Uncle Sam comes calling, tips to save on business taxes - KAIT Jonesboro, AR - Region 8 News, weather, sports

Uncle Sam comes calling, tips to save on business taxes

By Josh Harvison - bio | email

 

JONESBORO, AR (KAIT) – According to the Internal Revenue Service, most small businesses use a calendar year to file federal tax returns. With exactly two weeks before 2010, Region 8 News is helping small businesses looking for financial help by talking to tax professionals. Jennifer Primm with H&R Block told Region 8 News Thursday there are several options small businesses can consider to make their 2009 taxes less painful.

"There are some extra deductions out there so you might not owe as much as you think," said Primm.

According to Primm, a few purchases on items a company would normally purchase next year could be done this year. By purchasing something like a large SUV or truck, a business owner could write off a first-year Section 179 depreciation for $25,000. To qualify, the vehicle must weigh at least 6,000 pounds. The vehicle must be used for business purposes.

"If they're going to need a deduction this year, I would recommend going ahead and doing a quick inventory, seeing if there are some supplies or a piece of equipment that they would need to replace probably the first part of next year. Go ahead and do it this year," said Primm. "If it's something you're going to need to do anyhow, now is a great time to do it if you have that extra cash flow or put it on your credit card if you can pay it off next year."

"Speaking of buying new vehicles, you know the sales tax is an additional deduction this year," said Primm.

Another good way to save on this year's tax return is by a charitable donation, Primm said.

"Of course, we all need to think about the charitable donations this year. Charities are out there and charities are hurting just like individuals are," said Primm. "Some like Northeast Arkansas Children's Advocacy Center."

Primm said businesses who donate to charities need to keep receipts. If a business donated cash, then it must obtain a receipt to deduct the money. If a business donates a check more than $250, it must also obtain a receipt.

"You just need to be sure and get a receipt from them because you do have to have a receipt to claim that," said Primm.

Primm said small businesses can also donate office supplies and furniture.

"I know in particular a couple of years ago, we donated some chairs to a church that was needing chairs. They didn't serve the purpose for us, but they did for them and that's a charitable donation for us," said Primm.

If the property's value is over $500, then it must be appraised.

"Businesses have a real good opportunity and it may just be because they don't think about it," said Primm.

Companies can also purchase equipment and software that they will need early next year this year. Primm said businesses must remember that any action they take this year will also impact next year's return.

"That's where your tax pro can definitely delve into it with you and know what the best thing is for you to do," said Primm.

"If you are cash-basis, you can prepay expenses like that. If you have a little bit of extra cash flow, go ahead and pay January and February's rent if you can. If you think you're going to need that deduction, we'd be happy to go over your figures with you," said Primm.

Companies that make quarterly payments, if they itemize, can deduct state taxes already paid.

"If you need an extra deduction this year, go ahead and pay that January 15th payment. Have it postmarked by the 31st of December and you can count that on this year's federal tax return as a deduction. Keep in mind, that payment is not going to be on next year's tax return as a deduction unless you prepay it as well," said Primm.

Primm said there is also some confusion as to whether small businesses must report cash payments.

"Some really don't think they have to and cash payments are an income. You may be hurting yourself if you're not claiming it, because when you are self employed or you work contract labor, you can get earned income credit on that," said Primm.

Primm said before a business makes any large payment, they need to contact a tax professional to make a sound decision.

 

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