Unless Congress acts very quickly, everyone will see their federal income tax increase in 2011. This week we will look at the pending tax increases. Next week we will discuss what you can do before the end of the year to possibly lessen your tax burden.

Taxes may be one of a business owner's largest expenditures. Therefore, they deserve the planning and monitoring that accompanies any other major expense. A year end meeting with your accountant should always include an estimation of your taxes. The discussion should include the projected tax amount, along with the various methods and opportunities to negate or reduce the taxes at both your company and personal levels. However, sometimes paying the tax is cheaper than incurring the costs of reducing them. No one wants to spend $10 on something of little or no value to save $2. With the exception of a retirement plan contribution, tax planning must be complete by New Year's Eve. Trying to do tax planning for the prior year while sitting with your accountant in early April for your tax return preparation is simply a day late, a dollar short.

The IRS recently released Notice 2010-69 which says, in part:“Provides that reporting the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement, pursuant to § 6051(a)(14) of the Code, will not be mandatory for Forms W-2 issued for 2011.”What does this mean?

The IRS is in the process of auditing 2,000 firms, and will be auditing an additional 6,000 firms in the upcoming years. While similar to traditional audits, these Employment audits will focus more on employment tax and compliance issues. An IRS spokesperson said, “A National Research Project (NRP) is the first the agency has undertaken in 25 years. During that time business practices have changed significantly, prompting the need for this study”.

You are working hard, very hard. In fact, you have never worked so hard in your life. Your employees are also working hard. Therefore, your business must be doing, amazingly well. Right? BUT...your bank account is nearly empty, your desk drawer is full of checks that you can't mail, and your line of credit is maxed. So, what is wrong - where is all the cash going? Often, the mystery may be explained by analyzing your financial statements.

If you’re a business owner, you are probably familiar with Section 179 and its benefits. Section 179 allows business owners to fully deduct certain equipment purchases in the year they were purchased rather than depreciating the expense over several years. To qualify, property must be used more than 50% in a trade or business and be acquired from an unrelated party.