In light of the soft economy, businesses are seeking new ways to save money and maintain strong financials. Increasingly, business owners are looking to the IRS as a source of assistance and valuable savings opportunities to help ride out the economic slowdown. There are a few easy steps that savvy business owners can take to make the most of what Uncle Sam has to offer:
Don’t Skimp on the Necessities – The amount allotted for small business equipment purchases has doubled for 2008. This may allow business owners to afford the necessary tools to keep their businesses up and running. Up to $250,000 can be expensed this year, as compared to $125,000 in 2007. “Equipment” refers to items such as computers and software, office furniture and machinery.
Last Year’s Loss May Be This Year’s Gain – Did your expenses exceed revenues last year? If so, you may have had a net operating loss. Consider carrying back this loss to offset your income and receive a tax refund. If business is still down, it’s not too early to start planning for a carryback this year. Net losses can be carried back for up to two years, so follow up on old losses for a quick infusion of cash.
Don’t Let Unpaid Debts Go Unnoticed – Even if your business is doing well, there is a possibility that your customers or other business connections may be struggling. If sales go unpaid or loans are not repaid, business owners are entitled to a bad debt deduction. Documentation is key here, as debts must be proven worthless in order to qualify.
Take Care of Your Health – The last thing a small business needs in difficult times is a sick or injured owner. The IRS has made it easier for business owners to take proactive steps to care for their health by allowing them to deduct health insurance premiums on policies held in the owner’s name.
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