6 Year-End Tax Tips for Businesses
The Internal Revenue Service has carved out a section of its Web site designed specifically to help small businesses file their taxes correctly. The tax code is fluid and there are always exemptions being made -- and taken away -- during any given year.
|Business owners still have a week to take advantage of several deductions or credits to reduce taxes this year.|
For one, the Small Business Jobs Act of 2010 contains several tax provisions that took effect this year, while others will be implemented over the next few years.
Looking for some last-minute business tax benefits this year? Here are four that can lower your taxes if you take advantage of them by Dec. 31 and two other issues business owners should keep in mind for 2012.
1. Establish a retirement plan.
If your business is considering starting a retirement plan, do it before year-end and you'll be able to write off the setup expenses. The IRS says you don't have to start contributing, if that's what you intend, until next year.
"One of the things we're talking to clients about is the tax benefits that would be out there for a client that was going to set up a retirement or 401(k) plan. There are some relatively beneficial tax benefits in doing that," says Mike Trabold, head of compliance risk management at Paychex(PAYX) . "Usually you're able to get a credit for the first $500 of the setup fees."
2. Implement accelerated depreciation benefits.
Two favorable business deductions will be significantly rolled back in 2012 unless Congress moves to extend them: Section 179 expensing and bonus depreciation.
"If you're considering buying equipment, you should absolutely do it by the end of the year," Trabold says. "There is a degree of uncertainty those benefits will be available next year."