Small Business Tax Tips

Editor's note: As a special feature for March, TheStreet.com offers an ongoing series on everything you need to know about taxes. Today is part 10.

April is a-comin', and along with rain showers and the ensuing greenery, the month should bring a flurry of Americans filing last-minute tax deductions and adjusting claims.

Often, small-business owners tend to overlook write-offs that are available to them. So that this doesn't happen to you, Mel Schwarz, a partner at the national tax office of Grant Thornton in Washington, D.C., has provided some quick tips to make sure entrepreneurs are getting all they should from their returns.

In addition, he also gives some insight into how small-business taxpayers can maximize their return for next year.

First, small establishments should take a look at the new IRC Section 199 Domestic Production Activities Deduction, Schwarz says.

Under Section 199, businesses that produce goods in the U.S. are entitled to deduct 3% of money earned as a result of that production. For example, if an owner of a machine shop made a profit of $500,000 from merchandise produced in the U.S. last year, then that person is permitted to deduct $15,000 from his or her tax bill.

While there is no upper limit, the section 199 deduction cannot exceed 50% of the business employees' W-2 wages.

Although it requires a certain amount of effort to calculate the benefit, "there's really no reason why any small business shouldn't be doing it," Schwarz says.

This year, the deduction rate is slated to go to 6%, and up to 9% by 2010.

The deduction is carried out regardless of whether the merchandise was actually sold in the U.S. or exported. As long as the money is a result of you making the product in the U.S., you're good to go, Schwarz says.

Second, make sure to deduct the cost of all equipment purchases and for the future, figure out when it's more tax-beneficial for you to buy and when it's better to lease, Schwarz continues.