Inside Small Business | Small Business & Home Business Marketing

Tax Tips for 2008

John Ismerio

1. Contribution to I.R.A.s

If you haven’t already funded your retirement account for 2007, do so by April 15, 2008. That’s the deadline for a contribution to a traditional IRA, deductible or not, and a Roth IRA. However, if you have a Keogh or SEP and you get a filing extension to October 15, 2008, you can wait until then to put 2007 money into those accounts. Don’t dawdle though.

Making a deductible contribution will help you lower your tax bill this year. Plus, your contributions will compound tax-deferred. It’s hard to find a better deal. If you put away $4,000 a year for 20 years in an investment with an average annual 10 percent return, your $80,000 in contributions will grow to $252,000. The same investment in a taxable account would grow to only $186,000 if you’re in the 25% federal tax bracket (and even less if you live in a state with a state income tax to bite into your return).

Savings: Your savings will vary. If you are in the 25 percent tax bracket and make a deductible IRA contribution of $4,000, you will save $1,000 in taxes the first year. Over time future contributions you make will save you thousands, depending on your contribution, income tax bracket, and number of years you keep the money invested.

2. Organize Your Records, NOW!

Good organization may not cut your taxes. But there are other rewards, and some of them are financial. For many, the biggest hassle at tax time is getting all of the documentation together. This includes last year’s tax forms, this year’s W-2s and 1099s, receipts, and so on.

If you really want to make tax season go smoothly, use a personal finance software program like Quicken throughout the year so you have easy access to all the information you need.

How do you get started?

- Print out a tax checklist to help you gather all the tax documents you’ll need to complete your tax return.

- Keep all the information that comes in the mail in January, such as W-2s, 1099s, and mortgage interest statements. Be careful not to throw any tax-related documents out even if they don’t look very important.

- Collect receipts and information that you have piled up during the year.

- Group similar documents together, putting them in different file folders if there are enough papers.

- Make sure you know the price you paid for any stocks or funds you have sold.

- If you don’t, call your broker before you start to prepare your tax return.

- Know the details on income from rental properties. Don’t assume that your tax-free municipal bonds are completely free of taxes. Having this type of information at your fingertips will save you another trip through your files.

Savings: Hours of your time right off the bat. To complete your return easily and accurately use a tax software program such as TurboTax.

3. Itemize, don’t just take the Standard when possible!

It’s easier to take the standard deduction, but you may save a bundle if you itemize, especially if you are self-employed, own a home, or live in a high-tax area. It’s worth the bother when your qualified expenses add up to more than the 2007 standard deduction of $5,350 for singles and $10,700 for married couples filing jointly. Those amounts increase to $5,450 and $10,900 respectively, for 2008.

Many deductions are well known, such as ones for mortgage interest and charitable donations. Taxpayers, however, sometimes overlook miscellaneous expenses, which are deductible if they tally up to more than two percent of adjusted gross income when they are combined. These deductions include tax-preparation fees, job-hunting expenses, business car expenses, and professional dues.

Remember that you can deduct sales tax paid in 2007 is deductible if it is greater than the amount of state and local income tax paid. IRS tables give you a certain amount to claim for sales taxes paid, based on your income and household size. If you kept your receipts all year, you can compare the total sales tax paid to the table amount and claim whichever is greater.

Savings: Potentially thousands of dollars.

4. Home Office Deduction is more commonly accepted by IRS when properly accounted for!

The eligibility rules for claiming a home-office deduction have been loosened to allow more filers to claim this break. People who have no fixed location for their businesses can claim a home office deduction if they use the space for administrative or management activities, even if they don’t meet clients there. Doctors, for example, who consult at various hospitals or plumbers who make house calls can now qualify. As always, you must use the space exclusively for business.

Many taxpayers have avoided the home office deduction because it has been regarded as a red flag for an audit. If you legitimately qualify for the deduction, however, there should be no problem.

You are entitled to write off expenses that are associated with the portion of your home where you exclusively conduct business (such as rent, utilities, insurance, and housekeeping). The percentage of these costs that is deductible is based on the ratio of the square footage of the office to the total areas of the house. A middle-class taxpayer who uses a home office and pays $1,000 a month for a two-bedroom apartment and uses one bedroom as a home office can easily save $1,000 in taxes a year. People in higher tax brackets with greater expenses can save even more.

Savings: A typical deduction easily can run into thousands of dollars.

5. File and Pay as soon as possible!

If you can’t finish your return on time, make sure you file Form 4868 by April 15, 2008. Form 4868 gives you a six-month extension of the filing deadline to October 15, 2008. On the form, you need to make a reasonable estimate of your tax liability for 2007 and pay any balance due with your request.

Timely requesting an extension is especially important if you end up owing tax to IRS. If you file and pay late, IRS can slap you with a late-filing penalty of 4.5 percent per month of the tax owed and a late-payment penalty of 0.5 percent a month of the tax due. The maximum late filing penalty is

22.5 percent and the late-payment penalty tops out at 25 percent. By filing Form 4868, you stop the clock running on the costly late-filing penalty.

Savings: Interest and penalties.

ISTAX was founded in 2002 by John Ismerio, M.B.A. With John Ismerio’s innate business talents in this complex field, he has enabled business owners to resolve audits, convert sole proprietors into INCs or LLCs and help them save on taxes; this is the ultimate Accounting & Tax Solution!

