Many businesses have long-term assets on their balance sheets. For an asset to be considered long-term it needs to be held on a company’s balance sheet for more than a year and cannot be intended for sale. Examples of long-term assets include physical assets such as property, plant and equipment (PP&E) – machines, buildings, office equipment, vehicles, fixtures, land, computers, etc. These are all tangible assets. However, there are some intangible assets that are considered long-term such as goodwill, patents, research and development, and copyrights.
There is a unique tax break for business entities of all shapes and sizes contained in Section 179 of the Internal Revenue Code. Under this section, a business can elect to “expense,” or currently deduct, the cost of qualified property placed in service during the year, up to a maximum level. It is near-instant tax gratification.
Remember that year-end planning is not just for individuals. In fact, your business operation may benefit from tax moves in 2016 in the wake of several key extensions in the Protecting Americans from Tax Hikes (PATH) Act of 2015. Here are five ideas for small-business owners to consider.
Don’t be fooled into thinking that cash flow and profit are the same thing. In fact, there are major differences. Cash flow is dynamic and moves daily, while profit is a snapshot of income and expenses at a specific point in time. Understanding this comparison, and acting upon it, can be significant for a small-business operation.