Consider opening a health savings account.
“[Business owners] can get a credit for the contribution to the HSA,” said Bonnie Lee, a certified public accountant in California, and author of “Taxpertise,” due in August. “So they get that as a write-off, plus they can write their checks for the amount not covered by the deductible, for all their medical expenses and get those deductions as well.”
It’s not too late to make a retirement plan contribution for 2008.
“That’s about the only thing you can do after the year is over to cut your taxes,” said Frederick Daily, a tax attorney and author of “Tax Savvy for Small Business.” “You can make an IRA account contribution. Some of these have to be set up before the end of the year, but some of them don’t. You’ll have up until the time you file your return, and if you go on extension, that gives you until October.”
Lower the costs of inventory.
Let’s say you had inventory valued at $100,000 — the cost of what was paid. At the end of the year, normally on your tax return you would report inventory valued at $100,000. Instead you could report that the economy devalued it to only $50,000. That gives you an extra $50,000 of write off. “That is a method of valuing inventory that’s been around for a while, but it’s important because the economy is the way it is and the value of that inventory is probably lower than it has ever been in the last 20 or 30 years,” said Guy McPhail, president of Zdenek Financial Planning in New York. “So you have to change your thinking to take advantage of those times — and get some money back.”
Record-keeping is key.
Keep these records for at least seven years. “You need to have the records for a lot of things,” said Barbara Weltman, tax attorney and author of “J.K. Lasser’s Small Business Taxes 2009.” “Business owners should have a handle on what’s going on. They should already be keeping receipts.”
Investigate Obama’s stimulus plan.
For more on how small business owners can take advantage of new tax incentives, see the April 6 issue of Footwear News.