Tax Tip of the Week | No. 369 | Tax Breaks for Small Business Owners

Tax Tip of the Week | August 24, 2016 | No. 369 | Tax Breaks for Small Business Owners

Now that we are in the lazy days of summer, it is a good time to take a mid-year look at how you may be able to reduce your tax bill at the end of the year.Here are six areas to consider:1.     Load up on equipment:  Your business can potentially take a Section 179 deduction of up to $500,000 for qualified property placed in service in 2016, with a phase-out threshold at $2 million.  An alternative to writing off the full purchase price of the equipment is to use the 50% Bonus Deprecation option.  The point is, buy equipment when you need it and don’t wait for the year-end.2.    Employ your child:  If you put your child on the payroll (in an age appropriate job), the wages are deductible just like any other employee.  Your child may have to pay taxes on the income they receive, but it will be at a much lower tax rate than you would probably pay.  In addition, with this earned income your child could invest in an IRA (a Roth IRA would probably be the best choice).3.    Travel to a resort area: When you travel away on business, your travel expenses—including airfare, hotel and 50% of the cost of the meals—is deductible as long as the primary purpose of the trip is business related.4.    Treat your business clients:  When you hold a “substantial business discussion” with a client, you can generally write off 50% of any costs of entertainment preceeding or following the meeting.   This may include a round of golf or night at the ballpark.  Be sure to keep meticulous records of the expenses and the purpose of the meeting.5.    Pay your quarterly tax bill:  If you are self-employed you should be making quarterly estimated payments.  Take a look at your income and expenses so far this year.  You can then increase, or decrease, the next quarterly payment that is due September 15, 2016.6.    Aim for target workers:  Your business can claim the Work Opportunity Tax Credit (WOTC) for hiring workers from one of several “target groups” (such as unemployed or disabled veterans).  This credit had originally ended at the end of 2014, but recent tax rule changes extended the WOTC through 2019.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt – the guy behind TTW...until next week.