5 tax moves to make now to cut your firm's April IRS bill
 

As the year winds down, it's definitely not business as usual.

In addition to regular end-of-month tasks, a business owner also has to deal with year-end operational chores. Then you have the distraction of looming holidays. Seasonal considerations certainly cut into the time you need to finish up regular business.

And your accountant is bugging you to do a tax review, too!

While we can't give you more time to complete all your business chores, we can help you placate your accountant. Here are five year-end tax moves that shouldn't eat up too much time and could make your business's coming tax bill a bit smaller.

1. The holiday spirit can be deductible.
Unless your name is Ebenezer Scrooge IV, presents are the first thing that comes to mind when Christmastime nears. That's a great on-the-job idea, too. A gift to a business associate becomes a deduction.

You can write off up to $25 per person for business gifts. There are plenty of thoughtful items you can hand out for this price, making a nice holiday statement and cutting your tax bill at the same time.

Don't forget your employees. A party to thank the crew for work well done is fully tax deductible.

2. Visiting the relatives can be worthwhile.
Lots of folks travel over the holidays. If you have clients in the same town where your in-laws live, set up some business appointments right before or after the holiday festivities. That way you can get some business deductions from your personal trip -- and provide yourself a break when the family get-togethers become a bit too much!

Combining business and personal travel is allowable, but if the Internal Revenue Service questions you, make sure you have all the right deductible answers. Substantiate the business reason for the trip: Letters or memos detailing the appointment, meeting notes and receipts of any business entertaining will help. When it comes to writing off the actual transportation costs, it generally will bolster your tax claim if you can work in a bit more business than pleasure on the trip.

And unless your spouse and kids are legitimate employees of your firm, their expenses can't be deducted.

3. Too much income? We all should be so lucky.
Usually you want any money owed you as soon as you can get it. But from a tax perspective, it might be worth the wait if you've had a good year and December cash flow is fine.

If that's the case, push taxable income into next year. Send out your final invoices in early January. You can look at this as a holiday gift to yourself, to reduce your taxable income, and one to your customers, who'll have one less bill to pay.

4. Treat yourself to some new equipment.
Most business equipment must be depreciated over several years, reducing the tax deduction value of the property.

But Section 179 of the tax code allows businesses to get an immediate break on some capital costs. This provision allows a business operator -- sole proprietor, partnership or corporation -- to fully write off, up to a legislatively set limit, certain property in the year it is purchased and placed in service.

This year, the expensing option has been dramatically increased. The year started with the limit at $25,000, but tax law changes in May hiked the amount of business expenditures that can be immediately deducted to $100,000. Plus, there's a new 50 percent bonus depreciation provision for qualified investments made after May 5. Check with your company's tax attorney about how this could help your particular business.

The key Section 179 requirement is that the expenditures be for eligible equipment, defined as that material which is used in the course of business, not the business' building or its structural components. This covers a wide range of operational costs, from office supplies and off-the-shelf computer software (previously, it had to be depreciated over three years) to equipment, furniture and fixtures. There's also a much-publicized tax loophole in Section 179 for purchase of light trucks or large SUVs purchased for business use.

So if you're not near the new $100,000 limit and you've been postponing some purchases, now might be the time to start shopping.

5. Look to the future with retirement contributions.
Finally, give yourself a long-range business tax gift through your retirement plan.

Dec. 31 is the last day you can open a Keogh or solo 401(k) retirement plan if you're self-employed, either full- or part-time.

These savings vehicles are the self-employed equivalents of corporate retirement programs. Keoghs are somewhat complex to establish, so you should look into opening one now to make sure you meet the deadline. A solo 401(k) application is manageable without an accountant's help, but it can't be done in five minutes either.

Many taxpayers prefer a Keogh or solo 401(k) plan because they allow for larger retirement contributions than the similar self-employed Simplified Employee Pension (SEP) IRA. Regardless of which self-employment retirement plan you choose, the earlier you set it up and start contributing, the more money you can amass before it's time to close down shop.