Articles and News
10 LAST-MINUTE TAX DEDUCTIONS FOR SMALL BUSINESSES December 14, 2011 (0 comments)
Merrick, NY—While luxury jewelers hopefully are too busy selling to think about tax preparation, here is an excerpted list of 10 last-minute tax deductions for small businesses, written by author and small-business tax expert Barbara Weltman on cnbc.com.
1. Give year-end cash bonuses. These are tax deductible, and the payroll tax on them also is deductible. Bonuses can be done on an accrual basis and given to employees until March 15, 2012.
2. Give company stock as a year-end bonus. It is taxable to employees but in certain industries (including retail), C corporations giving stock can enable employees to earn tax-free capital gains.
3. Buy new equipment. If you put it into use by December 31 you can deduct all of the cost this year, rather than depreciating over a number of years.
4. Buy used equipment. You still can benefit tax-wise. As long as you’re in the black overall (not in the red), up to $500,000 of the equipment cost is deductible under first-year expensing.
5. Donate cash to an IRS-recognized charity. The deduction for individuals is 50% of adjusted gross income; for C corporations it’s 10% of taxable income.
6. Donate inventory in lieu of cash to benefit a charity (a popular strategy for jewelers). Certain donations may entitle you to enhanced deductions, but some of those are limited to C corporations so ask a tax professional first.
7. Set up a qualified retirement plan. As long as you sign with the financial institution where you’ll keep the plan, you have until the extended due date of your 2011 return to make contributions. Employees must be included on a non-discriminatory basis. Read more in IRS Publication 560, writes Weltman.
8. Pay your bills. Cash-basis businesses can deduct payment of invoices when they’re made. It’s good for your tax liability, your balance sheet, and your suppliers!
9. Order next year’s supplies. On a cash basis, you can deduct it now even if you don’t use it till 2012.
10. Renew your trade subscriptions and professional association membership dues. But weigh the costs of a three-year subscription before going for the deal; you can’t deduct more than a year’s worth for tax purposes.