Ask a Business Expert

A: Here are some things you can still do to minimize your business taxes if 2003 has been a good year for you:

• Buy needed equipment. As long as you have sufficient business income, you can opt to expense up to $102,000 of equipment purchases made in 2004, even if you do so on the last day of the year. Bonus: You can even boost cash flow by financing your purchase and still claim the same tax deduction (see IRS Publication 946 at www.irs.gov).
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• Set up a qualified retirement plan. If 2004 was a good year, adopt a profit–sharing or other qualified retirement plan by signing the paperwork before year end. Then you have until the extended due date of your 2004 return to make your deductible contributions (see IRS Publication 560 at www.irs.gov).
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• Time year–end income and expenses. If you are on the cash basis for accounting purposes, you can postpone income by holding off on billing for work performed or goods sold near year end. Similarly, you can pay up outstanding bills for expenses and prepay certain items (within limits). Caution: Before adopting this deferral/acceleration strategy, assess whether you'll be subject to the alternative minimum tax for the year; if so, you may prefer to reverse these steps — talk with your tax advisor.

If 2004 hasn't proved profitable, you may be entitled to claim a net operating loss that can be carried back for two years to produce an immediate tax refund. You can request a quick refund from a net operating loss carryback after the first of the year, so prepare your paperwork now to file:

• IRS Form 1139 if your business is a C corporation
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• IRS Form 1045 for net operating losses arising from all other types of businesses