Businesses that use the cash method of accounting have a certain amount of flexibility in timing when income is received and when expenses are paid. Most business owners look to push income into the next year in order to delay the payment of taxes on that income, while they accelerate the payment of expenses into this year so as to take current deductions. Those owners who anticipate being in a higher tax bracket next year may choose to reverse this strategy and accelerate income into this year when it will be taxed at a lower rate, and defer deductible expenses into next year, when the deductions will be worth more. The cost of new equipment and machinery that a business places in service is generally depreciated over a period of years. The immediate expensing deduction is limited to personal property, such as office equipment, that is used in the taxpayer's business.
Retirement plans are one of the most valuable tax breaks available to small business owners.
As a business owner, you can personally deduct contributions to your own qualified plan, and your company can deduct contributions made on behalf of its employees. The government has a number of retirement plan alternatives in place for small business owners. More people will qualify for the home-office deduction in 1999 than under previous law. In doing so, the Act opened the home office deduction to those people who manage a business from their homes, but also provide a service and meet clients at another location. Under previous tax law, unless you met with clients, customers, or patients on a regular basis in your home office, you could not claim the home-office deduction.