Business Tax Srategies
Consider whether your current form of business is still right for you.
Review entertainment, club dues, and meal expense accounts to make sure they are correctly classified.
Avoid payroll taxes by shifting a portion of compensation from salary to fringe benefits. Unreimbursed medical expenses and payroll - deducted group insurance are ideal benefits to include in a Section 125 cafeteria plan.
Review the status of workers as employees or independent contractors.
Set up a cafeteria plan to allow employees to pay for their dependent care expenses. This will likely save them more than they would with the child care credit.
Donate excess inventory to qualified charities to receive larger deductions.
Self-employed taxpayers who employ their spouses in the business may deduct 100% of the health insurance premiums for the spouse and dependents.
Employ your children if you own your own business to take advantage of several tax benefits.
Establish a 401(k) or SIMPLE program to help attract and retain quality employees.
Buy equipment before the end of the year to take advantage of your $19,000 expense deduction.
Time purchases of personal property to maximize depreciation deduction and avoid the mid-quarter convention.
Review the amount of your estimated tax payments.
Conduct a cost segregation study to identify and price separately the nonstructural items and land improvements from your building to accelerate depreciation.
Determine whether you'll be subject to the AMT this year or in the future.
Switch to an "accountable" plan if you're currently reimbursing employee business expenses under a "nonaccountable" plan.
Shift income into the next year by delaying billing and collection activities if cash basis shipments if an Accrual Based Business.
Buy business supplies at the end of a profitable year and accelerate other expenditures like repairs and maintenance.
Shift income into the next year by delaying billing and collection activities if cash basis shipments if an Accrual Based Business.
Set up a nonqualified deferred compensation plan for your highest paid employees.
Declare bonuses to qualified corporate employees before year end, then pay them within the first 2 1/2 months of 2006.
Determine how state and local taxes and year-end strategies will affect your overall plan.
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