, December 14, 2010 8:39 am
I’m pleased to include myself in the ranks of the 23 million Americans who run a small business. The latest stats from the Internal Revenue Service indicate we’re responsible for creating $1.3 trillion in revenue and more than $110 billion in payroll. Not bad, eh? Unfortunately, of the 16 million who made a profit, the average profit in 2008 was under $20,000. As entrepreneurs, we want to maximize our tax savings every way we can. So, here’s some ideas on how to do that in the time that’s left for 2010:
- Special carry-back rules – If your previous tax returns showed a net operating loss (NOL), you may be able to get a refund by using the losses against higher income in the last two years. You can only go back two years, but you can keep using the losses for 20 years or until they run out. I’d check with your tax preparer to see if this is worth doing
- Year-end purchases – This is always a good idea, and I’ll keeping mentioning it until the cows come home (eat more chikin’…I love those commercials). Office equipment and other supplies only last so long. It’s best to stay ahead on their life expectancy before you have a crisis situation. If you do end up purchasing a new computer, printer, etc. just make sure you use them before the end of the year. That should preserve your deduction for 2010. Changes in IRS rules allow us to write off up to $500,000 of annual equipment purchases at once rather than depreciating them over several years
- New hires after February 3rd – After the person has been on board for a year, you’ll be able to take a $1,000 tax credit in 2011; you’ll also be able to skip paying the employer’s share of Medicare and Social Security taxes (7.65% of wages) for the period from March 19 through December 31, 2010
- Health insurance refunds – Here’s one I bet you haven’t heard about: if you have fewer than 25 employees, earning less than $50,000, you may be eligible for a 35% credit on your health insurance expenses. It’s also a good time to see if you can offer access to voluntary benefits, like dental or a flexible spending account. These would be paid for by the employees, if they so choose
So, get cracking! The clock is ticking. Good luck. Until next time, here’s to good planning!