Thursday, February 28, 2008

Five Essential Tax-Planning Tips for Small Businesses

  • Keep detailed records of collection efforts to support deductions for bad debts that became worthless in 2007.

  • Reschedule business trips planned for early next year to December to increase travel deductions for 2007.

  • Increase your business driving or decrease personal driving—or both—to preserve top-dollar deductions for personally-owned vehicles.

  • If your company operates on the accrual basis, set bonus amounts before January 1, but pay them early next year. Generally, the bonuses aren’t taxable to employees until the year they are paid but can be deducted on your company’s current-year return so long as they’re paid by March 15 of the following year.

  • Nail down current deductions for repairs to business premises by scheduling them separate and apart from major renovations. As opposed to repairs, capital improvements aren’t deductible but are added to the “basis” of property.


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    Ricky said...

    Many thanks for sharing these great tips. Generally people only worry about their taxes during tax season. However, you will save in taxes if you make tax planning your year-round concern. It’s always better to make business and personal purchases, investments, and other expenditures with tax savings in mind.

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    Michael Hanley, CPA said...

    My thoughts exactly, Ricky. I have actually just released a book specifically designed to educate small business owners about year-round tax planning:

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