Theyear 2010 is rapidly drawing to a close, but you can still svae money on your business taxes by considering these 10 tax-saving tips.
1. Fund a Retirement Plan
Setting up and funding a retirement plan for yourself and employees can save you money on taxes, and it's easier than you might think. Just make sure it's a qualified plan (qualified by the IRS, that is), so you can take advantage of those tax savings.
2. Hire Employees and Get a Tax Credit
If you hire previously unemployed workers, you can take a tax credit based on their Social Security amount for the rest of 2010. The sooner you hire, the more your tax credit.
3. Buy Equipment, Vehicles for Depreciation Deductions
The Small Business Jobs and Credit Act increased depreciation allowances for Section 179 depreciation and bonus depreciation on the purchase of qualified equipment and vehicles.
Section 179 Deduction Increase.
Section 179 accelerated depreciation has been increased to $500,000 (with limits on the amount purchased). This provision is set to expire December 31, 2010, unless extended by Congress later.
Accelerated Bonus Depreciation Continued.
The new law will continue 50% Bonus Depreciation for business purchases in 2010. This is a 50% bonus for new property purchased and put in place this year.
Read the above article to learn more about how depreciation can cut your business tax bill.;
4. Deduct Holiday Gifts to Employees, Customers
5. Stock Up and Prepay to Reduce 2010 Net Income
Review your current expenses and, if you think you can benefit from reduced income in 2010, prepay some of those amounts. You can also increase expenses (and decrease income) by stocking up on supplies.
6. Write Off Obsolete Inventory and Equipment
Another way to cut taxes is to write off obsolete equipment and inventory that has lost its value. These write-offs reduce your cost of goods sold and can decrease your net income.
7. Write Off Bad Debts to Lower Income
The end of the year is the time to review your customer accounts to find those customers who aren't going to pay. You can write off the amounts they owe as "bad debts," and deduct these amounts from your business income to save on taxes.
8. Pay Bonuses, Write off as an Expense
Owners of corporations and top executives can receive bonuses and the company can get a tax deduction for these bonuses. Read more about how this works.
9. Defer Income to 2011, If Taxes Will Be Higher
Timing income is a method of moving income from one year to another. You first have to determine which year will have the highest taxes, because of two factors (1) your business income, (2) business tax rates. So get out your crystal ball and talk to your tax advisor about this one.
10. Pay Bills Now for Lower Income in 2010
Timing expenses works the same way as timing income, only in reverse. Put the expenses in the year of higher taxes, to reduce your net income in that year.
