| Savvy business owners understand that the intricacies | | | | a good year otherwise, you may consider taking the |
| of tax planning is an integral part of running a | | | | losses, diversifying your portfolio and contemplating |
| successful small business and it's never too early to | | | | areas in which you'd like to reinvest." |
| start gearing up for the following year's tax season. | | | | · Parents contributing to New York's 529 College |
| With over 20 years experience as a CPA, Marcia | | | | Savings Program must fund the account by year's end |
| El-Baz is a Tax partner with New York's venerable | | | | in order to deduct contributions. The 529 plan offered |
| Lutz and Carr accounting firm. She offers expert | | | | through Vanguard is the only one that allows a |
| advice that'll help prepare small businesses owners for | | | | deduction and tax payers can deduct contributions of |
| the coming tax season. | | | | up to $5,000 (for single parent) or $10,000 (for a |
| · Take the time to organize and maintain accurate, | | | | married couple filing jointly) from their state taxable |
| reliable records. This includes keeping a financial trail for | | | | income each year for their contributions to their |
| business income and expenses, gathering cash | | | | accounts. Tax payers in other states, should check if |
| receipts and disbursements; utilizing a program such as | | | | that state offers a 529 plan with tax advantages or |
| Quicken, QuickBooks or even an Excel spreadsheet to | | | | other benefits not included in this program. Visit for |
| compile financial information and reconciling information | | | | more information. |
| with bank statements. Ms. El-Baz says, "This year the | | | | Ms. El-Baz also cautions against the following: |
| IRS will focus keenly on Schedule C filers. In the event | | | | · Use family members only if they genuinely provide |
| of an audit, they will require bank statements for 14 | | | | a service. Effective this year, while some of their |
| months, including December of the previous year and | | | | income will be sheltered at a lower rate, dependents' |
| the January following. It's important to keep separate | | | | investment income over $17,000(Double checking |
| checking accounts and credit cards for business and | | | | amount for this year) will be taxed at the highest |
| personal expenses, so that the information is easily | | | | investment rate. |
| accessible" and to avoid discrepancies. | | | | · Resist withdrawing funds from your retirement |
| · Whenever possible, open a retirement account. | | | | account. If it's a loan and you can't repay it within the |
| Some plans must opened by December 31st. The Solo | | | | time allotted, you will be paying tax and a penalty. |
| 401K, for example, is ideal for sole proprietors and | | | | Here are a few additional tips and possibilities to keep |
| Schedule C filers with no W2 wages. "You're treated | | | | in mind and discuss with your tax or financial advisor. |
| as both the employer and the employee and can | | | | · Check out the first year of business depreciation |
| contribute up to $15,500 of your net income and up to | | | | tax write-off. Now entrepreneurs and small business |
| 20% of your profit sharing. (Double checking this year's | | | | owners can take advantage of the generous savings |
| update). | | | | potential and tax benefit available with the expansion |
| · Take deductions for space in your home | | | | of Section 179. Your business may be entitled to a |
| exclusively designated for your business. You can also | | | | deduction of up to $125,000 on tangible personal |
| deduct expenses such as portion of utilities costs, cell | | | | property assets and capital expenditures. This includes |
| and home phones, internet and use of personal vehicle. | | | | office equipment, furniture, fixtures, software and |
| The mileage allowance for vehicles is.48 cents per mile | | | | storage facilities. When filing your tax return, you must |
| and depreciation coverage. Ms. El-Baz advises, "Keep | | | | complete Form 4562 for Depreciation and |
| a log or journal of travel and business purpose. This will | | | | Amortization. You must file for the write-off in the |
| help with fair, accurate estimates." | | | | current year as it is not retroactive unless you filed for |
| · Create a budget for next year. In these troubling | | | | an extension before the actual due date. |
| financial times, it's important to find areas in which you | | | | · Increase tax deductions. Itemized deductions to |
| can cut costs without sacrificing business development. | | | | consider include expenses for health care, state and |
| She cautions, "Don't forsake marketing and business | | | | local taxes, personal property taxes (such as car |
| development when things are going well only to play | | | | registration fees), mortgage interest, gifts to charity, |
| catch up when they aren't." | | | | job-related expenses, tax preparation fees, and |
| · If you need help, get it - inexpensively. If your | | | | investment-related expenses. |
| business efforts are best served in a particular, more | | | | · Take advantage of tax credits. Tax credits reduce |
| pressing area, consider outsourcing other | | | | your taxes and can include college expenses, |
| responsibilities. "You don't have to wear multiple hats. In | | | | retirement savings, and even adoption. Taking college |
| this financial downturn, you can retain consultants and | | | | classes also adds value to your business, increase |
| freelancers to do bookkeeping, etc. cheaply and | | | | your business acumen and capabilities. There are two |
| expertly." | | | | education-related tax credits: The Hope Credit, for |
| · Take losses and diversify your portfolio. Yes, the | | | | those in their first two years of college and the |
| market has gone further south that you're comfortable | | | | Lifetime Learning Credit for anyone taking college |
| with. However, you are allowed to take up to $3,000 | | | | classes. |
| of capital loss in excess of capital gains. "If you've had | | | | |