With 2013 right around that corner, businesses can take a number of steps to prepare themselves for changes in the new year. In particular, savvy business owners can take advantage of a number of tax regulations and credits still available for 2012, says Paychex, a provider of payroll, human resources and benefits solutions.
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“With the potential tax increases and government spending cuts planned for 2013, it’s important for small business owners to understand how they could be impacted,” said Martin Mucci, president and CEO of Paychex. “Now is the time for business owners to re-examine their upcoming business needs and determine where they can make adjustments that will allow them to take advantage of the tax benefits currently available.”
Some of those tips from Paychex include:
*Move up bonuses – Employers may want to consider accelerating bonuses or other incentive compensation payments into this year if it appears that policymakers will not reach an agreement by year end to extend the lower tax rates currently scheduled to end in 2012.
*Make planned asset purchases now – Businesses are permitted to take a Section 179 deduction for the full purchase price of qualifying assets, such as equipment, computers or software, purchased during the tax year, to lower their taxable gross income. However, without congressional action, the limit of this deduction is scheduled to dramatically decrease in 2013.
For assets that don’t qualify for the Section 179 deduction, small businesses can also take advantage of a 50 percent bonus first-year depreciation allowance on certain assets placed in service during 2012; this benefit is also set to expire at year end without legislation extending it.
*Start a retirement plan– If you are considering offering a retirement plan for your employees, doing so before the end of the year could provide tax benefits. Your business might be eligible for a $500 tax credit for the first three years of your plan to help defray setup costs. In addition, any employer contributions to employee plans enjoy tax deductions, and a business owner can realize personal tax savings by contributing to a plan.
*Look at small business tax credits – A tax credit is available to certain small businesses to encourage them to offer health insurance coverage. Generally, the credit is available to small employers that pay at least half the cost of single coverage for their employees.
*Hire a veteran – The Work Opportunity Tax Credit (WOTC) for hiring qualifying veterans is scheduled to expire at the end of the year. The credit can range from $2,400 to $9,600, depending on certain factors, including how long the veteran has been out of work and whether he or she has a military service-related disability.