It’s easy to blow off year-end financial discussions, especially the dreaded appointment with your accountant for business tax strategies. However, I encourage you not to procrastinate on that this year as so many tax incentives came out of the Small Business Jobs Act. These qualified leasehold improvements incentives could be very beneficial, providing you both more business and more revenue by year end.
While you might think you didn’t have enough profit this year to make a difference, these provisions could be beneficial. Restrictions on real property expensing have been relaxed as well as bonus depreciation for certain eligible properties. Future profits may also qualify for reduced taxation. The excess will carry forward to a period when sufficient taxable income can offset the deductions. But don’t get too excited; you still have to pay for the stuff you buy.
You should also have your accountant explain the bonus depreciation provisions that were reinstated but expire on December 31, 2010. Among other things, the Small Business Jobs Act also allows a self-employment income tax deduction for 2010 health care expenses. Contractors using the “percentage-of-completion” accounting method generally must include any bonus depreciation taken when calculating the percentage of completion. Be sure to ask your tax adviser to explain this in full detail soon.
The biggest reason not to avoid your accountant is that tax audits are way up this year and won’t be slowing down any time soon. A major area to be aware of is the use of independent contractors. Be aware of this rule as our members are getting hit with major back taxes for improper classifications.
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