If you've put off filing your taxes until now, there's still time left to take advantage of a number of tax incentives for small businesses that are sprinkled throughout the U.S. Tax Code.
"This is a perfect time for LGBT business owners to access the federal government's plentiful sources of information on tax filings," says Chance Mitchell, co-founder and CEO of the National Gay & Lesbian Chamber of Commerce. "It's well worth doing the research to avoid missing some key deductions and tax credits. Every penny counts in an economy like this one."
Some of those sources are just a few mouse clicks away, making it remarkably easy to find guidance. Check out the Web sites for the Internal Revenue Service and the U.S. Small Business Administration. Both sites offer some much-needed insight for last-minute filers, especially given the tax changes slipped into the American Recovery and Reinvestment Act of 2009, the so-called economic stimulus package.
As you're digging into those tax records, here are a few handy last-minute tax tips for small businesses:
- Small businesses that adopt environmentally friendly initiatives such as putting in solar panels or using energy-efficient equipment can qualify for federal and state tax breaks. And some states allow small business owners to use these credits to offset their corporate and personal taxes. Check out the Database for State Incentives for Renewables and Efficiency.
- Small business expensing has been extended as well through Section 179 of the Tax Code. Small businesses can write off capital expenditures, and the phase-out threshold for 2008 is $800,000.
- Consider setting up a Simplified Employee Pension (or SEP) IRA. SEP contributions are due by April 15, although you can get an extension until Oct. 15. They are usually limited to whichever is lower, $46,000 or 25 percent of an employee's compensation. Contributions are not subject to federal income taxes, and businesses can claim a credit equal to part of the cost of establishing one.
- Doing business outside your home state might prove a boon for you, since you may not have to pay taxes on that income. Public Law 86-272 allows you to skip paying taxes on the out-of-state sales. Check with a tax adviser to see if your state employs this provision.
- And in a sign of the times, abandoning your struggling business might be your best bet tax-wise by creating an "ordinary" loss versus a "capital" loss. With an ordinary loss, you can use the entire amount to offset any personal income, i.e. salary, rent, etc, while there are limits on capital losses and they must be carried forward into future years.
