| Now that the end of the year is near, it is time to | | | | There are a number of new or increased deductions |
| review a few business tax tips for 2007. Anyone who | | | | available to small businesses for 2007: |
| owns a business or is planning to start a new business | | | | - Energy efficient buildings that meet specific criteria |
| in 2007 should be thinking about maximizing the | | | | may be eligible for a $1.80 per building square foot tax |
| profitability of their business and minimizing the amount | | | | deduction. |
| of tax that needs to be paid on that profit. | | | | - The Section 179 expensing election allows you to |
| Tips for Consideration | | | | write off the costs of machinery and equipment |
| 1. Business Entity Choice | | | | purchased in 2007 up to $108,000 of eligible purchases. |
| Choosing the correct entity structure to operate your | | | | - Home office deductions include a portion of your |
| business has become increasingly complicated. There | | | | home-related expenses such as mortgage interest, |
| are a number of considerations that must be | | | | real estate taxes, insurance, utilities and depreciation. |
| addressed in order to select the correct entity for your | | | | 4. Claim All Available Credits |
| particular business. Considerations include: | | | | Small employers starting retirement plans who meet |
| - the number of owners | | | | various qualifications may take a tax credit of 50% of |
| - type of industry | | | | the costs of administering the plan and providing |
| - risk of litigation | | | | education on retirement planning for the first three |
| - exposure to self employment tax | | | | years of the plan up to $500 per year. |
| - risk of double taxation and | | | | Home builders that construct energy efficient homes |
| - the allocation of profit and loss. | | | | may qualify for tax credits up to $2,000 per home built |
| Incorrect decisions may prove costly. It is imperative | | | | if the homes meet certain energy savings criteria. |
| that you consult a qualified small business CPA to | | | | 5. Take Advantage of Accounting Rules |
| assist you in making this decision. | | | | - Tax accounting rules allow for numerous ways to |
| 2. Start Up Costs | | | | defer taxable income to the next tax year. This gives |
| When starting a new business, you will invariably incur | | | | the business owner use of the profits for an additional |
| expenses before you begin the actual operations of | | | | year. |
| the business. Expenses such as supplies, advertising | | | | - Accrual basis businesses who ship products can |
| and employee training are examples of the type of | | | | delay shipping until the beginning of the following year |
| costs a new business owner might incur prior to | | | | or ship F.O.B. destination instead of F.O.B. shipping point. |
| commencing operations. | | | | Title does not pass until the product reaches its |
| Business owners may elect to deduct up to $5,000 of | | | | destination, presumably in the following year. |
| these expense once the business begins operations. | | | | - Cash basis businesses can delay year-end billings so |
| Start up costs in excess of the $5,000 can be | | | | that payments will not be received until the following |
| deducted on a pro rata basis over a 180 month period. | | | | year. Expenses may be prepaid at the end of the |
| Similar treatment exists for the costs of professional | | | | year and a deduction for the payment taken in the |
| fees and state incorporation or organization fees that | | | | current year. |
| are necessary to register the company with your | | | | These are just a handful of the numerous tax savings |
| state government. | | | | ideas that exist for small business owners. |
| 3. Claim All Available Deductions | | | | |