Larry Kopsa, CPA
- One item that can really help you out is to do what we call a pre-tax plan. Gather your information, set up a time with your tax advisor and determine what your taxes are going to be based on your current situation. Estimate what's going to happen for the rest of the year, then your advisor can step back and make recommendations for you.
- If you are a "cash basis" salon or spa, as you get close to year-end, don't forget to mail your checks for deductible items before the end of 2009 to insure the write-off. You can claim the deduction in the year that the check is dropped in the mail. The check does not have to clear the bank in order for it to be deductible.
- You can use credit and debit cards to pay bills, but make sure you understand the rules. Credit cards are deductible at the time that you actually charge the item, whereas a debit card is not deductible until the bill has cleared the bank.
- Many times, the end of the year is the time to do bonuses for staff. If you do the bonuses in 2009, they are deductible this year. If you wait until after the first of the year, you do not get to take the deduction until 2010.
- If you have equipment needs, in 2009 you can write off up to $250,000 worth of equipment in the year of purchase and placement in service. This amount is supposed to drop to $134,000 in 2010, but those people who have their finger on the pulse of Congress think that the $250,000 amount will continue into 2010. Either way, if you do have equipment needs, this is a great way to slash your taxes. Remember, the equipment not only has to be purchased but also has to be placed in service.
- If you have children or retired parents or relatives who are doing work for the salon, don't forget to pay them a reasonable compensation. A child for example, can have income up to $3,650 without any federal income tax in 2009. If you are in a 33 percent bracket this saves you $1,200 and costs the child no federal tax. Make sure it's reasonable and make sure you have good documentation.
- The purchase of retail inventory is not a deduction until such time as that retail inventory is sold. On the other hand, for most salons and spas, the purchase of backbar items are deductible when purchases. If you are in a high tax bracket, and you are going to need backbar items at the beginning of 2010, stock up and pay now to get a 2009 tax deduction.