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Now is the best time to start thinking about your year end tax
planning for your business. These tax strategies can be put into
effect by the end of the year and some as late as when the tax
return is due. Planning now will save you money and reduce your
tax liability not only with your IRS taxes but also with your
state taxes. Here are tax tips that will help you accomplish
your goal.
DEFER YOUR INCOME INTO 2006
If you don't receive payment until the first week of January for
cash basis tax returns and don't bill until January for accrual
basis tax returns, you have effectively deferred your income.
This works well if your 2006 income is equal to or less than it
was for 2005. If not, you are delaying the inevitable and
potentially putting yourself in a higher tax bracket for 2006.
ACCELERATE DEDUCTIBLE EXPENSE INTO 2005
Anything charged on your business credit card December 31st and
prior is deductible in 2005 even if it is paid in 2006. 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 2005. This works well if your
2006 income is equal to or less than it was for 2005. If not,
you are delaying the inevitable and potentially putting yourself
in a higher tax bracket for 2006.
OPEN A RETIREMENT PLAN ACCOUNT
See
http://www.dgoodmancpa.com/smallbusinessretirementplan.htm
for an example of what you can do with that available profit tax
deferred until retirement. This is a fantastic option for those
who have the cash and want to contribute money into their
personal retirement account and deduct that contribution from
their corporate earnings. Does it get any better than that?
BUY EQUIPMENT AND SOFTWARE BEFORE YEAR END
You can deduct up to $102,000 (2004 maximum) in equipment and
software purchases for the year under Section 179 depreciation
expense. This includes sport utility vehicles, pickups and vans
with a gross vehicle weight rating over 6,000 pounds. However,
businesses should be aware of the change due to the American
Jobs Creation Act of 2004. Certain sport utility vehicles
(SUV's) are limited to $25,000 if they were placed in service
after October 22, 2004.
GET ORGANIZED
If you haven't already done your accounting and reconciled it to
your bank statement, you have some catching up to do. Knowing
where you are at financially is the true measure of your
performance. It allows you to make better business decisions and
to be more successful financially.
TAX PLANNING FOR INDIVIDUALS
Go to
www.dgoodmancpa.com/yearendtaxplanningindividuals.htm for
what you can do to prepare your business for year end.
These are just some tax tips you should consider when thinking
about your year end tax planning for your business. If you have
a specific question about your particular situation, e-mail me
at dianne@dgoodmancpa.com and I will help you work through the
tax planning issues you may have.
This article was intended to provide general information about
year end tax planning. It does not contain all the rules and
exceptions that may apply to your situation. If you have further
questions regarding year end tax planning, I can be reached at
www.dgoodmancpa.com.
You have permission to reprint what you just read. Use it in
your ezine, at your website or in your newsletter. The only
requirement is to include the following footer... 2005 Year End
Tax Planning and Preparation for Businesses - Tax Tips for 2005
by Dianne Goodman, visit
http://www.dgoodmancpa.com for more
content like this.
About the author:
Dianne Goodman, CPA -Specializes in servicing Small Businesses
and Individuals. Visit
www.dgoodmancpa.com for relevant and
current information on a variety of financial and tax issues
focusing on small businesses and individuals or call at
1-866-531-3035.
CONTACT INFORMATION:
Dianne Goodman, CPA Comprehensive Small Business Solutions, PC
505 323-2307 1 866-531-3035 toll free
http://www.dgoodmancpa.com
