Events Calendar
In This Section
Most Read Stories
Akron judge Linda Kersker dies
DiLullo's closes doors after 63 years
Portage man beaten at home, robbed of coins
Akron police arrest murder suspect within an hour
Call center to cut 250 jobs in Akron
Rib, White and Blue is festival of tastes
Man fit for trial in rape of girl, 2
Powerful sedative found in Michael Jackson's home
Blogs:
Pets:
Summit teams up with Rescue Waggin' to save dogs
The Heldenfiles:
I Hate "More To Love"
Patrick McManamon:
Ron Artest goes to the Lakers
Akron Zips:
Opponent outlook: Northern Illinois
Browns Bulletin:
Single-game ticket sales begin July 11
Tribe Matters:
Tribe needs to slow down opponents
Cleveland Browns:
Stallworth test showed marijuana
Kent State Sports:
Men's Basketball Scheduling update
Cleveland Cavaliers:
Updated: Free Agency: Another Gone - Apparently
All Da King's Men:
IPCC Already Wrong About Global Warming
Blog of Mass Destruction:
Wow….Sarah Palin Resigns Governorship
Akron Law Café:
Abraham Lincoln and the Fourth of July
Varsity Letters:
Highland senior receives honor
See Jane Style:
Picnic Wear
Car Chase:
Where do We Go from Here?
Let's Talk Real Estate:
Hate Crime in Fort Worth Texas: "That F***t had it Coming"
Ohio Travels with Betty:
Linda asks-where is the Ohio Chautauqua?
Sound Check:
Rundgren fans rejoice!: Second night of AWATS at The Civic added
HRLite House:
Sport Psychology and Performance Consulting
Akron Gamer:
Hot link: Best of Nintendo at E3
Many small-business owners must take greater care in year-end decisions
By Joyce M. Rosenberg Associated Press
Published on Monday, Nov 26, 2007
NEW YORK: Many small-business owners meeting with their accountants this month and next might find that year-end tax planning and projections for 2008 are a little more complicated than usual because of the uneasy economy.
''We're finding a lot of clients due to the economy aren't doing as well as they've done in previous years,'' said Jeffrey Berdahl, a certified public accountant with Berdahl & Co. in Center Valley, Pa. ''We're not seeing as much of top-line revenue growth.''
For many business owners, that means cash flow isn't as healthy as they'd like. And so decisions typically made toward the end of the year — for example, whether to buy new equipment or whether to set up a retirement plan — need to be thought through even more carefully.
As always, what businesses do for the balance of the old year needs to be considered in the context of projections for 2008. And no decision should ever be based solely on how much it might lower your tax bill — every step you take should have a sound business reason behind it.
The common wisdom in year-end planning is to try to defer income to the new year, and accelerate deductions from January into December. If 2007 has been a hard year, and your tax bill is likely to be smaller than next year's, consider the reverse, pulling some income into this year, and putting off that computer or other equipment purchase until January.
At the end of the year, many owners go shopping to qualify for a Section 179 deduction, which allows small businesses to deduct up-front rather than depreciate over time the costs of buying certain kinds of equipment, such as cars, computers, manufacturing machinery and office furniture.
Useless deduction
But ''if you're going to have a loss or break even, it's going to be useless'' to take the deduction, said Gordon Spoor, a certified public accountant in St. Petersburg, Fla.
Ginger Broderick, whose accounting firm Broderick & Co. is located in New York, said owners might want to pre-bill customers who are willing to pay early. And, she noted, while you need to make many retirement-plan contributions by year-end, ''you're not required to pay bonuses in December,'' so you might want to move those deductions to January.
Watch cash flow
But Spoor noted that as you make such decisions, you need to keep your eye on cash flow. ''That's the life blood of a small business,'' which often doesn't have access to lines of credit that larger companies do, he said.
Some companies might find that they need to accelerate income into this year because they need it to keep operating now, Spoor noted. But, he cautioned, ''shifting income is a fool's game; you never know what's going to happen.''
''You could be shifting into a higher tax bracket next year. You don't have a crystal ball.''
There's often a lot of conjecture about changes in the tax law in the new year. Of course, no one knows what's going to happen, but Berdahl noted, ''we'll probably have some stability in tax rates — no one is going to pass a tax increase in an election year.''
As you go through the process of year-end planning, you should also take a look at your remaining estimated tax payments — if your tax bill is going to be smaller, maybe you don't need to make such a big final 2007 payment.
Broderick said businesses that have loans up for renewal should be very careful about their financial positions, or they might find themselves out of compliance with lending agreements and then find they're denied a new loan.
''If you're having a bad year, let the banker know in advance,'' she advised. ''Some bankers may have the ability to push your renewal through'' if they know about your problems in advance. (This is one of the reasons why you need to have a good relationship with your banker, Broderick noted.)
If you've been meaning to set up a retirement plan, but feel you don't have the money now, remember that the plans known as Simplified Employee Pensions, or SEPs, don't have to be set up and funded until the due date of the owner's tax return. So if the owner is filing a Schedule C, Profit or Loss From Business, and plans to obtain an automatic extension of the April 15 filing deadline, he or she has until Oct. 15 to create a SEP.
NEW YORK: Many small-business owners meeting with their accountants this month and next might find that year-end tax planning and projections for 2008 are a little more complicated than usual because of the uneasy economy.
Get the full article here.
Comments
Click here to post your comments
