2014 Tax Planning Tips for Businesses

Posted on by December 25, 2014

  1. General Planning

    1. Accelerate deductions for things you need.  Avoid buying things you don’t need just for a tax deduction

    2. Defer customer billing to next year if possible

    3. Maximize employer retirement contributions to the extent possible

  2. Depreciation and fixed assets

    1. Tax Extenders signed into law on December 19th restored two valuable depreciation provisions to prior year levels

      1. S179

        1. Deduct entire cost of small capital expenditures
        2. Dollar limit back up to $500,000 from $25,000
        3. Investment ceiling up to $2.5 million from $200,000
        4. Limited to business taxable income with any excess carried forward

      2. 50% Bonus Depreciation

        1. Deduct half the cost of new capital assets in the year of purchase
        2. No limits on investment or income/losses
        3. Excess losses generated by bonus depreciation can be carried back for two years

      3. Link to Congress.gov (link)

    2. Final Tangible Property Regulations

      1. Materials & Supplies defined as unit of property (UoP) costing $200 or less and economic useful life of 12 months or less

      2. De Minimis Safe Harbor Election for UoP costing $500 or less ($5000 or less for entities with audited financial statements) and useful life of 12 months or less

      3. Improvements, betterments, adaptations and restorations must be capitalized and depreciated

      4. Safe harbors to deduct routine maintenance and minor building repairs for small tax payers

      5. Link to AICPA Summary (link)

  3. Health Care Reform

    1. Employer Shared Responsibility Mandate

      1. Employers with 100 or more FTEs required to comply in 2015

      2. Employers with 50-99 FTEs required to comply in 2016

      3. No employer with fewer than 50 full-time employees is subject to the Employer Shared Responsibility Payment in any year.

      4. Link to IRS (link)

    2. Employer Reporting Requirements

      1. Employers required to file fewer than 250 Forms W-2 for the preceding calendar year

      2. Link to IRS (link)

    3. Small Business Health Care Tax Credit for Small Employers

      1. Must cover 50% of employees

      2. Fewer than 25 FTEs and average wage of employees must be $50,000 or less

      3. Coverage must be obtained through the Small Business Health Options Program (SHOP) unless an exception applies (link)

      4. Amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit.

      5. Link to IRS (link)

  4. Flow Through Entities

    1. Review S-Corp Officer Salaries for reasonableness.  This is number one audit risk for S-Corps

    2. Review records for adequate tax basis and at-risk basis to claim losses from flow through entities such as S-Corps, partnerships and LLCs

    3. Review Buy-Sell and other agreements to confirm they function as needed