Five Year-end Tax Tips for Your Small Business
As the holidays quickly approach it's hardly a time to think about small business taxes. But a quick look at these year-end tax tips for small business can pay big dividends for 2006. For example, if you purchase a computer system for $2,000, you can expense it immediately and get a deduction under the Section 179 portion of the IRS code. Your firm could get a 15 - 25% write-off, which would translate into between $300 and $500 in savings. So that $2,000 computer just cost you $1500 as a result. But check with your CPA, they will have the best advice based on your company’s current financial situation.
For more tips, we’ve reprinted an article written by Darrell Zahorsky from the Small Business section of About.com; it’s an excellent resource:
1. Update Your Accounting: It's important as part of your year-end tax strategy to have a good understanding of your company's financial situation. Spend extra time ensuring your books are up-to-date and accurate. It won't hurt to plan time with your accountant for year-end advice, particular to your operations.
2. Increase Expenses: Purchase items your business will require in the immediate future to maximize deductions for this year. If you can see a need for goods and services in the first quarter of the new year, buy them now, if cash flow permits. Consider the following items for expenses:
- Office Supplies: Stock up on fax paper, printer cartridges, stationary, and other office items.
- Pay Bills Early: Pay your bills before the new year in areas such as; cell services, subscriptions, rent, insurance, and utilities.
- Office Equipment Purchases: If you will be buying new office equipment such as computer hardware or software, consider purchasing now. Business equipment purchases of up to $105,000 can be expensed for a 100% immediate deduction (under Section 179 of the IRS code). Expenses over the $105K maximum may apply for the Bonus Depreciation allowance which ends on December 31, 2005.
Your small business can gain a 50% immediate depreciation. You'll have to decide whether an immediate write off is best or spread out the depreciation over years. Consult with an accountant to examine your circumstance and company structure to maximize your deductions. In addition, your equipment will have to be in your office, "in use" by year-end.
- Other Items: This category includes: pre-payment of subscriptions, travel bookings, equipment repairs, and maintenance.
3. Defer Income: Any payments your company can receive during the first week of January as opposed to December cuts your tax bill. Every cent earned up to December 31st, 2005 has taxes paid in April 2005; whereas income deferred to January 2006, will not owe taxes until April 2007. Of course, any deferral strategy will depend on your profit and losses for the year and your corporate legal structure. Don't forget to push any early 2006 charitable donations back to 2005. Make sure you get a receipt for the tax deduction.
Depending on your income tax rates in the foreseeable new year, deferral of income can make the best sense for many sole proprietors, partnerships, LLC's, and S corporations. Ensure your cash flow can handle the deferred income.
4. Inventory Write-Offs: Depending on your accounting methods, you may wish to check inventory for goods that have been damaged or have become obsolete. The drop in market value of the inventory can provide your company with added deductions.
5. Contribute to a Retirement Plan: Make payments to your retirement plan or set one up before the year-end to reduce your income for this year. Check the contribution limits for your type of plan. In the U.S.: KEOGH plan, Roth IRA, or SEP's. (For SIMPLE IRA's the deadline is set in October, too late for year-end tax planning.) In Canada: an RRSP. Discuss the best strategy with your financial planner or accountant.
These year-end tax tips will apply differently to each business owner's situation and accounting method. The cash method of accounting allows for deductions and income reported for the year they are paid or received.
The accrual accounting method applies income and deductions in the year incurred. Take the time to review the best strategy with a professional advisor and make the most of the year-end tax planning for your small business.
http://sbinformation.about.com/cs/accounting/a/aa121502a.htm
ClickFORMS Maintenance and Technical Support – A Quick Review
Unlike most appraisal software vendors, Bradford Technologies allows customers to purchase ClickFORMS maintenance (software updates) and live technical support independently. We don’t force you to buy both. This flexibility means that, if you’re a complete expert at ClickFORMS, you may opt to not to purchase support when you renew your maintenance agreement, and save some money. By the way, you do get free email support with your maintenance agreement.
Of course we strongly recommend that you purchase technical support. Especially in these times of new Fannie Mae, Freddie Mac and AI forms. You see, technical support is more than a help line when you can’t figure something out, it’s a productivity resource where you can learn cool new tips and tricks. And not just for ClickFORMS. One support contract covers all Bradford products, including property data import (AppraisalWorld Connection), Marshall&Swift integration, WinSketch and AreaSketch, etc. Just to name a few.
And Technical Support uses the Web-Ex interactive tool, that lets you not only hear how something is done, but also *see* it on their computer screen. Our customers tell us that the Web-Ex tool not only helps them learn things faster, but retain things longer.
Not on customer support? Want to learn more about Web-Ex and how it can help you learn better?
Call us and we’ll show you. And give you a free tip or two.
