Still time to lower 2011 business taxes

By Joyce M. Rosenberg AP Business Writer NEW YORK (AP) -- Although 2011 is history, you may still be able to save money on your business taxes. Many accountants and other tax preparers find that their small business clients overlook deductions. Sometimes it's the result of not taking advantage of tax laws that work in your favor. Poor record-keeping can also be the problem. Here are some ways to lower your bill: Start or fund a retirement account. You have until Oct. 15 to reduce your 2011 taxes--if you have employees and start a retirement plan known as a SEP, or Simplified Employee Pension. The tax law lets you start a SEP until the due date of your return, including extensions, and to deduct the amount of your contribution from last year's income. SEPs are easy to set up, require little paperwork and no filings with the IRS. It's also possible to contribute to some existing retirement plans by Oct. 15 and take a deduction for 2011. Not only SEPs, but SIMPLES, or Simplified Employee Pensions, and defined contribution plans like 401(k)s. You can find out more about retirement plans from IRS Publication 560, Retirement Plans for Small Business. Benefiting from operating losses. Did you lose money last year? When a business suffers a net operating loss, the tax law allows the company to use it to offset income in previous years, and, if the loss was big enough, to offset losses in future years. Here's how it works, using 2011 as an example. After you compute all your income and deductions, your business was left with a $50,000 loss. You pay no taxes. You can use the $50,000 to offset income you had in 2009 and 2010. That's called a net operating loss carryback. If there's still money left over, you can have a carryforward, and use the money to offset income for the next 20 years. "You're leaving money on the table" if you have a net operating loss and don't carry it back or forward, said Jeffrey Chazen, a certified public accountant with EisnerAmper in New York. He noted that you will need to amend your past returns to carry the loss back. In future years, you'll see there are places on your tax forms where you can enter the amount of 2011 loss you're taking. Two IRS publications can tell you more about net operating losses--Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trust; and Publication 542, Corporations. Go back over your records -- all of them. Small business owners are among the busiest people in the world. And even those who try to keep good records can forget some expenses that they can and should deduct. So, you should go back over your books, credit card statements and receipts and checkbook to be sure that you're taking every deduction you can. Jeffrey Berdahl, a CPA with RLB Accountants in Allentown, Pa., said it's common for owners to forget some of the expenses that can be taken as part of a home office deduction. Many expenses of owning a home that normally aren't deductible can be used to lower your taxes if you work out of your home. For example, if you had to have your furnace repaired, you can deduct a portion of that cost. Similarly, repairs on your car can be deducted if you use it for business as well as personal reasons. Don't forget to go over your personal records as well. Maybe you spent $300 at a discount store back in June and forgot that you bought supplies for the office, like tissues and soap. Don't try to rely on your memory. "It's hard to remember what you had for breakfast yesterday, let alone what you did nine months ago," Berdahl said. This is also the time to be sure your records are in good shape, so either you or your accountant won't miss any deductions that your business is entitled to. Published: Thu, Feb 9, 2012