Tips on lowering business taxes

As a business advisor, we’re often called on to help clients reduce their taxes. Based on our experience, here are some of the most overlooked ways privately held businesses can lower taxes:

1. Depreciate equipment
   2004 was the last year you could take advantage of the relaxed depreciation deduction provision included in the 2003 tax relief bill. Check with KDV for new IRS rulings on depreciation of equipment.
   
   
2. Buy vs. lease
   It can be tempting to lease if you don’t have the cash to make a large, one-time payment. But with leasing, you can only deduct the amount of the lease. A purchase allows you to deduct the full purchase amount from taxes. Plus, leasing interest rates are usually high, around 15 to 20 percent. You may be better off getting a lower-interest bank loan to cover the purchase.
   
   
3. Put it into savings plans
   Since all business structures except C corporations require shareholders to account for business profits as personal income, why not put some of those profits into tax-deductible retirement plans or college savings plans?

For additional ideas on how to lower your taxes or other questions about filing business tax returns, feel free to contact one of our privately held business experts.