No one looks forward to paying taxes, particularly during such grim economic times. But there are things you can do to help minimize your 2008 tax bill. In its October/November issue, Business Week's Small Biz magazine offers the following tips for small-business owners looking to decrease their tax bills:
- Purchase new equipment. If your business has less than $180,000 of depreciable property, you can deduct up to $250,000 for new equipment purchases. You also can take a bonus depreciation equal to 50 percent of the equipment's value, but you must be sure to use the new purchase before the end of the year to qualify for the tax breaks.
- Keep paying reservists. If you have fewer than 50 employees, you can receive a tax credit if you pay reservists the difference between their civilian pay and military pay. The government will give you 20 percent of the amount you pay up to $20,000.
- Contribute to your retirement. Retirement accounts are a sure-fire way to take a tax deduction. For 2008, you can fund a retirement plan with up to $46,000 or $51,000 in pre-tax dollars if you are over 50 and meet certain qualifications.
- Start spending money. Money spent for deductible expenses, such as office supplies or business trips, should be spent before the end of the year to qualify for tax write-offs.
- Clean up. Now is the time to pitch old inventory and write off customers who have yet to pay you. Small Biz suggests that if you use the accrual method of accounting, keep good records of your collection efforts and write off the resulting debt.
- Buy a hybrid. Although the available tax credits for purchasing a Toyota Prius have been used up, you still can receive $1,300 for buying a 2008 Chevy Malibu hybrid or $3,000 for buying a 2008 Ford Escape or Mercury Mariner hybrid for your business.
Of course, there are other ways to minimize your tax bill, and your accountant should be able to provide you with more information. To read the entire Small Biz article, go to www.businessweek.com/smallbiz.
Ambika Puniani Bailey is editor of Professional Roofing and NRCA's senior director of communications.
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