Feature:
Tax Planning - It’s not just for year-end anymore.

2007 is over and the dawn of a new year is upon us. While you are spending time over the next few weeks collecting information to prepare your 2007 business tax returns remember that now is the perfect time to think about your 2008 business tax returns as well.

Small businesses have many tax benefits available to them. By leveraging some of the tax benefits available, you will be able to hold on to more of your hard-earned cash at the end of the year.

• Automobile Deductions
  Do you use a vehicle for business purposes? If so, you may be able to claim a deduction for the cost of the business use portion of your vehicle even if it is leased. The I.R.S. rate for mileage expenses increases to 50.5¢ per mile in 2008, making it even more compelling for business owners to track their mileage. Other methods allow for the expensing of all automobile costs including gas, insurance, repairs and maintenance as well as depreciation. You are permitted to use the method that yields the greatest tax benefit.
  
  
• Home Office Deductions
  Many start-up small business owners operate all or part of their business out of their homes. Under certain conditions, you can claim a deduction for a portion of your housing expense. Some of the items that are deductible are rent, insurance, security system, utilities, sanitation, pest control, repairs, maintenance and lawn care. The deduction is based on the square footage of a space that is devoted to business use. Published statistics show that the average home based business generates additional tax deductions of $3,000 to $4,000. Depending on your tax bracket this will translate to tax savings of as much as $1,600.
  
  
• Personal Asset Deductions
  You may be able to claim the business use of other personal assets such as computers, fax machines, tools, etc. If you qualify, you can typically claim an amount equal to the percentage of business use multiplied by the costs associated with the asset. A new computer and fax machine used exclusively for business could generate tax deductions of $1,000 or more in the year purchased.
  
  
• Retirement Plan Contributions
  Many tax professionals will suggest traditional retirement plans as a way of reducing current taxable income. Depending on your age and income you can make a tax deductible retirement contribution of as much as $45,000. Retirement plans need to be examined on a case by case basis. Many times an entrepreneur is better served by contributing to a Roth IRA or Roth 401K. While they give up current tax deductions they gain the benefit of many years of tax free growth and making tax free withdrawals in retirement.

The best advice for leveraging tax benefits for your business is to consult with a qualified tax professional who is experienced with small business tax issues. This will go a long way in helping you get on and stay on the right track.

Peter Tarantino CPA is the founder of Tarantino & Co, a CPA firm that provides tax planning, tax compliance and tax conflict resolution services to small and medium sized business. For more information contact Peter @ 678.624.4775 or Peter@TarantinoCo.com.

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