Thanks to the $350 billion tax cut passed by Congress this year, it's probably more important than ever for small-business owners to check up on the financial health of their businesses, especially where the new tax laws are concerned. The new tax laws require taxpayers to spend more time on year-end planning and to do it earlier this year.

	Stacy Innerst/Pittsburgh Post-Gazette

Since owners rarely assess the financial position of their companies, it would be advantageous to hold a comprehensive year-end review to check the fiscal pulse of the businesses and help plan for the months and years ahead.

The new law made significant changes to the rules for depreciation. There's a huge increase in the amount that businesses can write off in the year an asset is acquired and placed in service for equipment or other personal property that would otherwise have to be depreciated. Generally, if equipment or other personal property used for business has a useful life of more than one year, the deduction for its cost must be spread across a given number of years as depreciation with a portion of the cost deducted each year.

Provisions of the tax laws allow a sole proprietor, partnership or corporation to fully expense certain eligible property in the year it is purchased. The election is made on an item-by-item basis for eligible property but it doesn't have to be used on all eligible property bought in that year. The election must be made in the tax year the property is first placed in service.

Businesses can now use that provision to deduct 100 percent of the cost of most new and used business equipment and other personal property instead of depreciating it over several years. For 2002 the allowance was limited to $24,000. Now for equipment purchased and placed in service for 2003, 2004 and 2005, the allowance is increased to $100,000.

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Additionally, the tax cut makes the temporary bonus depreciation enacted in 2002 even better. Now, 50 percent of the cost of qualifying new assets purchased and placed in service on or after May 6, 2003, through the end of 2004 can be written off as depreciation in the first year. The bonus deprecation refers to equipment as well as other assets that have a useful life of 20 years or less.

For those who buy a new car after May 5, 2003, and place it in service after that date, bonus depreciation permits as much as $10,710 to be written off for 2003. The bonus depreciation does not apply to used autos. This new law applies to those buying certain new or used "heavy" (over 6,500 pounds) SUVs, pickups and vans during 2003 for use in their businesses.

This new law also presents an opportunity for owners to grow their businesses with technology. Business owners should take note that off-the-shelf computer software acquired and placed in service in 2003-2005 also is included as "qualifying property" for bonus depreciation.

Entrepreneurs pride themselves on delivering the best products available at the lowest price possible. Why shouldn't the same reasoning apply to taking full advantage of the new tax laws? B.B. King sings about "paying the cost to be the boss," but that doesn't mean having to pay more than your fair share of tax. Remember that these provisions are only temporary so businesses need to act quickly to reap the maximum benefit from them.

Year-end is a time for reflection but it also is a time for sound tax planning. This involves doing tax projections on the anticipated tax liability of the business and taking whatever action is available to lower the projected tax liability and put appropriate tax strategies into place for next year and beyond.

There are hundreds of changes in the Tax Code every year. A year-round tax service can help ensure that when tax time comes, you'll get every advantage. Keep more of your hard-earned money for yourself by sending the government only the tax amount you are legally obligated to pay.