Wrapping up: A December ‘tax saving’ list for your business

As we wrap up the year 2007, and in the midst of a busy holiday season, small business owners need to be thinking about what they can do to minimize taxes and maximize profits. Over the next few weeks, we’ll talk about what steps you can take to wrap up your financial year.

Here is the first idea, courtesy of a comment from Duke Adams at Crest Capital.

You might be considering the purchase of equipment for your business. I’ve been looking at a new laptop, since mine is a couple of years old. The IRS just recently increased the benefits of expensing equipment purchases each year, under the provisions of Section 179. For equipment purchases under $500,000, you can deduct up to $125,000. The savings are significant. On a $3,000 computer, for example, I could realize cash savings of $1,050, with a net cost of the computer of only $1,950.

There are a few restrictions of course. Only certain types of purchases qualify, and you can’t write off more than your taxable income. To check this saving further, try Crest Capital’s calculator. I’m going now, gotta check out those computer deals….

We’ll do more end-of-the-year wrapping up in future blogs.