
This requires careful planning to comply with tax laws regarding "reasonable" salaries. Mistakes can lead to costly income reclassifications, but the savings can be substantial when managed correctly.
Book a free S-Corp analysis with the Passageway Financial team to ensure you're maximizing this strategy.
Setting up a small business retirement plan allows you to save for the future while reducing taxes.
Employer contributions to 401(k)s, SEP IRAs, or defined benefit plans are tax-deductible and not subject to self-employment taxes. Depending on the plan, you could write off up to $69,000 annually. If you have employees, these plans can also be a great way to attract and retain talent.
We'll help you identify the best retirement plan for your business and financial goals.
Hiring your children can reduce your tax burden by shifting income to a lower tax bracket.
Your child must be a minor and legitimately work in the business. Tasks could include cleaning trucks, helping with social media, or assisting with photos and marketing. By following payroll and record-keeping rules, you can save significantly while teaching your kids valuable skills.
Hiring your minor children can lead to significant tax benefits if you own an HVAC business. The wages you pay them are tax-deductible as a business expense, and they can earn income up to the standard deduction limit without paying taxes.
Benefit: Not only does this strategy help reduce your tax liability, but it also teaches your children valuable financial skills and provides them with work experience that will benefit them.
Trucks and vans used for your HVAC business can provide substantial tax deductions. The entire cost is deductible if the vehicle is used solely for business. Track your business mileage for vehicles used personally and for business to claim the correct deductions.
Tip: To maximize your deduction, you can use the standard mileage rate (65.5 cents per mile in 2024) or calculate actual vehicle expenses, which results in a greater deduction.
Strategic year-end tax planning is crucial for minimizing your overall tax burden. By working with a CPA who understands the HVAC industry, you can gain insights into tax-advantaged investments, depreciation strategies, and expense management.
Tip: Begin your tax planning early and stay consistent throughout the year. A proactive approach ensures you don't miss valuable opportunities as the year progresses.
Yes, equipment purchased for client installations, such as furnaces, air conditioners, and related materials, can be deducted as a cost of goods sold.
Tools such as pressure gauges, leak detectors, and refrigerant scales are deductible as business expenses, or they can be depreciated over time.
For many HVAC contractors, an S-Corp provides greater tax savings than an LLC taxed as a sole proprietor. S-Corps offer substantial benefits by avoiding self-employment taxes on distributed income, especially for higher earners.
To switch to an S-Corp, submit IRS Form 2553 by March 15 of the tax year you want the S-Corp status to take effect. Detailed filing instructions are available on the IRS website.
At Passageway Financial, we specialize in helping HVAC contractors optimize their taxes and grow their businesses. Whether you need help setting up an S-Corp or exploring additional tax-saving strategies, connect with Passageway Financial to our experienced team today!
