There are no time machines, so you can't come back to today from the future. That's one reason planning ahead is important - and why now is the time to think about what you can do before the end of the year to trim your business tax bill.
Here are three suggestions:
1. Take advantage of energy incentives. Making energy-efficient improvements to commercial business property by December 31 can garner a federal tax deduction. The maximum deduction is $1.80 per square foot.
A partial deduction is available for improvements such as interior lighting and hot water systems that meet certain energy-savings targets.
2. Benefit from depreciation write-offs. Instead of waiting until January to upgrade computers or software, consider buying them now.
For 2007, you can expense up to $125,000 of qualifying business assets. Though subject to limitations, the deduction is available whether you finance assets or buy them outright.
3. Plan for retirement. Establish and fund a qualified retirement plan before December 31 and you might be eligible for federal tax credits in addition to a deduction from your business income.
The credit for small employer pension plan startup costs reduces your tax liability by as much as $500 in each of the plan's first three years.
You may also qualify for the qualified retirement savings contributions credit on your personal return, which can save up to $1,000.
Other tax-saving strategies include hiring family members and paying year-end bonuses. We'll be happy to help you maximize business tax benefits. Give us a call.
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