Year-End Tax Planning



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mediately deduct the purchase price from your business income. You can also write off up to $10,710 in the first year for lighter-weight trucks and cars used more than 50% for business.
3. Buy on credit ? Don?t have the money to buy that new business computer? Buy it on credit. It is still deductible in the year of purchase even if you buy it on credit. Be sure that the corporation or LLC (if your business operates as an entity) uses it?s own credit, in its name or your business wont be able to deduct the expense.
4. Defer your year-end billing - Since collections are taxable in the year they are received, by sending your bills out closer to the end of the year, customer?s payments won?t arrive in the mailbox until after the new year.
5. Set up a qualified tax savings plan ? Most of these don?t need to be funded before April 15, 2004, but many need to be set up before 12/31/03.
6. Take some compensation as dividends ? Because of the new reductions of taxes on dividends, C corporation owners may want to consider taking some of their year-end compensation as a dividend rather than in a normal paycheck. Because of the reduction in the dividend rate to 15%, this could be a large savings. Beware; IRS will be on the lookout for companies abusing this rule.

As always, we recommend that you consult with your tax or accounting professional before taking any actions and to make sure you are taking all of the advantages you can of the current tax laws


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