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posted: 4/30/2012 5:30 AM

Small business tax wrap-up brings good, bad news

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There's good news and bad for small businesses about the just completed tax season. First the good:

• We made more money. "We saw the best (client) earnings since 2008," says Tony Massaro, tax partner at Porte Brown LLC, Elk Grove Village. "A lot of people bought new equipment and took advantage of the Section 179 write-off."

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Businesses could write-off as much as $500,000 of qualifying equipment purchases in 2011. The write-off is lower this year, but, assuming cash flow works, 2012 "still can be a good time to buy equipment" and write off at least some of the cost, says Wheaton CPA Paul Asheim, president, Paul W. Asheim Ltd.

• QuickBooks helps. Even though some business owners "have a fear of setting things up," Asheim says that QuickBooks "has changed the accounting world. Once business owners get past the learning curve, I get a disk, not a box of receipts.

"QuickBooks is pretty easy to work with."

• We're talking to our accountants more often. "We aim to have very few surprises on March 15 (when corporate taxes are due) and April 15 (when those 1040s must be filed)," Massaro says. "We get as much information as possible from clients in October and November," partly so clients know early whether they must write a big year-end check.

"It's like a health checkup," Asheim says. "Where do you really stand? What do you need to do?"

• 401(k) plans are coming back. "We saw a lot of new retirement plans starting up," Massaro says. That's an indication business owners are seeing more cash and feeling better about their prospects.

Still, less than two weeks since tax-due day, why does it feel like we're not done with the tax season? Well, we're not.

• The Supreme Court's decision on the Patient Protection and Affordable Care Act (Obamacare) will set in motion, change or kill a passel of taxes scheduled to become effective in 2014, the year the health plan really takes effect.

"People are scared about all the taxes in the health care bill," says Asheim. "It's not just the penalty (for individuals who do not buy health care coverage), it's the taxes created to fund the program."

• What Congress does, or doesn't do, about the expiring-again Bush-era tax cuts will affect this year's taxes and tax planning -- but Congress seems unlikely to act before year-end.

• Tax-related identity theft has become an issue -- up 97 percent in FY 2011, according to the IRS.

Criminals use a stolen Social Security number to file a false return that generates a refund early in the tax season. When a legitimate return is e-filed, Massaro says, the IRS "rejects the form because somebody else already filed with your Social Security number."

The problem is solvable, Massaro says, but time consuming.

• Jim Kendall welcomes comments at JKendall@121MarketingResources.com. 2012 121 Marketing Resources Inc.

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