Business Tax planning gains for year end 2008

A majority of businesses are organized as pass-through entities that transfer their income and tax liability to the individual owners. Those businesses will need to combine individual tax planning for the owners at the same time they do yearend planning for their business.

Here are some things to consider in your planning:

# Make purchases of certain tangible personal property that qualifies for the Section 179 deduction and deduct the full purchase amount up to $250,000 total (this deduction phases out with total purchases in excess of $800,00 for the year).

# Set up a retirement plan if you don't already have one and make the maximum contribution permitted.

# Every company that has employees paying for all or a portion of their health insurance should have a Section 125 Cafeteria Plan. Under a Section 125 plan, the portion of health insurance paid by the employee is not subject to FICA tax or income tax, benefiting both the company and the employee.

# Consider establishing a medical and/or dependent care reimbursement plan for your employees (a Flexible Spending Account). Again, this portion of wages is not subject to FICA tax or income tax.

# Accrual-basis taxpayers should make sure to record all accounts payable items as of the end of the year

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