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Small-Biz Tax Tips for Procrastinators

Annika Mengisen

But you'll feel much better about the new fiscal year if you shell out less income tax. So here are a few last-minute tips for you business owners who have better things to think about.

1. Keep your eyes on the horizon.

"Don't look at 2007 in a vacuum," says Brittney Saks, partner with PricewaterhouseCooper's private company services practice.

A good look at the year ahead will help you to see what income and education look like in both years and to make better tax decisions.

2. Did the AMT get me?

Ah, the Alternative Minimum Tax. If you're subject to it, reverse most of the year-end tax advice you get.

For example, most would prepay their real estate taxes in 2007 to qualify for the deduction, but if you're AMT material, you want to defer those deductions into 2008.

The AMT only applies to C corporations, says Jeff Cullen, advanced-planning consultant for The Hartford Financial Services Group.

So if you haven't already, go to a tax adviser or use some software such as Intuit's(INTU) TurboTax and see if you're subject to the AMT.

New corporations are exempt from the AMT their first year in business.

3. Give out bonuses.

If you're in a low tax bracket but your business is in a high tax bracket, you can get a nice deduction by giving out bonus dollars to your executives, says Cullen. These don't have to be paid out until March 15, 2008.

4. Expense your equipment.

The Internal Revenue Code's Section 179 allows a small business to fully expense tangible property the year it's purchased. If you put a new piece of equipment in service before 2008, you can deduct up to $125,000, says Cullen.

3. Don't squander your stock.

Tax deductions are a good reason to sell stocks, but they shouldn't be the only reason, says Saks.

If you're debating selling stock to offset gains -- which can offset as much as $3000 of ordinary income -- step back and make sure it's a good investment decision overall.

4. Hold that sale.

If you're selling your business, try not to close the sale until 2008, says Saks: "You never know what the tax rates will do."

5. Take care of yourself.

Take advantage of your contribution to an IRA or 401(k). Retirement plans need to be set up by Dec. 31 in order for you to qualify. You can make your contributions in 2008 as long as the plan is set up in 2007.

And remember that flexible spending account you set up eight months ago? Make sure to spend any leftovers before they're lost in the new year.