Year-end tax savings
CHICAGO — No matter how the so-called fiscal cliff finally works out, building service contractors (BSCs) and others in the professional cleaning industry can take some important steps to reduce their 2012 tax burden and possibly plan ahead for 2013, according to a press release.
According to this month's Tornado Business of the Business, some tips that can potentially save you and your firm money include:
- Many companies or individuals may be able to lower their tax bite by bringing income, bonuses, dividends and capital gains forward into 2012, if possible. As an example, many firms are declaring special dividends, paid in December 2012, to lower shareholders’ expected tax burden as a result of expected higher tax rates in 2013.
- Making capital expenditure purchases in 2012 and placing them in service by December 31, 2012, may allow you to take advantage of special Internal Revenue Service (IRS) depreciation and write-off rules before they terminate. Under IRS Section 179, if you are purchasing or leasing new business equipment, the government will essentially help pay for those purchases through special tax treatment. However, this is set to expire at the end of 2012, so treat this as a gift from Uncle Sam — one that is worth taking advantage of.
- Save money on your taxes and provide for your retirement at the same time by maximizing contributions to your 401(k) or simplified employee pension individual retirement arrangement (SEP IRA). Even self-employed business owners, regardless of whether or not they are the only employee, can usually establish a SEP IRA, enjoying significant tax savings in the process.
"And, consider hiring a tax professional to handle your business taxes as well as explore the above opportunities," said Michael Schaffer, president of Tornado Industries.
"A tax professional can make suggestions and offer advice that can help your business plan tax strategies for years to come," Schaffer added.
Click here to read the release in its entirety.