The Suites Collection

Business tax deadlines are quickly approaching – 1099′s and W-2′s must be in by the end of January and corporate taxes must be filed by March 15th.  It’s tempting to wait until the last minute to prepare your filings, but it’s best to get started right now.   There are so many details to take care of and you don’t want to be swamped with last minute questions or surprises.  Delays can increase the likelihood of errors and may even result in overpayment!  Do you know how you are going to file this year?  Get started by gathering and organizing all your receipts from 2008.  Then choose from among the various options for tax filing and support offered to small business owners.

If you plan to file on your own behalf, you’ll need to select the correct IRS forms for your business situation.  You may also want to conduct some preliminary research.  Attend a low cost informational session at SCORE, the nationwide small business counseling organization.  The Chicago area SCORE has upcoming workshops on Accounting & Taxes, held Feb 12 and Mar 12 from 8:45 – 12:30pm, at 500 West Madison Street, Suite 1250.  This workshop covers the basics of federal, state and local taxes.  Cost is $40 prepaid and $50 at the door.  Call 312-353-4540 or email workshops@scorechicago.org for more information. 

If you think you want to rely on a professional to file your taxes this year, consider hiring an accountant or tax preparer.  Get a recommendation for a reputable consultant through a trusted business associate or use a free accountant search engine.  Once you’ve vetted and selected your consultant, go through your receipts and carefully consider your deductions.  If you deduct vehicle usage, keep your total and business miles as well as actual expenses for repairs and gas.  You’ll want to give the information to your accountant as early as possible and provide them with a comprehensive explanation of your purchases and charitable donations.  Send all your business tax information to your accountant in the same package (corporate receipts, income statements and totals, employee salary and benefit information, sales tax, dividend and interest statements, etc.).   This will enable them to prepare your return as quickly and accurately as possible – which will mean more savings for you!  

It’s not easy to take time off from making money each year to give it away.  Unfortunately taxes are an inescapable part of being in business.  There can always be improvements to the system, however, so if this season inspires you to strive for change, check out The National Federation of Independent Business.  The NFIP is a nonprofit, nonpartisan organization founded in 1943 which lobbies in Washington and all 50 state capitals for members’ rights to own, operate and grow independent businesses in the United States of America.

You still have a few days to reap all the 2008 small business tax incentives that are available to you.

The IRS allows you to deduct “ordinary, necessary, and reasonable” expenses that help you earn business income.   This includes appropriate business expenses like computers, copiers or client entertainment.   Some items that aren’t tax deductible are traffic tickets, a home telephone line and clothing you wear to work.  For more information, see SCORE’S Top 10 Tax Tips for Small and Growing Businesses.

The Economic Stimulus Act of 2008 allows businesses to take an immediate write-off of up to $250,000 for equipment purchased this year, double the amount allowed in 2007.  Businesses that place those assets in service this year are entitled to an additional 50 percent depreciation.  Make sure to keep your receipts and canceled checks for your business expenses and keep them organized and in a safe place.   Small businesses are about three times more likely to be audited than individuals and the burden will be on you to substantiate your deductions.

Hold on to records for expenditures in the following categories:

• auto expenses
• office and equipment rental
• utilities
• advertising
• travel
• meals and entertainment
• professional fees

You may deduct only 50% of expenses for entertaining clients for business purposes.   Qualified business entertainment includes taking a client to a sporting event, a concert, dinner at a restaurant or even hosting a Sunday barbecue at your home.  So, keep a guest list and note the business (or potential) relationship of each person entertained.  Parties, picnics and other social events that you host for your employees and their families are 100% deductible.

Everyone’s business situation is unique.   To find what deductions will apply to you, research the current tax code or consult a small business tax professional to make sure you are following the law.  Next year, consider hiring a bookkeeper to handle your day-to-day accounting, if you haven’t already, to make sure you remain on the right track.

Some of these tax incentives may not be around in 2009, so if you’ve the need for new office equipment or can take advantage of any of the other categories, go ahead buy your business a present before Dec. 31!

 Information contained on this website consists of suggestions only.  We strongly recommend that you consult a tax professional as you make any decisions regarding tax filing or expenditures.