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The Taxman Cometh: What Small Business, Financing Experts Have to Say

It never fails. You have the best of intentions to organize and clean up your business files and paperwork before the end of the year but then you get caught up in holiday festivities, family gatherings, cookie-making parties and the like, and organizing for the new year gets put on the back burner. Yet with valuable business tax breaks set to expire after December 31, 2013, you ignore these legal tax write-offs at your own peril.

Don’t Miss an Asset Based Financing Tax Write Off

Whether you used asset based lending, factoring receivables, or another form of commercial finance to purchase new business equipment, 2013 is the last year you will have for a maximum deduction value of $500,000 (per Section 179 of the IRS code). It is suggested that small business owners take advantage of this generous limit for asset based lending and purchasing while they still can. In 2014, reports that the limit will shrink to a mere $25,000.

Avoid the “I’ll just write off the expense” mentality for December 2013. Most companies use one commercial lending option or another (factoring accounts receivable or invoice factoring services) to help manage their working capital or to cover the costs of major purchases. Yet during this time of year, some businesses make the mistake of racking up expenses thinking they can just write them off. This is faulty thinking and a common mistake small business should avoid, however, as a dollar spent does not equal a dollar to deduct in most cases. Most accountants advise not to spend more than they normally would just for the sake of writing it off on your taxes. Of course, costs associated with company holiday parties more than likely are deductible so you don’t have to be a scrooge. But you don’t have to overspend or make a major purchase in hopes of getting a tax break either.

Factoring For Small Business to Help with the New Year

The Taxman Cometh for small business financingSo before you ring in 2014, sit down (advisable with your accountant) and put together the income and expenses you’ve been tracking over the year. This will help you plan for your taxes and minimize unpleasant surprises. It might also be a good time to talk with your numbers’ experts about using financial options such as invoice factoring, working capital financing, or other alternative small business financing options to improve your business cash flow for 2014.

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About the Author:

Robert Bernfeld started in the commercial finance industry in 1974. His early years included positions with Aetna Business Credit and Foothill Group. During the next thirty five years. Mr. Bernfeld established both equipment leasing and accounts receivable factoring companies. He partnered in founding Business Facilitators, Inc. in 1999. Mr Bernfeld graduated from the University of California, Riverside in 1974 and received his Juris Doctorate from Loyola University School of Law in 1977.

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