Minimizing tax expenses
As the end of the year approaches, there are steps that business owners can take now to reduce the amount they spend on their 2010 tax bill.
Barbara Weltman recently interviewed several CPAs and tax attorneys in order to compile a list of tax advice for an article on American Express' OPEN Forum. One rule that is beneficial for businesses is that charged expenses can be deducted in the year that the purchase was made regardless of when the credit cards bill is paid.
Businesses that develop software may be able to take advantage of the R&D Tax Credit if it is extended by Congress. This means that they could write off approximately 7 cents for every dollar spent on their software development expenses, including salaries.
“The Small Business Jobs Act of 2010 temporarily increases the amount of start-up expenditures entrepreneurs can deduct from their taxes for this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today," Michael Kaplanidis, managing director and founder of Water Street Associates, notes.
These sources of savings should be maximized as several may expire by next year's tax season.