The holiday decorations and advertisements popping up across Baton Rouge should remind businesses that the end of the year is closer than they think.
That means the Dec. 31 deadline to file year-end taxes is looming ever closer—and now is the time to prepare.
“Now is the time to get your books in order and get your questions ready. There are no stupid questions,” John Gautreau, director of tax consulting services at LaPorte Sehrt Romig Hand, says. “Make sure to have that conversation with your CPA.”
Businesses taxed as partnerships, including most LLCs or S corporations, which choose to accelerate expenses and defer income at the end of the tax year into the next shouldn’t necessarily use that method this year, Gautreau says.
The reason? The top individual rate is set to rise to 39.6% in 2011. A proposal in front of the U.S. Treasury seeks to accelerate that increase to 2010.
For a business where the owner pays taxes as an individual, shifting income from 2009 to 2010 and 2011 income-tax returns might actually cost more in taxes. C corporations that typically pay out bonuses to owners should also consider the impact of the increase.
C corporations should take a look at paying out more dividends. While this year’s 15% long-term, capital-gains rate is mandated to go to 28% in 2011, the Treasury has proposed raising it to 20% in 2010. That means this year might be a last chance for stakeholders to receive dividends taxed at the lower rate.
Businesses planning to buy new equipment next year should probably look at putting in that new purchasing order by the end of the year, Gautreau says. A first-year writeoff of equipment purchases is $250,000 for 2009. That amount will probably drop to around $130,000 in 2010, so businesses should take advantage of the larger benefit by year’s end.
Likewise, all personal property purchased before Dec. 31 is allowed a 50% bonus depreciation deduction in 2009, but the provision expires at the end of the year.
There is a wealth of business-tax credits available for green initiatives, research and work opportunities to name a few. Businesses also have time to start a retirement plan this year. In most cases, the contribution can be made in 2010 but still be deducted on a 2009 business-tax return.
