Top Ten Tax Tips Before the Year Ends
- December 23, 2008
- by PInow Staff
With the year rapidly coming to a close, now is the time to start thinking about end-of-the-year tax preparations for your business. Go ahead and spend money on your business now for things youll need next year so you wont be surprised with a giant tax bill in April. Remember, while we pay taxes, were not tax professionals. Also, state and local tax laws vary. Be sure to consult with your tax professional before the end of the year to make sure you're not overlooking any deductions, or deducting ineligible items.
- As part of the Economic Stimulus Plan of 2008, the limit on Section 179 deductions has been increased from $125,000 to $250,000 for this year, with both new and used equipment qualifying. Now is the time to buy those new computers you had your eye on, or that scanner/fax machine/copier unit. You can even deduct these items if you choose to finance them. However, any equipment that you claim as a deduction must be in place and working by December 31, 2008 so if you buy new computers, make sure they're up and running before January 1. For more information on Section 179 deductions, check out this informative article from SmartMoney.com.
- Buy an SUV. I know, I know. With gas prices and green initiatives, no one tells you to buy SUVs anymore. However, if you buy an SUV that weighs more than 6,000 pounds and use it at least 50 percent of the time for business, you can deduct up to 75 percent of the purchase price. SUVs that fall into this category include the Chevy Suburban, the Ford Excursion, and the Toyota Landcruiser. With struggling car companies offering great deals on vehicles, now is an especially good time to invest in a new company vehicle. Consult with your tax professional to learn how to deduct up to 75 percent of the cost of a heavy SUV in 2008.
- Now is the time to join a local, state, or national association. Business association dues are considered tax deductible. Take advantage of this while benefiting from the networking opportunities being in an association brings.
- Remember that education expenses can be deducted if they help you maintain or improve skills required in your present employment, or if it is a legal requirement for your job. Continuing education classes to maintain licensing would be included in this category. In addition, the registration fees for the conferences and conventions of the associations you just joined are deductible as well. Go ahead and register now for conferences that take place next year.
- Now that youve registered for conferences, take the time now to book your airfare, the deduct it as travel expense. Travel expenses include air fare, hotel rooms, and car rentals. You can also deduct 50 percent of the costs for entertainment and meals that are a business expense.
- Another business expense that you can deduct is advertising fees. Advertising fees include business cards, fliers, directory listings, and anything that promotes and publicizes your business. If you are running low on business cards, consider getting new ones (this article gives you tips for designing an effective business card). If you advertise in any directories, see if you can pay for a year of advertising now. Consider increasing your marketing budget and adding additional advertising. By paying for next years advertising before December 31, you benefit by relieving this years tax burden in a way that will drive new business to your company throughout 2009.
- With the downturn in the economy, many charities are seeing an increase in need with a decrease in contributions. Make a holiday contribution from your company to your favorite charity or charities. Not only will you be helping people in need and fostering a spirit of goodwill in the name of your company, but charitable contributions are tax deductible.
- If you can, prepay recurring business expenses now. Consider prepaying rent for a couple months in January, or see if you can prepay your property insurance bill. Other recurring expenses you might be able to prepay include Januarys cell phone or car insurance. If you pay these expenses by check, send them by registered or certified mail so you have proof that they were mailed by the end of 2008.
- In addition, dont overlook the following business expenses. They fall into the ordinary and usual category, therefore making them deductible: bank service charges, business-related magazines and books, casual labor and tips, coffee and beverage services, commissions, credit bureau fees, office supplies, parking and meters, postage, and promotion and publicity.
- Consult a tax professional. No one knows tax laws better than the people who are paid to know them. When in doubt, obtain the services of a CPA who will let you know for sure what can and cannot be claimed as a deduction. Remember, the cost of a CPA now just might save you the headache of an audit later.