Smart Mid-Year Planning Ideas

Barbara Weltman It’s easy to get lost in the day-to-day operations of your business and fail to make long-range decisions. The calendar suggests that now is a great time to step back and make plans for the future, or at least for the rest of the year. Here are some ideas to help you plan effectively.

Strategic moves
Are you satisfied with the direction in which your business is moving? Maybe you need to site down with your advisors to discuss your situation. Schedule appointments now with your attorney, accountant, insurance agent and banker to review your current status and discuss your future.

Read over your business plan to see if you are in line with projections. You may want to revise your estimates in light of performance during the first half of the year. For free business planning software, go to

If you don’t have a written business plan, now is a good time to create one. There are many software packages for this purpose (e.g.,; you can also get free help from the SBA for writing your plan, including sample business plans (

Employee benefit plans
If your company is profitable, you can afford to support employee benefit plans. This will not only increase current employee morale but will also serve as an inducement when hiring new workers – something you may need to consider as your business continues to grow. And you can enjoy tax benefits, such as deductions, credits or savings on employment taxes, in return for your generosity. The earlier in the year you explore your options, the more choices you may have.

Retirement plans. If you want to put a SIMPLE plan in place for 2004, you must do so no later than October 1, 2004, in order to comply with notice requirements. If you want a profit-sharing plan for 2004, you must sign the papers by December 31, 2004. You still have until the extended due date of your return to fully fund the plan (e.g., August 15, 2005, if you are self-employed and you obtain an automatic filing extension for your 2004 return).

Bonuses.Do you plan to offer year-end bonuses? You may need to start setting aside funds for this purpose.

To review the types of employee benefits you can offer and their tax treatment, see IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits, at

Check your profit margins to make sure you are still making the kind of money you anticipate in light of the steep increases in gas prices. According to the AAA, the national average price for gas in January 2004 was $1.643 per gallon; by May 2004, it had topped $2 a gallon (up about 25%). The rise in gas prices has caused price increased throughout the economy and you may need to adjust your prices accordingly.

Equipment purchases
Take advantage of current tax breaks to upgrade you equipment.

  • First-year expensing up to $102,000.
  • Bonus depreciation of 50% of equipment costs (purchase price minus any first-year expensing).
  • Regular depreciation for costs in excess of expensing and bonus depreciation.

While you have until the end of the year to do so, you must place equipment in service to claim these write-offs. If you’re buying a computer, it may be no problem waiting until the last minute to complete your purchase. But if you are ordering specialized equipment, it may take many weeks or even months to receive it.

First-year expensing applies to the purchase of both new and used equipment (as long as its use is new to you); bonus depreciation only applies to new equipment.

You do not have to pay cash to qualify for these write-offs. You can finance your purchase and still claim deductions.

Final reminders
Make sure to complete anything outstanding for 2003. For example, if you obtained a filing extension for your 2003 return, don’t miss the deadline for submission. If you are on extension and haven’t yet fully funded your retirement plan for 2003, do so now.

Copyright © 2004 by, Inc.

Category: Business Planning
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