YEAR-END YIPS: "Not only are [small business owners] trying to end the year strong with their sales and profits, but they are beginning to worry about year-end reporting, W-2 and 1099 preparation, and tax season.".

• Author: Read, Charles
• Position: BUSINESS & FINANCE

YEAR-END is a stressful time for small business owners. Not only are they are trying to end the year strong with their sales and profits, but they are beginning to worry about year-end reporting, W-2 and 1099 preparation, and tax season. So, let's get started.

First off, remind your employees that charitable contributions need to be made by year-end. If you are matching all or part of that contribution, employees should make them early enough so you can get the paperwork done.

Also, go over all of the situations that have occurred during the year that were not fully covered by the Employee Handbook. Update it for any changes you want or that are mandated by new laws and regulations.

If you have a flexible spending account, make sure your employees are reminded of the use-it-or-lose-it policy. Provide them with a list of things that they can spend it on if they have extra after medical bills are paid.

Update your labor posters. They are available free from the Federal Department of Labor and your state labor department.

Now, as for taxes, there are four items business owners can do at year-end to lower their taxes:

* IRS Tax Code Section 179 allows businesses to deduct in the year of purchase equipment that was bought and put into service, with a max of $500,000.

* There are several different retirement plans available, depending on your situation. How much you can contribute each year depends on the type of plan you have and possibly the dollars of net earnings from your business. For example, the maximum contribution for a solo 401 (k) plan is 20% of your net self-employment earnings, plus an elective deferral contribution of up to an annual threshold amount. Check the IRS website for annual contribution limits.

A Health Savings Account is like an IRA for health care that is combined with a high deductible health insurance policy. You can set one up as a self-employed individual or for a business and include your employees.

You or the business can deduct the contributions to the HSA. The money contributed can be used to pay almost any noninsurance covered medical expense. This money is contributed pretax, and it is not taxed if you use the money for medical expenses. If you set up your HSA and contribute by Dec. 31, you can make a full year's worth of deductible HSA contributions for that year.

* If you itemize, or your employees itemize, you can reduce your taxable income by donating to charity. Your business itself may be able to make...