Facing a still-difficult economy and a flurry of tax changes, business owners must be especially alert to new tax pitfalls and opportunities. Business.com collected these fresh tips and insights from tax experts across the country:
Tap the new rules for business losses: “Small-business owners need to plan for their net operating losses (NOLs),” said CPA Stacey Dell, a tax partner with Mohler, Nixon & Williams in Campbell, Calif. “An election must be made at the time a tax return is filed to either carry back or carry forward the current year NOL. Check your tax rates and income levels from the prior years. If income is expected to increase in the future, it may be better to carry the loss forward,” Dell said.
“Do the opposite of what we’ve told you before,” said Christopher Axene, a CPA with Rea & Associates in Dublin, Ohio. “This year, think about accelerating income and deferring expenses. That is the opposite of everything accountants have typically preached for many years. But this may be the time to look at IRS-approved ways of minimizing taxes through different accounting methods.”
Depreciation is your friend: Claude Titche III, a CPA with Beene, Garter in Grand Rapids, Mich., offers this tip: “Be sure to maximize depreciation deductions available by using the Section 179 immediate deduction of fixed assets and the 50 percent bonus depreciation for purchasing new assets. Quicker depreciation expenses save tax dollars. Remember that you only get to deduct the cost once. A current deduction is better than a deferred deduction.”
Beware of out-of-state surprises, offers Joel Rothenberg, CPA, a tax partner at Boston-based DiCicco Gulman and Co. “Small-business owners should review their state filing requirements for income tax, personal property or sales and use tax. State tax authorities are being super aggressive in enforcing their laws and business owners must know the rules in their home state and also determine if their activities in other states trigger a filing requirement.”
Take advantage of depressed asset values, recommends Vincent Paolucci, a tax partner with Grassi & Co. in Jericho, N.Y. “In light of the current economy, which has driven down market values of businesses, entrepreneurs should consider transferring stock in their companies to family members as part of their total estate plan.” •
Daniel Kehrer can be reached at editor@business.com.
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