8 Year-Round Business Tax Strategies Are Vital



Dec. 26, 2015 –

Many business owners find they can plan their futures, operate their businesses more efficiently year-round, and take maximum advantage of tax savings when they file their returns.

Ask your tax advisor about these eight strategies:

1. If you need equipment and the price is right, make your purchases.

You can take advantage of Section 179 deductions. Section 179 is designed to help small business buy as much as $500,000 a year in equipment like computers, machinery and vehicles.

Qualifying capital items can be written off immediately on business taxes instead of spreading the deduction over sever years. So again check with you tax advisor.

office-620822_1280

2. Enhance your retirement account.

Many baby boomers have learned about retirement the hard way because they weren’t proactive. Retirement has come before they knew it.

It’s much easier to make contributions to a qualified retirement plan periodically throughout the year instead of waiting until the last second.

It’s possible to postpone as much as $17,500 in salary to a 401 (k) plan — even more if you’re 50 years old or older — up to $23,000.

Another option is to contribute the lesser of 25 percent of your pay or $52,000 to an SEP.  You can contribute $57,500 if you’re at least 50 years old.

3. Include a vacation on your business trips.

Personal expenses for recreation, of course, aren’t deductible. But business expenses are deductible eight ways.

4. Look for reasons to entertain your customers.

If you can have a substantial business discussion, fully 50 percent of the entertainment and meal expenses qualify as write-offs. A husband-wife business team will find this to be a wonderful practice.

5. Entertain your employees.

You can celebrate holiday occasions, such as July 4th or Labor Day, and deduct 100 percent of the expenses if you include all employees. (Again, ordinarily, only 50 percent of business entertainment expenses are deductible.)

You can write off minor repairs. But know the difference between repairs and improvements.

6. If you forecast an S-corporation loss, plan to recoup your money.

S-Corp shareholders can deduct losses up to their stock value. So if you’re forecasting a loss this year, increase your basis in your stock, if necessary to avoid a big hit.

In such a loss, you have two options — lend money to the S corporation or add capital to it.

7. Launch a startup.

You can deduct up to $5,000 in qualified expenses for a startup. You will be allowed to amortize the balance over the succeeding 180 months.

Stay out of trouble by commencing your launch by the end of the year.

Note: Turning a hobby into a business can be tricky. You must be able to demonstrate your hobby has become a business with the goal of earning profits.

Documentation counts. You can’t deduction a loss otherwise. If you can provide documentation, the IRS will penalize you under its “hobby loss” rules.

8. Make repairs.

You can write off minor repairs. But know the difference between repairs and improvements. It might seem odd, but the IRS will treat painting the premises or major overhauls as improvements, which aren’t deductible.

From the Coach’s Corner, more tips:

11 Payroll and Tax Tips for Small Businesses — To stay competitive in this difficult marketplace, it’s vital to be proactive on your taxes.

4 Tax Tips for Your Home Office Write Offs — The best tip I ever got from a CPA was to move my firm from a rented office space to my home. But it was important to understand the tax code for qualified write offs.

Keys to Protect Yourself from Skyrocketing Trend – Tax Identity Theft — Tax identity theft is increasingly victimizing Americans, according to the Internal Revenue Service. As many as 1.5 million Americans were hit by tax-refund fraud in 2013, according to IRS Special Agent Kenneth Hines in a 2014 published report.

Financial Tips for Taking the Plunge to Buy a Business — So you’ve decided to take the plunge in buying a business. Congratulations. I salute such bravery. Owning a business represents one of America’s great fundamentals — our free-enterprise system. You’ll have multiple financing options.

“The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”

 -Will Rogers

 __________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Seattle business consultant Terry Corbell provides high-performance management services and strategies.