Sunday, January 6, 2008

ACCOUNTING ADVICE: Tips on tax savings for small businesses

There are many things small business owners can do throughout the year to save on taxes come year-end. Many of these you may already know, but I thought with a new year and the perceived fresh start that this would be a good time to instill a few reminders.
  1. Equipment purchases - The cost of computers, office furniture and machinery used in the business can be deducted rather than simply depreciated up to the about of $128,000 for 2008.
  2. Employing an owners child - For 2008 a child can earn tax free up to $5,500. Thus a teenager employed in a parents business can obtain valuable experience and a tax-free income. Since this is earned income, the "kiddie tax" does not apply.
  3. Retirement plans - The annual limit on contributions to both traditional and Roth IRAs for 2008 increases to $5,000 (plus another $1,000 for those age 50 or older).
  4. Home office deduction - this can be a tricky one, and one I've written on before, but it can be a valuable one for small business owners who do a lot of work from home.
All of the above a valuable deductions that small business owners can easily take advantage of, but they must be done with proper documentation. As with any case, please consult your tax advisor so that you can rest assured you are above any reproach in the eyes of the IRS.

Finally, as we start a new year, I just want to take a moment to thank you all for your support. I do this for all of you who read it, so please feel free to e-mail me any comments, questions or article requests. May you all have a blessed and prosperous New Year and let's work together to make Montgomery County strong.

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Ted Walker said...

Good website and good advice. We offer free accounting advice as a publice service.

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