It’s not
too late to make moves to reduce your 2013 taxes if you are a business owner.
· Use the new “streamlined” home-office rules. Many self-employed
taxpayers declined to claim the home-office deduction because it was so
complicated to compute. For 2013, the deduction is streamlined, allowing for a
deduction of $5 per square foot, up to a maximum of 300 square feet or $1,500.
· Create a retirement plan. It’s not too late to create a retirement
plan for yourself and your employees if you have them. The plans can be simple
to set up and administer, such as a Simplified Employee Pension (SEP) plan. A
401(k) plan could be established even for a one-person business. While some of
these plans must be established by the end of the year, most can be funded up
to the extended due date of the tax return.
· Purchase business equipment. Up to $500,000 (scheduled to be
reduced significantly to $25,000 in 2014) in business equipment purchases can
be expensed this year, rather than being expensed over a number of years.
Additionally, there is also a 50% bonus depreciation allowance (that will not
be available in 2014) if your purchases exceed the $500,000 limit. 2013 might
be the last year to maximize your equipment purchase deductions to such an
extent.
· Deduct health insurance.
If you are self-employed, you are allowed to claim 100% of the amount paid for
health insurance for yourself, your spouse, and your dependents as long as you
follow certain conditions.
· Consider
credit card purchases. If you want to purchase equipment or supplies for
your business before the end of the year, but you are cash-strapped, consider
using your credit card. Your deduction occurs this year when the purchase is
made, not next year when the credit card charges are paid.
For
guidance with year-end tax planning for your business, contact our office.
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