Last Minute Tax Planning Checklist

Before you file on April 17, have you considered the following credits and deductions.

Before you file on April 17, have you considered the following credits and deductions to lower your overall small business tax bill?

Hiring Incentives

The Hiring Incentives to Restore Employment (HIRE) Act was enacted in March 2010 to promote hiring, among other things. In 2010, the ACT provided a break to employers from paying the employer portion of the Social Security tax on newly hired eligible employees.

In 2011, the Act provides a benefit up to $1,000 per employee in to employers that continue to employ eligible employees for 52 consecutive weeks.  This amount is obtained through a credit taken on the business return filed in 2011.

Capital Expenditures

One of the key areas to examine is your capital expenditures. There are two tax provisions that provide for immediate expensing of qualified purchases that will allow many businesses to be able to deduct most, if not all, of their 2011 expenditures for machinery and equipment:

• Section 179 – a taxpayer can write-off up to $500,000 of qualified assets, either new or used, if the total capital expenditures did not exceed $2 million for the year. The maximum deduction has dropped to $139,000 for 2012, and beginning in 2013 the amount will be reduced to $25,000.

• Bonus Depreciation – a taxpayer can deduct 100 percent of their qualified asset purchases from 2011.  In order to qualify for the bonus depreciation, the assets must have been new and placed in service before December 31, 2011.  For 2012, the 100 percent deduction has decreased to 50 percent and it will be eliminated for tax years after 2012.

R&D Tax Credits

Companies that made qualified research expenses before the end of 2011 are allowed to claim a federal research and development (R&D) tax credit.  This credit could result in a tax credit of up to six-and-a-half cents for every dollar spent on qualified research expenditures that offsets federal taxes on a dollar for dollar basis. The R&D provisions expired on December 31, 2011.

Michigan-based Businesses

Consider this before making your 2012 Michigan estimated tax payment, due on April 17:  Most businesses organized as pass-through entities that do not have a c-corporation in their structure by now are well aware they are not subject to the new Michigan Corporate Income Tax (CIT).  However, another provision in the recent Michigan tax reform may provide an additional benefit.  Beginning Jan. 1, 2012, business income reported under the individual income tax will be apportioned based on 100 percent of a sales factor, rather than the equally weighted, three-factor formula.  This means that profitable businesses that have both Michigan payroll and property may have a lower Michigan apportionment factor under this new rule, particularly if they ship product, or perform services out of state. 


About Accounting

Ren J. Carlton
Dynamic Advisory Solutions

Starting with little more than a basement "office," a short list of contacts, and his trusty cell phone, Ren J. Carlton launched Dynamic Advisory Solutions in January 2000, and thus began the arduous, yet rewarding, process of building a successful company from scratch. This was no accident. Ren knew that to truly help entrepreneurs improve their accounting practices, he would have to live how they lived, worry like they worried, and grow like they grew.

Along the way, Ren created and hosted a weekly radio show, "The Business Reality Network," designed to nurture both aspiring entrepreneurs as well as seasoned business owners. He wrote a popular book, Profitpreneurship, now in its second printing. And he began delivering live presentations advocating smarter accounting practices for business groups as small as 20 and as large as 2,000. Additionally, Ren has maintained his CFO blog since the time blogs were invented. His consulting blog is perpetually updated with a wide variety of entrepreneurial - focused content that goes above and beyond basic accounting advice.

Now in its 13th year, Dynamic Advisory Solutions continues to grow as Ren's team delivers solutions to companies whose accounting departments cannot perform at the level of expertise required to sustain growth in a competitive marketplace. DAS's focus on Training, Staffing, and Outsourcing delivers customized, ala carte solutions on a pay-as-you-go basis that permits companies to get the help they need without hiring an expensive, fulltime CFO.

Ren has contributed his expertise to numerous non-profit organizations, including the Michigan Association of Certified Public Accountants Ethics Task Force, the Detroit Chapter of the Entrepreneur's Organization Board of Directors, and the Troy Community Foundation Board of Directors.

To contact Ren, visit

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