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YEAR END TAX PLANNING AND PREPARATION FOR BUSINESSES - Tax Tips

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Now is the best time to start thinking about your year end tax

planning for your business. These tax strategies can be put into

effect by the end of the year and some as late as when the tax

return is due. Planning now will save you money and reduce your

tax liability not only with your IRS taxes but also with your

state taxes. Here are tax tips that will help you accomplish

your goal.

DEFER YOUR INCOME INTO 2006

If you don't receive payment until the first week of January for

cash basis tax returns and don't bill until January for accrual

basis tax returns, you have effectively deferred your income.

This works well if your 2006 income is equal to or less than it

was for 2005. If not, you are delaying the inevitable and

potentially putting yourself in a higher tax bracket for 2006.

ACCELERATE DEDUCTIBLE EXPENSE INTO 2005

Anything charged on your business credit card December 31st and

prior is deductible in 2005 even if it is paid in 2006. You can

also write a check on December 31st that you would have normally

paid in January. You may want to get a confirmation receipt to

prove you mailed those checks in 2005. This works well if your

2006 income is equal to or less than it was for 2005. If not,

you are delaying the inevitable and potentially putting yourself

in a higher tax bracket for 2006.

OPEN A RETIREMENT PLAN ACCOUNT

See http://www.dgoodmancpa.com/smallbusinessretirementplan.htm

for an example of what you can do with that available profit tax

deferred until retirement. This is a fantastic option for those

who have the cash and want to contribute money into their

personal retirement account and deduct that contribution from

their corporate earnings. Does it get any better than that?

BUY EQUIPMENT AND SOFTWARE BEFORE YEAR END

You can deduct up to $102,000 (2004 maximum) in equipment and

software purchases for the year under Section 179 depreciation

expense. This includes sport utility vehicles, pickups and vans

with a gross vehicle weight rating over 6,000 pounds. However,

businesses should be aware of the change due to the American

Jobs Creation Act of 2004. Certain sport utility vehicles

(SUV's) are limited to $25,000 if they were placed in service

after October 22, 2004.

GET ORGANIZED

If you haven't already done your accounting and reconciled it to

your bank statement, you have some catching up to do. Knowing

where you are at financially is the true measure of your

performance. It allows you to make better business decisions and

to be more successful financially.

TAX PLANNING FOR INDIVIDUALS

Go to www.dgoodmancpa.com/yearendtaxplanningindividuals.htm for

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what you can do to prepare your business for year end.

These are just some tax tips you should consider when thinking

about your year end tax planning for your business. If you have

a specific question about your particular situation, e-mail me

at dianne@dgoodmancpa.com and I will help you work through the

tax planning issues you may have.

This article was intended to provide general information about

year end tax planning. It does not contain all the rules and

exceptions that may apply to your situation. If you have further

questions regarding year end tax planning, I can be reached at

www.dgoodmancpa.com.

You have permission to reprint what you just read. Use it in

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requirement is to include the following footer... 2005 Year End

Tax Planning and Preparation for Businesses - Tax Tips for 2005

by Dianne Goodman, visit http://www.dgoodmancpa.com for more

content like this.

About the author:

Dianne Goodman, CPA -Specializes in servicing Small Businesses

and Individuals. Visit www.dgoodmancpa.com for relevant and

current information on a variety of financial and tax issues

focusing on small businesses and individuals or call at

1-866-531-3035.

CONTACT INFORMATION:

Dianne Goodman, CPA Comprehensive Small Business Solutions, PC

505 323-2307 1 866-531-3035 toll free http://www.dgoodmancpa.com