Tuesday, December 16, 2008

Ten Tax Tips for Bail Agents Before 2009

With the year rapidly coming to a close, now is the time to start planning for end-of-the-year tax preparations for your business. Go ahead and spend money on your business now for things you’ll need next year so you won’t have to pay a giant tax bill in April. Remember, while we pay taxes, we’re not tax professionals. Also, state and local tax laws are different depending on where you live. Make sure you consult with your tax professional before the end of the year to make sure you’re not overlooking any deductions, or trying to deduct things that the IRS finds suspicious. You might not want to pay more taxes, but you definitely don't want to face an audit.

1. As part of the Economic Stimulus Plan of 2008, the limit on Section 179 deductions has been increased $250,000 for this year, double what it was last year. New and used equipment qualify for this deduction. Do you need a new computer? Now is the time to buy. It's alright if you need to finance these items - they're still deductible. It is important to note that any equipment you claim as a deduction must be in place and working by December 31, 2008. If you end up buying a new computer, make sure it is up and running before January 1. For more information on Section 179 deductions, check out this informative article from SmartMoney.com.

2. Believe it or not, it makes sense to buy an SUV. Ignore what we've said the rest of the year about not buying SUVs because of gas prices and green initiatives. The reason? If you buy an SUV that weighs more than 6,000 pounds and use it at least half of the time for business, you can deduct up to 75 percent of the purchase price. There are lots of SUVs that weigh more than 6,000 pounds: the Chevy Suburban, the Ford Excursion, and the Toyota Landcruiser. Now is an especially good time to invest in a new company vehicle, since car companies are drastically reducing the cost of vehicles. If you decide to put your company name on the vehicle, you can also deduct the cost of labor and materials to have that done. Talk to your tax professional to learn how to deduct up to 75 percent of the cost of certain SUVs this year.

3. Are you a member of PBUS? Of your state association? If not, you need to join your local, state, or national association. Business association dues are also tax deductible. This is a great deduction that also gives you the added benefit of great networkign opportunities.

4. Don't forget - education expenses can be deducted if it is a legal requirement for your job, or if they help you maintain or improve skills required in your present employment. Continuing education classes to maintain licensing are part of this category. Also, the registration fees for the conferences and conventions of the associations you just joined are deductible as well. Take the time to register now for conferences and continuing education classes that take place next year.

5. Book your airfare for any of the conferences you registered for, then deduct it as a travel expense, which includes air fare, hotel rooms, and car rentals. You can also deduct 50 percent of the costs for entertainment and meals, as long as they are related to business.

6. Advertising fees are another deductible business expense. Advertising fees include business cards, fliers, directory listings - basically anything that promotes and publicizes your business. If you are almost out of business cards, go ahead and order new ones so you're not caught cardless. If you advertise in any directories, ask if you can prepay next year's advertising now. Consider increasing your marketing budget and adding additional advertising. If you pay for next year’s advertising before December 31, you get twice the benefits. Not only do you help relieve this year’s tax burden, but you are driving new business to your company throughout 2009.

7. The recession is hard on everyone, but it is especially hard on charities. More people need the services of charitable organizations, while less people feel they can donate to them. Spread holiday cheer by making a contribution to your favorite charity or charities from your company. Not only will you be helping people in need and fostering a spirit of goodwill in the name of your company, but charitable contributions are tax deductible.

8. If your budget allows you, try to prepay recurring business expenses now. Consider prepaying rent for a couple months in January, or see if you can prepay your property insurance bill. Other recurring expenses you might be able to prepay include January’s cell phone or car insurance. If you pay these expenses by check, send them by registered or certified mail so you have proof that they were mailed by the end of 2008.

9. Here are a few other things that are deductible expenses because they fall into the “ordinary and usual” category: bank service charges, business-related magazines and books, casual labor and tips, coffee and beverage services, commissions, credit bureau fees, office supplies, parking and meters, postage, and promotion and publicity.

10. We've said it multiple times, and we'll say it again - consult a tax professional. No one knows tax laws better than the people who are paid to know them, and they certainly know them better than us. When in doubt, hire a CPA who will let you know for sure what can and cannot be claimed as a deduction. Remember, the cost of a CPA now just might save you the headache of an audit later.

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