Start 2010 Right with These 10 Tax Tips!

• December 01, 2009
• by Collateral Staff
• Business Tips

With the holidays right around the corner, now is the perfect time to begin making end-of-the-year tax preparations for your business. To prevent a large tax bill in April, spend money now on things your business will need in the upcoming year. Always remember to consult with your tax professional before the end of the year to make sure you are complying with state and local tax laws while not overlooking deductions or claiming ineligible deductions.

1. The limit on Section 179 deductions was supposed to decrease to $125,000 from $250,000 for this year, but instead the $250,000 deduction limit was extended, making it an excellent deduction to take advantage of. Now is the time to buy both new and used equipment that helps run your business. This includes new computers, scanners, fax machines, printers and copiers. To deduct these items, make sure they are installed and running by December 31, 2009.

2. Business association dues are considered tax deductible, so if you are not a member of your local, statewide or national professional association, join before the end of the year. Not only will you be able to deduct the expense of joining, but you also can gain valuable networking opportunities to grow your business.

3. If you take any classes to help maintain or improve skills required in your present employment, or if it is a legal requirement for your job, the education fees can be deducted. This includes continuing education classes to maintain licensing. In addition to the dues of the business associations you just joined, the registration fees for the conferences and conventions are deductible as well. Register in advance for conferences that take place next year to take advantage of the tax deduction this year.

4. Also deductible? Travel expenses. Book your air fare for the conferences you just registered for. Included in travel expenses are air fare, hotel rooms and car rentals. You can also take a 50% deduction on entertainment and meals that are used for business purposes, such as meeting with clients.

5. Another important deductible business expense is advertising fees. This includes business cards, fliers, directory listings, and anything that promotes and publicizes your business. Order new fliers, brochures and business cards now. If you have print or digital advertising that you plan on keeping, ask if you can pay in advance for the next year. The same goes with directory listings - paying next year's advertising fees now can lift the tax burden in April. Consider buying new advertising and listings now as well. Waiting until after January 1st means you have to wait to write off that expense.

6. A great way to decrease the amount of tax you will have to pay in April is by making a tax-deductible donation to the charity of your choice. Challenge clients to donate as well, and offer to match donations to a charity of their choice. This is a great win-win deduction for everyone.

7. Similar to paying next year's advertising fees now, try to prepay other recurring expenses before the year ends. Try to prepay January's rent and property insurance, as well as other recurring payments such as your car payment or cell phone. If you pay these expenses by check, ensure you have proof that they were mailed by the end of 2009 by sending them by registered or certified mail.

8. If your company has enough money to function for a few months, consider delaying collections or billing until January. This revenue will not count towards the 2009 tax bill, even if the work was done in 2009. Be aware, however, that compaines that are cureently eax planning as well may ask to pay their outstanding balances before the year is up. Remember that keeping a customer happy is more important than pushing revenue into 2010.

9. In the process of looking for extra deductions, do not overlook deductions that fall into the "ordinary and usual" category: office supplies, bank charges, business-related magazine subscriptions and books, coffee services, commissions, office supplies, parking fees, postage, casual labor and tips, and anything that involves the day to day running of your business.

10. The most important piece of advice we can give is to consult a tax professional. CPAs make their livelihood with their knowledge of tax laws - they can let you know for sure what can and cannot be claimed as a deduction. While aCPAmay cost your company money now (which is also tax deductible!), the services of aCPAmay prevent your company from having to deal with theIRSlater.