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by Harry Rabb, C.P.A.
Special to Tropical Breeze

The arrival of April 15th shouldn’t signal the end of small business owners’ tax concerns — they should take another look at 2007 and plan for the current tax year.

Once you complete the return, it’s a time for reflection. You have an opportunity to mend your ways and fix what was previously done wrong and to do things that were done right for next year.

We suggest business owners first look back at the process they went through in compiling their returns. Was your tax prep software helpful? Do you need to try another type? And, if you used a professional tax preparer, how are they in terms of meeting your needs? If you’re dissatisfied, now is the best time to pick a tax preparer for next year.

This is also the time to project what 2008 taxes will be. Many business owners tend to give little thought to the current year — even though it’s more than 25 percent over by the time they file their previous year’s returns.

It’s obvious that you’ll want to look for ways to maximize your deductions. But it is also recommended that business owners look carefully at any losses they can carry forward into 2008 that might offset gains.

Doing tax projections is part of your overall business planning. For example, you’ll want to consider if you’re buying new equipment whether you’d want to take a Section 179 up-front deduction or amortize the acquisition over a period of years. But remember business decisions should not be based solely on tax consequences.

You need to consider your taxes as you make cash-flow projections. We find that most business owners aren’t planning how they’re going to pay their taxes; they’re not putting any money aside. Instead they’re using the tax allocation to run their business. That can make for a lot of grief this time next year.

It’s also a good time to familiarize yourself with tax code provisions that will apply to your business.

Why bone up on tax law? Business owners can overlook deductions that might seem obvious to others. In fact, we had one client who didn’t realize he could get a deduction for business meals.

It’s possible as you’re considering this year’s taxes that you find you made mistakes or omissions on your 2007 return, either in your favor or the government’s. This shouldn’t be a cause for panic — you have three years from the date you filed your return during which you can file an amendment.

You might have found in the course of working on 2007 that there were deductions you could have taken in 2005 or 2006. The good news is that you still have time to amend those returns and get back taxes you paid.

Some business owners worry that an amendment will flag their return for an IRS audit. But, if the return is questioned, as long as the taxpayer has adequate documentation, there’s nothing to fear.
But let’s say you find something in your favor. You might not want to immediately dash off an amended version.
There is something to be said for waiting and making sure that you’ve got all the things you want to amend the return for. You don’t want to get into a situation of serially amending the return between now and your extended due date, in three years, that is, consistently amending already amended returns.
As always, we recommend the services of a competent tax professional to assist you. A professional can be your “gateway” to the IRS to ensure that each submission is as complete and accurate as possible and to assist with the arcane structure of the Internal Revenue Service.

This information is provided as a public service and should not be construed as individual accounting or tax planning advice. For information on how these general principles apply to your situation, please consult an accounting or tax professional.
Harry Rabb is a C.P.A. and partner in Cormier & Rabb, CPAs, Accounting, Tax and Consulting Services, 28163 U.S. Hwy. 19 N., Ste. 204, Clearwater. Call 727-796-2459.