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The Online Advisor

June 2008

New Business

It's time for midyear business planning


It's time to do a midyear review of your business tax planning. Here are six ideas to consider.

* Establish a retirement plan if you don't already have one. Examining the choices now gives you time to select the best plan for your business and to get the paperwork completed. Then you'll be set to make contributions as your cash flow allows - and to take the deduction on your 2008 tax return. Another plus: You may be able to claim a credit on your 2008 tax return for the costs of establishing the plan.

* Hire your kids. If your child is under age 18 and works for your unincorporated family business, there are no social security or Medicare taxes on the child's pay. Wages paid to the child are also deductible. Just make sure the compensation is reasonable for the work actually performed.

* Track your business driving. For 2008, the rate for business-related mileage is 50.5 cents per mile, and you can deduct actual costs for parking fees and tolls in addition to mileage. Keep detailed records to substantiate your deduction.

* Deduct equipment purchases. You can expense up to $250,000 of business equipment purchased this year. If you buy new equipment (not used), you may also qualify for 50% bonus depreciation in 2008.

* Check your benefits. If you offer health benefits to your employees, look into tax-advantaged plans such as health savings accounts, flexible spending accounts, or health reimbursement arrangements. These plans can reduce your taxes and help control your benefit costs.

* Start a business. Planning to acquire or start a business this year? Keep good records of your costs to get the business off the ground, including advertising costs, legal fees, and accounting expenses. Up to $5,000 of these expenses could be deductible on your 2008 tax return.
To discuss the tax-saving ideas best suited for your business, give us a call.





Before you invest in any business, it's always a good idea to discuss the proposed venture with your advisors. If you would like assistance with evaluating a business opportunity or with legitimate tax planning, please call our office.

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