Small business tax incentives


You still have a few days to reap all the 2008 small business tax incentives that are available to you.

The IRS allows you to deduct “ordinary, necessary, and reasonable” expenses that help you earn business income.   This includes appropriate business expenses like computers, copiers or client entertainment.   Some items that aren’t tax deductible are traffic tickets, a home telephone line and clothing you wear to work.  For more information, see SCORE’S Top 10 Tax Tips for Small and Growing Businesses.

The Economic Stimulus Act of 2008 allows businesses to take an immediate write-off of up to $250,000 for equipment purchased this year, double the amount allowed in 2007.  Businesses that place those assets in service this year are entitled to an additional 50 percent depreciation.  Make sure to keep your receipts and canceled checks for your business expenses and keep them organized and in a safe place.   Small businesses are about three times more likely to be audited than individuals and the burden will be on you to substantiate your deductions.

Hold on to records for expenditures in the following categories:

  • auto expenses
  • office and equipment rental
  • utilities
  • advertising
  • travel
  • meals and entertainment
  • professional fees

You may deduct only 50% of expenses for entertaining clients for business purposes.   Qualified business entertainment includes taking a client to a sporting event, a concert, dinner at a restaurant or even hosting a Sunday barbecue at your home.  So, keep a guest list and note the business (or potential) relationship of each person entertained.  Parties, picnics and other social events that you host for your employees and their families are 100% deductible.

Everyone’s business situation is unique.   To find what deductions will apply to you, research the current tax code or consult a small business tax professional to make sure you are following the law.  Next year, consider hiring a bookkeeper to handle your day-to-day accounting, if you haven’t already, to make sure you remain on the right track.

Some of these tax incentives may not be around in 2009, so if you’ve the need for new office equipment or can take advantage of any of the other categories, go ahead buy your business a present before Dec. 31!

 Information contained on this website consists of suggestions only.  We strongly recommend that you consult a tax professional as you make any decisions regarding tax filing or expenditures.


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