Business owners make decisions every day. Many of them are minor and every-day. Some are not. As year end 2009 approaches, there are some tax changes from 2009 to 2010 for which you should consider the effects on your business. Not planning or choosing blindly could cost you tax money. And while Congress may make changes for 2010 before the end of this year, we have to start somewhere.

An important consideration is the purchasing of Capital Assets, which are depreciated over time, usually 5 years or more, as defined by law. For 2009, there is 'bonus depreciation' which allows 50% of the asset cost to be deducted in 2009, the balance recovered by regular depreciation; this is available for machinery, equipment, land improvements, and other things (anything with useful life 20 years or less). Also, the one-year expensing of capital assets significantly decreases in 2010 (up to $ 250,000, with limits, for 2009, only up to $ 134,000 for 2010). Review your spend for this year and your needs and budget for next year.

Bonuses paid...lots of rules here. Normally, you deduct the pay in the year paid, but you can accrue certain bonus expenses into 2009 and pay in early 2010. Rules and conditions depend on your accounting method and whether or not a 50% owner of the business.

Dividends...normally not issued from a small business as they are taxable to recipient but not deductible to the business paying them. But if the owner is in a low or the 0% tax bracket on long-term gains, it may make sense to do it.

And your net income may be subject to the Alternative Minimum Tax, which means you might want to do the opposite of the more logical 2009-tax-saving option.

If you have any questions about your particular situation, please give us a call.

More later...
Bob