Tax Planning in 2009

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"Someone who likes to gamble and who was planning to buy a piece of equipment in 2010 might make that purchase in December," Evans says, to take advantage of the bonus depreciation. "But it's a tough thing to do with the economy still uncertain and the full shape of the recovery still unknown," he acknowledges.

For export manufacturing firms. Look into the IC-Disc (Interest Charge-Domestic International Sales Corporation) program. Because it involves setting up a separate domestic entity to act as your firm's commissions agent, it is a fairly complicated and costly strategy. But firms that have at least $300,000 to $400,000 in export sales should consider it, Zerbe says. "If you directly export or if you supply a company that exports product overseas, there's a big tax advantage involving treating earnings like dividends," he explains. "We've had companies take advantage of IC-DISC and double their after-tax profits."

R&D tax credits. Large corporations get billions of dollars annually in tax credits for research and development, but few small and midsize firms do the same. "It's not just for huge companies working on government projects. It's also for companies that are making things greener, cleaner, quicker, or cheaper." At least ask your accountant whether your firm might be eligible for this tax break, Zerbe advises.

Tax increases. It is expected that the top two individual income tax rates, currently at 33% and 35%, will roll back to their 2000 levels of 36% and 39.6% when the Bush tax cuts expire at the end of 2010. The top capital gains rate will rise to 20% from 15%. But it's also possible that the health-care reform bill currently being debated in Congress could be paid for partially by surcharges on top income earners, Zerbe says. While most small business owners don't fall into the top tax brackets, some entrepreneurs do and might think about accelerating income this year, rather than deferring it into next year, he says.

Sales and use taxes. Many small business owners will show a business loss on their 2009 tax returns. But they might have to pay sales, use, and other miscellaneous transactional taxes, says Doug McCubbin, alliantgroup's managing director. "About 51% of state revenue comes through transactional taxes. There's a trend where states are stepping up their audits of transactional taxes and looking at new laws that would expand taxation on service companies, since many companies are adding service models to their product sales," McCubbin says. Small businesses that have expanded their sales into multiple states should review their compliance with state sales tax collection policies, he says.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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