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For Immediate Release
Capital One Offers Tax-Saving Tips for Small Business Owners
March 27, 2013:
MCLEAN, Va. — The April 15th tax deadline is around the corner and America's small business owners will be responsible for a significant portion of the country's annual tax bill. While tax laws are shifting to benefit small businesses, there are steps small business owners can take now to help alleviate their annual tax burden this year and in years to come, and take greater control of their finances year-round.
Capital One offers the following tips to help small business owners minimize their 2012 taxes and save more money year-round:
- Know before you start. Tax laws are consistently being updated. Small business owners must stay abreast of the latest legislation surrounding eligible tax deductions. Tools at sites such as IRS.gov offer insight designed to equip small business owners with the most up-to-date information.
- Share the wealth through your company's 401(k), and get rewarded. Small businesses that offer a 401(k) plan may consider making a profit-sharing contribution before April 15th. Employees will appreciate the bonus, and employers will benefit from the tax deduction (as well as the additional deposit into their own 401(k) accounts). The amount of the profit share will lower business earnings, resulting in less income to tax, and the money put into the 401(k) is also tax deductible for the company.
- If you're self-employed, maximize your 401(k) contribution. Self-employed business owners may contribute up to $50,000 tax-deferred to their Solo 401(k) plan by April 15th (but they must have their plans started by the end of 2012 in order to make deductions to 2012 taxes).
- Set up and contribute to an IRA. A speedy way for anyone to reduce their personal taxes for 2012 is to put up to $5,000 (the current maximum) into an Individual Retirement Account (IRA). If you're 50 years of age or older, you can put up to $6,000 in an IRA.
Taking the above steps can help small business owners save on 2012 taxes; however, to ensure maximum tax benefits in the years ahead, it pays to manage finances year-round, including:
- Start a 401(k) plan to lessen your tax burden in the years to come. If your business hasn't started a plan yet, now is great time to start a low-cost plan and take advantage of the higher tax-deferred contribution limits for 2013. (You will likely qualify for $1,500 in government tax credits over three years if this is the first 401(k) plan for your business and have less than 100 employees.)
- Making charitable contributions. Charitable donations shouldn't be limited to the holiday season. Consider donating money and/or usable items such as equipment, clothing, and other goods throughout the year as a smart way to claim a deduction for the items' fair market value come tax time each business quarter.
- Join (or renew) business associations or education programs. Association fees and business-related education are also tax-deductible, as well as a good way to network and enhance your workforce knowledge.
- Hire a returning or disabled vet. In November 2011, President Obama signed into law specific tax credits for businesses that hire unemployed veterans. The Returning Heroes and Wounded Warrior Tax Credits provide businesses with maximum credits of $5,600 to $9,600 per veteran.
Making educated decisions to save on annual taxes is important but making the most of every dollar spent is also vital for long-term success. Small businesses can also earn rewards and save cash on all purchases made throughout the year with products like the Capital One Spark Cash Card (which earns two percent cash back with no limits) or Capital One Spark Miles Card (which earns double miles on every dollar spent).
This is general information for your convenience and should not be construed as advice. You should consult your tax advisor regarding specific tax strategies.
About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N. A., had $213.3 billion in deposits and $302.0 billion in total assets outstanding as of September 30, 2012. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. ING DIRECT, a division of Capital One, N.A., offers direct banking products and services to customers nationwide. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.
Capital One is committed to driving industry leading rewards by consistently engaging its customers with rich rewards, perks and benefits. The No Hassle Rewards® program from Capital One offers easy ways to earn rewards and a flexible suite of redemption options including travel, cash back, merchandise, gift cards, experiential rewards and more. With No Hassle Rewards, there's no limit to the amount of rewards a customer can earn and rewards don't expire.
About ShareBuilder 401k
ShareBuilder 401k provides easy-to-use, cost-efficient 401(k) retirement plans for small businesses ranging from the self-employed to those with 1,000 or more employees. ShareBuilder 401k is a leader in providing 100 percent index-based ETF investments (plus a money market) in 401(k) plans. ShareBuilder 401k offers a suite of on-demand services that make it simple for employers and employees to open and manage their retirement plans online at www.sharebuilder401k.com. ShareBuilder 401k plans provide market-efficient investments and model portfolios that make it easy for employees to select smart investments to help them get on track to meet their retirement goals. Customers can also take advantage of ShareBuilder 401k consultants, customer success managers, and customer care agents to receive assistance in choosing and managing their retirement benefits.
Alison Cahill Rouse