Midyear checkup can bring big savings
The end of June and beginning of July is an important time for savvy small-business owners, who’ll be assessing their companies’ finances and thinking about strategies for the second half of 2008. A midyear checkup is even more important than usual this year, given the uncertainty of the business climate.
Accountants and other tax professionals say business owners should consider steps to lower their energy bills, not just for this year, but the long term. And the government has made some recent changes to the tax laws that owners should take into consideration.
The newest change takes place Tuesday, when the Internal Revenue Service increases the mileage deduction for vehicles used for business purposes to 58.5 cents from 50.5 cents. The increase reflects the jump in gasoline prices, now averaging $4 a gallon nationally and likely to stay quite high for the rest of the year; the new rate applies to only the second half of the year.
And the economic stimulus package that has given millions of taxpayers rebate checks also contained two provisions that benefit small businesses. The first is a near doubling to $250,000 of what’s known as the Section 179 deduction. The second is a bonus depreciation allowance under which businesses of any size can depreciate half the cost of equipment bought and placed into service this year.
The first step in a midyear financial checkup should be an appointment with an accountant or other financial professional. Jeff Berdahl, a certified public accountant at Berdahl & Co. in Center Valley, Pa., noted that “a year or two ago, top-line revenue was pretty good, but now a lot of businesses are flat, so you need to look at all areas” in your company.
For example, you might be more concerned now about your receivables than you were a year ago -- if your customers are behind in payments, your accountant can suggest ways to improve your cash flow. Berdahl also suggested trying to restructure your company’s debt while interest rates are relatively low.
Soaring energy costs should also be more of a consideration in a midyear checkup than they were in the past.
Leon Dutkiewicz, a certified public accountant at Margolis & Co. in Bala Cynwyd, Pa., recommends business owners look at their heating and cooling systems, and be sure they’re running efficiently. He also suggests that owners think about replacing older, wasteful units with ones that use less energy.
“A little bit more money upfront could save you big dollars over the long term,” he said.