ISTAX Accounting & Tax Solutions can be visited on www.myistax.com or contacted toll free at 1-866-My-ISTAX.

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10 Things to Do Before You Leave for the Holidays

Small Business Success

If you plan to take more than just Christmas and New Year’s off this year, make sure you’re prepared. Here are 10 things you should do before you close for the Holidays.1. Plan ahead - Taking some time for yourself can be a far less stressful proposition if you’re realistic about the best time to go. Consider previous summers and choose a time when you expect the business to be quiet. Taking off at the beginning or at a crucial point in a project can end up causing you more stress than not.

2. Delegate - Select a trusted member of staff or a colleague to take the reins while you’re away and empower them to make decisions in certain areas during your absence.

3. Clear your desk before you go - Try not to leave things hanging while you’re away. Sorting out last minute details and making sure you have a clear desk to come back to can take a weight off your shoulders. Perhaps appoint someone to open your mail and see to important emails while you’re away. If your papers are in order, your staff or trusted colleague will also easily be able to find what they need to answer queries in your absence.

4. Set up your Outlook - You can use Outlook’s Out of Office Assistant to let people know that you’re away and tell them who they can speak to in your absence, or else provide contact details if they need to get hold of you.

5. Change your voicemail - If you don’t have anyone to hold the fort, make sure that you change your office voicemail so that clients know how to get hold of you in an emergency. But take care of how you phrase your message - you don’t want to end up inviting unwelcome guests to come and visit!

6. Turn on your International Roaming - Make sure you are able to receive calls while you’re away. If this isn’t an automatic feature on your mobile contract, call your network provider a few days before you go and have them set it up.

7. Set up your mobile voicemail - Have you ever been abroad and found you’re unable to pick up your voicemail? It’s a good idea to call your network provider before you leave to arrange to pick up your voicemail while away. You may for example need to set a new security code to pick up your messages.

8. Planning to take your laptop with you? - If you have an important job on the go and don’t want to be cut off from the office, take your laptop along with you. Solutions like Windows XP’s Remote Desktop lets you connect to your office computer while away, giving you access to those important documents. However, do make sure that theft of your laptop is covered by your insurance.

9. Otherwise check your mail at an Internet café - If you’ve decided to walk on the wild side and leave your laptop at home, most popular holiday destinations have Internet cafes where you can respond to mail if need be. You’ll need to set up a Web-based email account if you don’t already have one and have your messages forwarded to that account.

10. Give yourself a break - Above all, once you manage to get away from it all, remember that you’re on holiday. This is an invaluable time to clear your head, get away from the day-to-day grind, and strategize for the future.

Article courtesy of SmallBusinessSuccess

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Planning an Office Holiday Party on a Budget

Julie Rosenberg

Are you trying to plan a corporate holiday party on a shoestring budget? Makes sense in these economically rocky times. Vault.com spoke to Sherri Foxman, founder and Party Girl of Party411.com, to get her advice on cheap-yet-fabulous holiday parties.

First, the good party planner must decide on a venue. If you can’t hold the party in your office (and who wants beer dumped in the server room?), you’ll need to find another place for cheap. Foxman has two suggestions.

First she suggests cheapskate party planners “poke fun” at the situation and “hold the party in a party room of a Country Buffet or something similar [aka, a Bonanza-like buffet]. It’s a huge choice of mostly fattening foods, but it’s terribly inexpensive and they have party rooms. And they will let you decorate any way you please! Same with McDonald’s. Most of the newer McDonald’s have huge party rooms!”

For those who do not wish to share their festivities with a brightly colored Ronald McDonald Fun Slide, Foxman suggests finding cheap space and contracting with a low-priced catering agency.

“Inexpensive caterers abound,” claims Foxman. “Even Super K is catering now and the food is actually good, with shrimp the size of small footballs. Even if you can’t find an inexpensive caterer, one can certainly stick to menu items that are inexpensive.”

No matter what your budget, Foxman emphasizes the importance of approaching caterers with a firm budget in mind. “Let them build the menu around your budget,” says Foxman. No apologies for a shrunken party budget this year.

Party Girl’s Party Hints

Serve wine and beer only.
You’ll save lots of money by not having a full bar and a skilled bartender. Employees can pitch in on pouring the wine and beer.

Throw in some inexpensive, fun activities - and people won’t notice you have a small budget.

Foxman once dressed a small person as Santa Claus who sat on the knees of attendees for a photo op. Popular and unexpected!

Have fun with the food.

At one party, Foxman built “The World’s Largest Egg Nog and Sundae Bar. It was mostly graphics and they put out all sorts of egg nog and ice creams, and it was served by administrative elves — cheap but creative.”

Don’t just decorate the room, decorate the servers and your guests.

Fun gewgaws like reindeer hats and glow-in-the-dark jewelry add to the air of fun and turn even stick-in-the-muds into party animals.

Play party games.

Reminisces Foxman: “For a mortgage company last year I did a version of Monopoly that had their logo in the title. People had to answer trivia questions to get property cards and turned them in for cash to buy prizes at a make-believe auction. The party was a huge success!”

You don’t need to serve dinner.

Heavy appetizers and hors d’oeuvres are fine.

Vault.com is the leading source of insider employment information for employers and jobseekers. Benchmark salaries at 5,000+ employers on Vault.com here: http://www.vault.com/companies/salary-survey.jsp

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