This has been a challenging year for a lot of people. We have moved our office to 81 8th street suite 3 (on main street 2 blocks west of Jackrabbit, yellow building).

At the end of the fiscal year, there are several things we normally ask our business clients to look at in order to minimize the number of unpleasant shocks that occur when tax returns are prepared. Depending on the state of your financial records and your comfort level in analyzing them, you may be able to do these steps on your own, or you may need schedule a year-end tax planning appointment.

The first step is to see if your records indicate that you have a profit - this is a good thing. It may mean that you owe some taxes - but they will always be just a piece of the profit that you made.

The next step is to consider the type of business that you have. Are you operating as a sole proprietor (or a single member LLC)? If you are, your business results for last year were entered directly on your individual tax return and the business did not file a separate tax return of its own. If you are a sole proprietor, make sure that you have not subtracted the cash you withdrew as an expense. Money you took out of the business for yourself is not deductible. Add back any amounts paid out to yourself or for personal expenses. You will be taxed on the profits of the business. The cash that you took out of the business is irrelevant for tax purposes.

If you are operating as a partnership, you also need to add back any amounts that may have been subtracted for payments to partners.

Sole proprietors and active partners pay income tax and self-employment taxes on their share of the business profits.

If you have an S corporation (income from the corporation is included on your personal federal income tax return and the corporation does not pay its own federal taxes), and you have not paid yourself a reasonable salary from the profits you may need to pay yourself and the payroll taxes before year-end.

If your company reports its taxes on the cash basis, make sure that you have paid as many of the company's bills for expenses as possible before the end of the year. They will not be deductible otherwise. Payments on loans are not deductible, except for the interest portion. Items charged on a credit card are deductible as of the date charged whether the credit card payment has been made by the end of the year or not. If your company reports its taxes on the accrual basis, payments have no impact on taxable profits.

If your company needs new equipment in the near future, you may want to complete the purchase before year end. Up to $250,000 in new equipment purchases can be expensed in 2008 or you can elect 50% bonus depreciation on new items. You can deduct the total cost of the equipment, up to that limit (and the extent of your profits ) even if you have a loan to cover the equipment purchase cost. The 50% bonus depreciation has no limits. Do not buy anything you do not need for your business just to save taxes. The cost of the purchase will always be several times more than the amount of taxes saved.

If you have a significant taxable profit, start thinking about preserving some cash to pay the taxes.

I have attached a summarized listing of tax changes for 2008.

Sincerely,

Leslie A. Madsen, CPA