Small-business owners still have time to implement several strategies that will reduce their 2012 income tax liability. The catch is that they must be put into place before the new year.  

Consider the following opportunities:

• Accelerate income. Given the near-certainty of income tax increases beginning with the 2013 year, small-business owners that use cash-basis reporting should try their best to invoice and collect from their customers during the final days of 2012 so that income is taxed at current, lower rates.
•  Convert your IRA. Owners of a Roth IRA can take money out of these accounts tax-free for retirement. That is a significant advantage to other types of retirement accounts that require you to pay income taxes when you take the money. You can convert your retirement accounts to Roth IRA. Converting will trigger a tax, but doing so in 2012 will result in a lower tax liability than doing so in 2013.
• Accelerate equipment purchases. Section 179 of the tax code allows you to expense the purchase of business equipment up to $139,000 in 2012. This goes down to only $25,000 in 2013.

Learn more at Bloomberg.

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