Year-end Strategies to Cut Your Business
Taxes
The end of the year still presents opportunities to cut your
company's tax bill. The financial position of your business should be clear enough by this
time to identify tax-saving strategies that fit your company's situation. Some year-end
strategies to consider:
- Make equipment acquisitions. A certain amount of 2001 equipment
purchases can be immediately deducted, rather than depreciated over several years. If
you're looking for more business deductions in 2001, accelerate your planned equipment
purchases to fully utilize the expensing option available this year.
- Establish a retirement plan. There are several types of retirement
plans that can be established by year-end or even until your 2001 tax return filing
deadline. If you are a business owner who is significantly older than other company
employees, certain plans will allow you to contribute more for yourself than for your
employees.
- Review your benefits package. Fringe benefits can help you attract
and retain good employees and cut your taxes. While adding a new benefit this late in the
year may not significantly reduce your 2001 tax bill, you can get a jump on next year's
taxes by establishing a plan now.
For example, a medical reimbursement plan allows employees to use pre-tax dollars to pay
for items not covered by insurance. Amounts spent through this type of reimbursement plan
are not subject to FICA tax, which reduces the company's payroll taxes.
- Review meal and entertainment expenses. Generally, business meals and
entertainment costs are only 50% deductible, so many businesses simply combine these
expenses into one account and deduct half. But some of these expenses are 100% deductible,
including meals provided to employees at company picnics and holiday parties, meals
directly related to company business meetings or training sessions, and food and beverages
furnished for employees on the business premises.
- Review customer receivables for bad debt write-offs. Accrual-basis
businesses can deduct accounts receivable in the year they become uncollectible. If there
is a question regarding uncollectibility, you can, at a minimum, write off the collection
agency's fee once the receivable is turned over to them.
- Check the status of estimated tax payments. If it appears that your
business has paid in too little in estimated taxes to date, make an adjustment in the
fourth quarter payment to minimize any underpayment penalty. If enough has already been
paid in, consider eliminating the last quarter's payment.
Owners of "pass-through" entities, such as partnerships and S corporations, can
adjust their income tax withholdings from wages before year-end.
For a review of year-end moves that could reduce 2001 taxes for your
business, give us a call.
Related Information:
2000 Year-End Tax
Planning - For Businesses
Consulting
Services
Selecting a Tax Advisor
Services Available
Small Business Services
Tax Cutting Ideas -
December, 2000
Tax Services
Withdrawing Money From
An S-Corp
© Copyright 2001 Raymond S. Kulzick. All rights reserved.
011230.
This publication provides business, financial planning,
and/or tax information to our clients. All material is for general information only and
should not be acted upon without seeking appropriate professional assistance. Read Disclaimer.
Contact rkulzick@kulzick.com with questions or
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Copyright © 2001 Kulzick Associates, PA - Last modified: September 13, 2008