Thursday, February 28, 2008

Top Three "Do's" For Small Business Owners

Retain copies of all receipts, especially those from any cash transactions

Your accountant or bookkeeper will have a good record of any purchase you make with a debit card, credit card, or check. However, the only way they will know about a cash purchase is if you provide them with a copy of the receipt.

Receipts justifying any ATM Withdrawals, Cash Withdrawals, and checks made payable to cash are now required by most Workers Compensation Insurance Audits. Any cash withdrawals that cannot be justified will be assumed to have been used to pay off-the-books workers and you will be charged for additional payroll.

Take advantage of Section 179 Bonus Depreciation

If you are planning to make any large purchases during the first quarter of the following year such as trucks, automobiles, or equipment, you may benefit from making that purchase before December 31 of the current year. Making the purchase in the current year may qualify you to expense the full purchase price under IRS Code Section 179 in order to quickly reduce your current-year taxable income. For 2007, the maximum deduction limit has been increased to $125,000

Talk to your accountant about the Manufacturing Credit

A business may be able to claim a manufacturing credit in 2007 equal to 6% of the taxable income from its qualified production activities. Due to new regulations issued this year, it may be easier to qualify for deductions.


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