With the year’s end approaching quickly, Grant Thornton has released a series of tax-planning tips for executives and small business taxpayers, reports dBusinessNews. Speak with your accountant for advice on these or any other tax questions.
Randy Robason, JD, MBA, CPA and North Carolina's Tax Practice leader, told dBusinessNews, “Taking advantage of tax savings opportunities now may pay dividends in the future. We have outlined the following year-end tax planning guidelines to help executives review their financial positions and tax structures before entering the new year.”
Small businesses should be wrapping up their tax planning for 2005 by now, according to the Associated Press. These tax tips for small business were reported in Fredericksburg.com.
- Income can be deferred if the business’s accounting method allows for it. Denise King told Fredericksburg.com, “Push due dates back, so that way you can defer tax payment on that income for a whole year.”
- Small businesses can also accelerate claimable deductions by buying equipment needed for 2006 in 2005 and expensing it using Section 179. Equipment, furniture, and fixtures valued up to $105,000 can fully deducted as long as it is purchased and put into service before December 31, 2005. Note: Section 179 excludes real property. If your business is near the $105,000 limit, defer any equipment purchases until 2006. Off-the-shelf software will not be eligible for 179 expensing after the 2007 tax year.
- Equipment needing repair can also be done, or purchases of supplies made, in 2006 if these expenses would be incurred in 2006, anyway.
- For those businesses with accrual-method accounting, employee bonuses declared before year’s end, but paid by mid-March, are deductible. Bonuses to employees with more than 50 percent interest in the business usually cannot be accrued.
- Small businesses should also deduct any allowable losses to lower their taxes.
Capital spending and retirement plans are two of the biggest year-end concerns for a business, according to the Times Dispatch. Jeffrey Berdahl, a CPA with the Beard Miller Company, said, “You’ve got to look at your tax bracket from year to year, the whole picture.”
The CCH Business Owner’s Toolkit is an excellent business tax planning resource.
Review IRS Publication 946, “How to Depreciate Property”, including Section 179 expensing at www.irs.gov/publications/p946/ch01.html.
Find out more information about the accounting and business advisory firm Grant Thornton at www.GrantThornton.com.
Robason told dBusinessNews, “As another year nears an end, this provides the perfect opportunity to examine your tax situation and consider ways to improve your financial and business health. Nothing should be done in a vacuum, especially tax planning.”