It's never too soon to start thinking about how to trim your tax bill for the year ahead.
The holidays are over. It's time to start putting your tax resolutions for the new year into effect. Here are a few simple ideas to get you started:
Keep better records. Create a file system to store business receipts. Track your odometer readings for every business trip taken in your personal vehicle, noting the destination and purpose of the trip. Protect your financial data by implementing backup systems, such as automated online backup solutions.
Add more to your retirement plan. The annual deduction limits for profit-sharing and simplified employee pensions (SEPs) are higher, so why not save more if you're eligible. The more you put into the plan, the greater your tax deduction and retirement savings will be.
Upgrade your business equipment. Whether you can buy a new computer system or other needed equipment outright or must finance the purchase, you'll be rewarded in two ways: A tax deduction and more operating efficiency.
Save energy. Look into taking advantage of federal and state tax incentives to go green. Hybrid vehicles, solar energy, and energy conservation practices are some ways you'll save taxes and fuel costs.
Lose weight. The perennial New Year's vow can pay off in better health and a tax deduction. While the cost of a personal weight loss program for general good health is not deduction, you can treat as a deductible itemized medical expense any doctor-prescribed programs to alleviate a specific medical condition, such as hypertension or obesity. Or look into adding wellness programs at your company to benefit you and your staff.
Do strategic planning. Review your business and marketing plans to see if you're on track. Schedule an appointment with your accountant and other business advisors to create a game plan for the coming year.
Maybe all of these resolutions aren't for you. Write down the ones that are and be sure to look at your list periodically throughout the year to stay on track. Happy New Year!
Last updated: Jan 9, 2008
BARBARA WELTMAN is an attorney and a trusted professional advocate for small businesses and entrepreneurs. She is the author with such titles as J.K. Lasser’s Small Business Taxes and Smooth Failing, and she contributes regularly to American Express OPEN and SBA.gov. Her articles have appeared in the Wall Street Journal and U.S. News and World Report. Weltman is also the publisher of Idea of the Day and monthly e-newsletter Big Ideas for Small Business at www.barbaraweltman.com and hosts radio shows and podcasts, including Build Your Business radio. She has been named one of the 100 Small Business Influencers in the U.S. for the third year in a row. @barbaraweltman