Take advantage of last minute 2008 tax breaks for small businesses including home businesses. Do not be slothful in your business. It is now time to begin preparing for the 2008 tax season. If you start now, you will have the time to properly set up strategies that will benefit you. Take a look at the following tax methods that can save you money and lessen the tax burden on your business.
Did you know that income could be deferred to 2009. Small Businesses that use cash basis accounting income is realized when received and expenses recognized when remitted. Take a look at your income for last year and compare to next year’s estimated income. If your income will be equal or less than this year, you can defer income to next year and apply expenses to this year (2008). This will lessen your taxes for this year. These changes do have an affect on other tax deductions, exemptions, withholdings, etc.
By the same token if your small business uses accrual based accounting, then income is realized at the time earned and expenses when they occur. For accrual based accounting, billing in January will defer income. Again, this is better if income from 2009 is the same or less than 2008. Failure to defer could possibly elevate your tax bracket for 2009.
Expedite Deductible Expenses
Charges on your home business or small business credit account up to the end of December 2008 can be deducted this year. Regardless of whether you pay these expenses in 2009.
The kinds of expenses range from supplies, to business equipment, memberships or dues to industry organizations. Bills for telecommunications such as Internet access, cell phones, and also professional licenses, business trips, and any other business related services.
If your small business income for 2009 will be the same or less than 2008, checks written by year-end can also be deducted. Be sure to have proof or postmark for 2008 for those checks.
You can also write a check on December 31st that you would have normally paid in January. You may want to get a confirmation receipt to prove you mailed those checks in 2006. These tips will also work in subsequent years.
Start A Business Retirement Account
This is an amazing opportunity to consider. If you have cash reserves, why not put some cash into a retirement account. Believe it or not, this cash can actually be deducted from your business earnings. The retirement plans to survey include Self-employed Retirement Plan, Individual Retirement Account (IRA), or Corporate Plans.
Purchase Business Equipment and Computer Hardware or Software
Receive a deduction of over $100,000 for small business purchases of equipment or computer related materials as depreciation expense before year-end. This will also apply to motor vehicles used in your business.
Review Your Accounting Records
It is definitely time to catch up on your accounting recordkeeping. The clearer your accounting statements are now, the simpler it will be to complete this task at tax time. When it comes time to make important decisions, it is always best to know exactly how your business stands financially. This will allow you to make accurate forecasts and avoid missing opportunities to grow your small business.
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