Now that we’re into the New Year, it’s time to think about your tax strategy for 2010. And this could be one of the craziest years to try and plan a workable strategy – but no matter what Congress does, you can take some useful precautions to minimize the impact of your tax bill on the bottom line.
One highlight of this year – the estate tax is supposed to go to 0% for this year. President Obama though is opposed to this move and is pushing for the rates to be set to levels comparable to recent years.
The American Recovery and Reinvestment Act provided some great tax breaks for small businesses in 2009 such as larger first-year and bonus depreciation tax write-offs. Expect some of these to be extended into 2010.
Bonnie Lee, a tax expert with Entrepreneur.com says “who knows what’s going to happen” but added that taxes are likely to rise, especially if the proposed healthcare legislation passes.
In spite of the uncertainty, Lee suggests a few prudent steps you can take to minimize your tax bill. These include:
- Do what you can to reduce taxable income – contribute to a health savings account or make charitable donations. Contribute the maximum allowance into your IRA or 401k.
- Develop better strategies to track your expenses. Buy a mileage log and develop company-wide strategies to track all expenses. You’ll need all the deductions you can get.
- As stay on top of all the changes that go on from year to year so if you haven’t used one in the past, consider hiring one.
- Set aside money each month for your tax bill that will be due in 2011. You can probably bet your 2010 taxes will be higher than 2009 so be prepared.
Taxes for small businesses are unfortunately a fact of life so we need to stay proactive so we don’t end up paying more than we should.
Learn more about some of the federal taxes small businesses are subject to in our online incorporation knowledge center article on the subject. And if you’re thinking about making the switch to entrepreneurship in 2010, consider incorporating your small business online with MaxFilings.