We’ve only got a month left to take action on strategy to maximize deductions for 2013, since several business tax breaks are set to expire at the end of year. Forbes reported last week on a few opportunities business owners can take to save money on taxes.
Section 179 Deduction
Currently, businesses can deduct up to $500,000 of their equipment purchases under $2 million (such as machinery, computers, vehicles, and certain leasehold improvements). That limit will be going down to $25,000 in 2014, so if you need to make any purchases for your company, now is the time to do it. Note that in order to take the deduction, the equipment has to be not only purchased, but also installed and/or in service by December 31.
First-year Bonus Depreciation
If you spend more than $2 million on capital equipment, you can take advantage of this year’s first-year bonus depreciation, writing off 50 percent with no limits.
R&D Tax Credit
Although the name of this credit sounds high-tech, it’s available to any company making improvements to their products, services, or operations–making them faster, greener, cleaner, cheaper, etc. If your company is in computer software, architecture, or engineering of any kind, you are an excellent candidate. This one is likely to be renewed by Congress retroactively, but nothing is guaranteed.
New taxes created as a result of the Affordable Care Act can be reduced for a company structured as an S-Corp. It makes sense to run the numbers for your business to see how much the S-Corp structure could save you if you aren’t already registered that way.
If you have questions about strategy and tax planning for your business, feel free to give me a call at (864) 836-3136.