What do we do first when revenues decrease? We cut costs! Here are some tax planning tips to help you save money:

1. Did you choose the right structure? You can operate your construction business as a sole proprietorship, a partnership, a regular corporation, or an S Corporation. The form you choose directly impacts the amount of tax you pay.

2.Maximize Net Operating Losses (NOL). An NOL from one year can reduce taxable income in another year. It can be carried back to a prior year, resulting in a tax refund. If the NOL wasn’t completely used in the two years before it occurred, the remainder can be carried forward and applied against taxable income for up to 20 years.

3. Utilize the bonus depreciation. On February 1st, President Obama released his 2011 budget, which included extending bonus first-year depreciation to apply to property placed in service in 2010. This means you can write off 50% of the purchase price of any equipment placed in service in 2010.

4. Hire a new employee. While it may seem challenging when “jobs are down 38 percent since 2006,” it’s still true that “you need to spend money to make money.” The Government is offering a tax credit up to $5,000 for new workers added in 2010. Additionally, for employees not working more than 40 hours during the 60-day period ending on the start date, the wages are exempt from the 6.2 percent employer portion of Social Security tax.

To identify and implement the tax strategies best suited to your situation, please contact us.