2010 Year-End Tax Planning for Businesses
The time to consider tax-saving opportunities for your business is before its tax year-end.
Some of these opportunities may apply regardless of whether your business is conducted as a sole proprietorship, partnership, limited liability company, S corporation, or regular corporation. Other opportunities may apply only to a particular type of business organization. This Tax Letter is organized into sections discussing year-end, and year-round, tax-saving opportunities for:
- All businesses
- Partnerships, limited liability companies, and S corporations
- Regular (C) corporations
Tax planning for businesses also requires consideration of the tax consequences to the individual owners. Accordingly, we suggest you also review our December Tax Letter titled 2010 Year-End Tax Planning for Individuals.
This Tax Letter only discusses federal tax planning. However, state taxes also should be considered because the tax laws of many states do not follow the federal tax laws. Your BDO USA, LLP, or BDO Seidman Alliance* firm client service professional may be consulted for guidance regarding individual state tax planning or multi-state tax planning opportunities when your business operates in more than one state.
This Tax Letter includes a discussion of various tax incentives that have been enacted or extended within the last year. Most significantly, President Obama recently signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “2010 Tax Relief Act”), providing for a two-year extension of the individual tax rate structure, including the maximum tax rates on qualified dividends and long-term capital gains; a one-year reduction in the OASDI share of the FICA and self-employment tax rates; a two-year extension of the research and development tax credit; and additional temporary investment incentives. The enactment of the 2010 Tax Relief Act removes—for the next two years—the uncertainty that has affected most taxpayers in recent years, as tax cuts enacted in 2001 and 2003 were otherwise due to expire at the end of this year.
This Tax Letter also includes a discussion of various tax incentives enacted by the Worker, Homeownership, and Business Assistance Act of 2009, enacted on November 6, 2009, the Hiring Incentives to Restore Employment Act of 2010, enacted on March 18, 2010, and the Small Business Jobs Act of 2010, enacted on September 27, 2010. For a more detailed discussion of the tax provisions of these Acts, please see our Federal Tax Alerts at www.bdo.com/download/1187, www.bdo.com/download/1299, and www.bdo.com/download/1465, respectively.
Business tax planning is very complex. Careful planning involves more than just focusing on lowering taxes for the current and future years. How each potential tax saving opportunity affects the entire business must also be considered. In addition, planning for closely-held entities requires a delicate balance between planning for the business and planning for its owners.
This 2010 year-end Tax Letter for Businesses and our 2010 year-end Tax Letter for Individuals cannot cover every tax-saving opportunity that may be available to you and your business. Inasmuch as taxes are among your largest expenses, we urge you to meet with your client service professional at Skoda Minotti. We can provide a comprehensive review of the tax-saving opportunities appropriate to your particular situation.