Stop! Don't Pay Off That Business Loan Yet.

Paying off debt feels good — fewer payments, less stress, more cash flow. But before you send that big check to the bank, here’s what most business owners don’t realize:

Paying down principal isn’t tax-deductible.

That $20,000 you were about to throw at your loan? It won’t save you a dime in taxes. In fact, you could end up with a nasty surprise: you owe tax at year-end and don’t have the cash to pay because you already sent it to the bank.

Instead, check with your CPA first. You might be better off using that money for moves that are deductible, like:

    •    Buying equipment and writing it off with bonus depreciation

    •    Funding your retirement plan

    •    Prepaying expenses to lower this year’s taxable income

Paying off debt is still a good goal — but timing matters. A quick planning session now can save you from scrambling for cash (or a loan) come April.

Before you write that check, let’s make sure it’s the smartest move for both your taxes and your cash flow.