Tax time! (Almost)

Okay, I know we've got a ways to go until April 15th, as the -25 windchill reminded me this morning. But this is tax time because you are probably getting your records together for your accountant. In my experience, small business owners run the gamut in the complexity and totality of their record-keeping. From my perspective as a lawyer and tax preparer, the more the better. Write it all down and keep it for at least seven years. Better yet, write it all down, scan it, and keep it electronically forever. (And as a tax preparer, I ask that you put it in a spreadsheet. The shoebox full of receipts is so 1980s.) If you're not sure whether something would be deductible, keep the receipt and talk to your tax preparer. You never know what extra deductions your preparer can find, but I can't do much to help you if you didn't document it!

BW Online has their advice for small businesses, with Five Tax-Trimming Tips. The first is an important one - save your records. (See my note above about saving your data electronically.) If you're not sure what to save or for how long, be sure to ask your tax preparer. Second, make sure that you're using the best business entity for tax savings. Your attorney can discuss potential tax savings with you. Third, manipulate your income and expenses to cut your tax liability for 2007. Fourth, get your capital gains now - just in case the Democrats take the election. Finally, put more money in your retirement accounts to avoid paying tax on it now.