small business taxes

Taxes: Depreciation Categories

When buying assets it is important to know the best way to purchase and depreciate to take advantage of tax loopholes. Capital expenses usually include the following assets: buildings, cell phones, computers and software, copyrights and patents, equipment, improvements to business property, inventory, office furnishings and decorations, small tools and equipment, vehicles and window coverings. Below you will find a more detailed account of these depreciation categories.

3 year property:

  • plastics
  • metal fabrication
  • glass

 

5 year property:

  • cars
  • trucks
  • small planes
  • trailers
  • computers
  • peripherals
  • copiers
  • calculators
  • manufacturing equipment (for apparel)
  • construction activity assets
  • R&D equipment

 

7 year property:

  • office furniture
  • manufacturing equipment
  • fixtures
  • oil
  • gas
  • mining assets
  • agricultural structures
  • personal property

Commercial buildings can be depreciated over 39 years while residential rental real estate can only be depreciated over 27.5 years. Expenses incurred for improvements to sidewalks, roads, drainage facilities, fences and landscaping are depreciated over 20 years.

To learn more about Notable Bookkeeping’s tax planning, preparation and research services call us today at 201-937-3428.

Lean Wednesday Tip: Tax considerations for C Corporation Dividend Payouts

“Avoid double taxation of a C Corporation’s dividend payout by structuring payments to shareholders as consulting fees. Shareholders must actually offer advice for the payments to be considered valid tax deductible transactions.”

Top 10 Business Tax Shelters You Should Know

As we all know, two things are certain in life, death and taxes. I personally enjoy doing my taxes but like everyone else I don’t enjoy paying them. In business, it is critical that you know all the deductions that are available to you when it comes to keeping your bottom line healthy and your tax payment as low as possible. See below for the top 10 business tax shelters you should know:

  • Real Estate
  • Pension Plans
  • 401K/Roth
  • Municipal Bonds
  • Health Insurance
  • Life Insurance
  • Tuition Assistance/Reimbursement
  • Charity
  • Leasing Vehicles (offers larger deductions than owning one)
  • Assets bought on credit (e.g.; computers, equipment, inventory, office furnishings, et cetera)

It is important that businesses keep a separate high yield savings account designated for taxes and automate quarterly deposits.

Notable Bookkeeping knows taxes. Let us help you with your tax planning and research needs. Contact us today

Lean Wednesday Tip: Issuing Section 1244 Stock

“Small C Corporations benefit from issuing Section 1244 Stock as it offers shareholders better tax treatment if they lose money on the disposition of their C corporation stock. It is best to create a written corporate resolution that specifically states that the shares are Section 1244 stock. Also, make sure to authorize more shares than you’ll sell.”