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GET CONNECTED
TAXES
Savvy strategies to help reduce your taxes
Cash Accounting Rules
The IRS and the Treasury Department now allow
more service businesses with under $10 million
in gross receipts to use the cash method of
accounting rather than the more complex and
confusing accrual method.
The change is a welcome relief for many small
businesses. Service businesses that sell
merchandise as part of their operations—such
as plumbers and veterinarians—could benefit
from the new rule. The IRS estimates that
500,000 small businesses will be able to take
advantage of the rule change.
Previously the cash method of accounting was
limited to small businesses with less than $1
million in revenue. Under the cash method,
generally a business reports income and
deducts expenses when the related payments
occur. Under the accrual method, a business
generally must keep inventories and report
income when it’s earned, even if the business
has not received payment.
Read It And Reap
Deductions
You may not be able to take a big bite out of
your small-business tax bill, but you can
nibble away by finding often-missed
deductions.
Just take a look at Bernard B. Kamoroff’s book
422 Tax Deductions for Businesses and
Self-Employed Individuals (Bell Springs
Publishing, 2001). Independent professionals,
contractors, freelancers and home-based
businesses can find a wealth of tax deduction
ideas in this updated guide. It includes
hundreds of tax breaks that you might be
missing.
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