- · Know before you start: Tax laws are consistently being updated. Small business owners must stay abreast of the latest legation surrounding eligible tax deductions. Tools such as IRS.gov offer insight designed to equip small business owners with the most up-to-date information.
- · Share the wealth through your company’s 401(k), and get rewarded:Small businesses that offer a 401(k) plan may consider making a profit-sharing contribution before April 15th. Employees will appreciate the bonus, and employers will benefit from the tax deduction (as well as the additional deposit into their own 401(k) accounts). The amount of the profit share will lower business earnings, resulting in less income to tax, and the amount put into the 401(k) is also tax deductible for the company.
- · If you’re self-employed, maximize your 401(k) contribution. Self-employed business owners may contribute up to $50,000 tax-deferred to their Solo 401(k) plan by April 15th (but they must have their plans started by the end of 2012 in order to make deductions to 2012 taxes.)
- · Set up and contribute to an IRA: A speedy way for anyone to reduce their personal taxes for 2012 is to put up to $5,000 (the current maximum) into anIndividual Retirement Account (IRA). If you’re 50 years of age or older, you can put up to $6,000 in an IRA.