Last-Minute, Year-End Tax Savings
No matter how the so-called fiscal cliff works out, building service contractors and others in the professional cleaning industry can take some important steps to reduce their 2012 tax burden and possibly plan ahead for 2013.
With the end of the year fast approaching, Tornado Industries offers the following tips to potentially save some money:
• Many companies or individuals may be able to lower their tax bite by bringing income, bonuses, dividends, and capital gains forward into 2012, if possible. As an example, many firms are declaring special dividends, paid in December 2012, to lower shareholders' expected tax burden as a result of expected higher tax rates in 2013.
• Making capital expenditure purchases in 2012 and placing them in service by December 31, 2012, may allow you to take advantage of special depreciation and write-off rules before they terminate. Under IRS Section 179, if you are purchasing or leasing new business equipment, the government will essentially help pay for those purchases through special tax treatment. However, this is set to expire at the end of 2012 so treat this as a gift from Uncle Sam, one that is worth taking advantage of.
• Save money on your taxes and provide for your retirement at the same time by maximizing contributions to your 401(k) or SEP IRA. Even self-employed business owners, regardless of whether or not they are the only employee, can usually establish a SEP IRA, enjoying significant tax savings in the process.
• Hire a vet: If you're thinking about adding staff, consider hiring a qualified military veteran before year's end. The Work Opportunity Tax Credit allows businesses to take a credit up to $9,600 for hiring a vet, depending on a variety of factors.
"And consider hiring a tax professional to handle your business taxes as well as explore the above opportunities," says Michael Schaffer, president of Tornado Industries. "A tax professional can make suggestions and offer advice that can help your business plan tax strategies for years to come."