Not too late for year-end cash flow planning

One of the most significant factors affecting the cash flow of a small business is taxes. This is a subject that comes up very frequently with our clients as they look to better manage the cash flow representing the lifeline of their business.

Answering questions like, “Are we doing everything we can to take advantage of the benefits the tax code allows?” are key themes in our planning meetings.

If you are like me and have done proper tax planning throughout the year, you are probably surprised at how much more your 2013 tax bill is going to be versus last year. I believe it is both an honor and a privilege to live in this country, and therefore, we must pay taxes.

That being said, I do not believe in paying any more taxes than is legally required. I will do everything in my power to find and use all legal deductions possible, as you should. 2013 gives us a unique ability to maximize deductions that may not be available in 2014.

There are some interesting deductions that may expire after this year that a small-business owner should seriously consider. Bonus depreciation and Section 179 expensing should be your friends before the end of 2013. Bonus depreciation allows for a 50 percent depreciation in the first year for purchases of new qualifying property, as long the property is put in service before the end of the year.

This can be a significant tax savings over the normal Modified Accelerated Cost Recovery System (MACRS) depreciation method. This can also help your business with cash flow issues, as you can finance the purchase and still take advantage of the full deduction.