Saving Money

>>Businesses can save potentially hundreds of thousands of dollars each year by taking advantage of a range of tax deductions. Experts say a lot of them go unused because many people don't know about them.

Want to visit Las Vegas? Find a legitimate business reason to go, and the trip can be deductible, says James Wesolowski, a certified public accountant in Cape Coral.

"With any tax deduction, you develop a business rationale and reinforce it with record keeping," says Wesolowski, who has lectured at International College and now teaches workshops on the subject for Wayne State University in Michigan.

"Your chances of an audit might become a little bit greater [by taking the deductions], but if you live to be 100, chances are you're going to be audited only twice," he claims.

Good tax planning begins when a business owner makes the critical decision about incorporation.

Wesolowski recommends that the owner of a mid-sized or small business file as an S corporation. Under this corporation, a "reasonable salary" for a business owner could be roughly 50 to 65 percent of income, he says.

"The rest [of the business income] escapes a 15 percent self-employment tax, and there is no double taxation with an S corporation as there is [for] a C corporation."

Another way to reduce a tax bill is to delay recognition of income and to accelerate expenditures. "At the end of the year, you should buy supplies for next year," Wesolowski says. "Pay off advertising for next year. Pay off any leases you might have." Put them on credit to delay payment for at least 30 days, he says, and "you could take the deduction for the current year." To reduce income, collect bills after Jan. 1.

Another deduction includes writing off part of a house that is used regularly for business, including mortgage interest, real estate taxes and utilities, homeowner's insurance, flood insurance, repairs and depreciation.