Tax Planning for US Businesses

If your business is based in the US and you have a tax liability:

• Ask your accountant/planner whether makes sense for you to open a SIMPLE IRA. You can shelter up to $10,500 in W-2 income (but not dividends), and the fees and paperwork are minimal. You can read more about the SIMPLE here:

http://www.irs.gov/retirement/sponsor/article/0,,id=139831,00.html

Note that you can have a SIMPLE even if you already have a 401(k) at another employer. It's too late to set up a SIMPLE for 2007, but it's the perfect time to do it for 2008.

• If your income is derived from software development, ask your tax advisor if you are eligible for the Domestic Production Activities Deduction (form 8903). You could be eligible for a deduction of as much as 3% of your qualifying income.

• If you haven't opened a Roth IRA, take a look at it. The Roth doesn't give you the immediate deduction, but you do get tax-free compounding which is tremendously valuable for younger workers. And you can still set up a Roth for 2007 until tax day 2008. A great source of Roth information is

http://www.rothira.com/

You might even be able to contribute to your Roth at work if your firm offers a Roth 401(k). Check with your benefits department. Otherwise, brokerages like Schwab and E-Trade offer low cost Roth plans, and they'll be happy to help you.

High income earners need to watch for Roth caps, but for most taxpayers this is not an issue. In fact, if you are subject to reduced Roth eligibility (AGI > $159,000 for married filing jointly), please contact me immediately to discuss Zen Cart customizations. :smile:

Good luck,
That Software Guy