February 2008: For the Record


February 2008

For the Record

Uncle Sam Is Calling

jennifer morrelljennifer Morrell, Editor

Are you knee-deep in your taxes yet, handing off paperwork piece-by-piece to your accountant in an effort to wrap up this tax season as soon as possible?

Whether you turn the whole tax kit and kaboodle over to your tax person, or you try to file taxes for your company on your own, you’re probably already tired of thinking about it.

I have a shoebox full of receipts at home that I need to get crackin’ on, but I’ll probably wait until early-April to do so. Hopefully, you’re more on-the-ball than I am.

To get you started or pull you through the muck and mire of tax season, I’ve secured a few tax tips for construction contractors from (provided by Grant Thornton, LLP). Maybe at least one of these tips will help you.

1. Examine your capital asset depreciation methods and lives. “Catch-up” deductions are possible on under-depreciated existing assets. You may be able to write off 100 percent of the under-depreciated amount in the current tax year without amending past returns by filing an automatic change in accounting method.

2. Obtain a marketing edge by offering your customers more. Work with a tax advisor to provide a turnkey cost segregation study to your customer with your completed project. Your tax advisor can assist in analyzing and appropriately classifying capital assets associated with the project into the most tax-beneficial depreciable lives.

3. Analyze the structure of your business. How your business is organized can have a major impact on the amount of taxes you pay, especially in the areas of state, local and unemployment taxation. Consider the benefits of restructuring your business (for example, by establishing a partnership to provide inter-company services), while at the same time potentially reducing state, local and unemployment tax liabilities.

4. Consider establishing a separate entity to own and lease fixed assets used in your business. Often referred to as “leasing companies” or “procurement companies,” these entities help manage your assets and may significantly reduce your sales and use tax — a tax you collect and remit regardless of whether your company is profitable.

5. Review your accounting methods. The operations of contractors can result in the need for multiple methods of accounting. Be sure that you are using appropriate and advantageous methods.

Happy filing!




Related Posts

  • 56
    Family business owners and entrepreneurs are all too familiar with our countrys onerous estate tax.
    Tags: tax, business
  • 50
    The economy has affected the budgets of not just individuals and entities, but also state and local governments. In these hard economic times, states and localities face serious shortfalls of revenue, made worse by the plunging value of real estate...
    Tags: taxes, business, tax
  • 38
    Lets make a bet: Imagine I gave you the task of coming up with a rational tax system. Starting with a blank sheet of paper, Ill bet that you would create a system nothing like our current one.
    Tags: tax
  • 38
    As an owner of a small or family-owned business, you can choose from many tools to transition your business to the next generation of leadership and maximize tax savings.
    Tags: business
  • 37
    As President Obama ramps down his time in the White House and looks to his life beyond the political spotlight, some were hoping that he would go away quietly and not try to slip in new regulations as he left. Unfortunately, it appears that President Obama has other thoughts. He…
    Tags: tax, business