"We hadn't planned ahead for our tax bill," says Julie Stewart. As the pair scrambled to find ways to pay the IRS nearly $20,000, they were forced to put all nonessential expenditures on hold and rely on their personal credit cards to help pay company expenses.Their sacrifices worked, and their $2-million company is back on track.
But today Julie, 31, and Tom, 46, don't make any key decisions, from capital investments to sizing their personal paychecks, without taking taxes into account.This year the Stewarts are introducing a new product line they hope to sell to mainstream gift stores, and once again they're hoping for high-speed growth. But this time they're planning for it, too.
Every month, they work with financial adviser Donna M. McGovern, president of Custom Business Results Inc., based in Huntington Beach, Calif. Their goal: to learn the most tax-savvy ways to extend their product lines, expand their customer base, and increase their annual sales by 30%.
From McGovern's perspective, there's one tax deduction that's an absolute slam dunk for any small-business owner: the right, under Section 179 of the tax code, to expense up to $24,000 in equipment purchases. "Bingo!" McGovern says. "You're taking expenditures that your company would otherwise need to capitalize -- meaning, write off over five or seven years -- and getting an immediate tax deduction." Depending on your corporate tax bracket, that could amount to a tax break of anywhere from $3,600 to $9,360.
Source: Jill Andresky Fraser, Inc.com