NEW YORK ( MainStreet) -- Whether it's for personal or business tax returns, tax time can be daunting.The Internal Revenue Service has carved out a section of its Web site designed specifically to help small businesses file their taxes correctly. The tax code is fluid and there are always exemptions being made -- and taken away -- during any given year.
|Business owners still have a week to take advantage of several deductions or credits to reduce taxes this year.|
If your business is considering starting a retirement plan, do it before year-end and you'll be able to write off the setup expenses. The IRS says you don't have to start contributing, if that's what you intend, until next year. "One of the things we're talking to clients about is the tax benefits that would be out there for a client that was going to set up a retirement or 401(k) plan. There are some relatively beneficial tax benefits in doing that," says Mike Trabold, head of compliance risk management at Paychex ( PAYX). "Usually you're able to get a credit for the first $500 of the setup fees." 2. Implement accelerated depreciation benefits.
Two favorable business deductions will be significantly rolled back in 2012 unless Congress moves to extend them: Section 179 expensing and bonus depreciation. "If you're considering buying equipment, you should absolutely do it by the end of the year," Trabold says. "There is a degree of uncertainty those benefits will be available next year." Section 179 expenses: According to tax code, businesses can take a deduction on the first $500,000 on new and used assets put in service before Dec. 31. Things such as office furniture, new phone systems and other equipment qualify. Bonus depreciation: Bonus depreciation is an extra incentive for businesses that have invested in new, tangible property, such as equipment or space. The deductible can be used only in the first year the property has been bought, says Bill Smith, director of the national tax office at CBIZ MHM ( CBZ).