With the holiday season starting just a week away and 2014 beginning just six weeks later small business owners need to remember it Is also the end of another tax year. Although there is just a limited time left in the year it is still possible for them to make the most of their yearly deductions and minimize the taxes they will have to pay on their business income.
Here are just 5 potential opportunities that can be taken by small businesses prior to the year that can help lower their 2013 tax bill:
Take Advantage of Section 179 Deductions
Although real property expenditures were previously not eligible to take advantage of a section 179 deduction that has changed as of 2013. A business that has placed real property in service in the 2013 tax year can claim up to $250,000 for expenditures on the following types of real property:
- Interiors of Leased Nonresidential Buildings
- Restaurant Buildings
- Interiors Of Retail Buildings
Section 179 deductions cannot be claimed if the business is expected to have a tax loss for this year.
2013 is the last year that businesses can take advantage of “bonus” first year depreciation for machinery, equipment, and other fixed assets purchased for their business. This first year depreciation deduction can equal up to 50% of the cost of the property acquired and placed into service this year. The 50% bonus depreciation is subtracted from the property’s cost basis before the regular first-year depreciation deduction is computed.
New Business Tax Break
New businesses that were launched in 2013 and incurred expenses prior to opening might be able to deduct up to $5000 of those expenses. A business owner can elect to deduct up to $5000 of these expenses as long as the business is up and running by the end of 2013.
Charitable Food Donations
Under the American Taxpayer Relief Act of 2012 (ATRA) any industry that is in a position to have food inventory, such as grocery stores or restaurants, can consider donating items to charitable organizations that will use them to care for the ill, needy or infants. ATRA will allow the business to claim an enhanced deduction for such a donation for 2013.
Reduce Self-Employment Taxes
Self-employed individuals can deduct one half of their self-employment taxes. By claiming this deduction they can reduce their adjusted gross income which can result in other potential year-end deductions and credits. If this deduction is taken the self-employed individual cannot include the additional 0.9% Medicare tax as part of the calculation.
Disclaimer: The above-mentioned tax opportunities are mentioned as potential tax benefits but in no way should be construed as tax, legal, or accounting advice. Business owners should always seek the advice of a tax advisor to learn what is best for their specific business and to avoid the potential of receiving any tax penalties.
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