The old adage that just two things are inevitable: death and taxes, fails to show another similarity these two subjects have in common: People like to put off thinking about them.

If you own a business, neither issue should be ignored or put off to the last minute. Taxes, however, have an annual deadline, and the time is here. If you haven't filed, there is still time to make sure you've taken every step available to reduce your tax burden.

At the simplest level, the tax you pay on your business income is unavailable for you to use, so obviously it's in your interest to reduce this tax burden as much as you legally can. Attention to detail can have a tremendous effect on your personal or family tax situation.

As an entrepreneur, you're likely to face many more volatile income fluctuations than you would as an employee of a large company, and you need to retain absolutely every penny you can, to build up a cushion in case things get rough. Saving on business taxes is one very important way to reduce your costs and keep more of what you earn.

On the other hand, owning a business also presents numerous opportunities for you to reduce your business taxes by having the company pay for things, such as family health benefits, a retirement plan, and perhaps even some of the expenses of owning a home, a car, and a computer. In addition, if your spouse or other family members work in the business, you may be able to reduce your total tax bill by spreading the income and benefits among more people.

There are limits to how far you can go with these strategies, and numerous rules to follow and records to keep to make sure you stay within the parameters permitted by the Internal Revenue Service. Being aware of the rules that work in your favor can save you money.

Here are 10 important considerations you should discuss with your tax accountant. While these should have come under discussion all year long, it's not too late to review your filing to make sure they have all been considered and included where applicable.

1. Change in type of business entity. Tell your tax person if you've changed your business formation. Are you filing as a sole proprietorship, limited liability company, corporation, partnership or other type of organization?
2. Fixed asset changes. Did you buy, trade or sell any of your fixed assets, such as property, plants, equipment or vehicles? If so, provide your accountant with the dates and dollar amounts of all related transactions. This could affect your tax liability because of depreciation.
3. Use of subcontracted services. If you paid an outside subcontractor more than $600 in a calendar year and the subcontractor is unincorporated, you will need to supply a 1099 form.
4. Changes in employee status. Hiring employees causes you to file additional items. Tell your tax person whether you're handling payroll in-house or outsourcing it. Make sure you have filed all the proper forms.
5. Equipment leases. The two different types of leases available, operating and capital, require different handling for tax purposes. Capital leases typically are longer term and sometimes end with the lessee taking ownership of the equipment.
6. Withdrawals from the company. As a business owner, you typically take your own compensation in the form of payroll and owner's equity withdrawals. For tax purposes, these should be kept separate and classified appropriately. Payroll is classified as an expense, but withdrawals are considered an equity reduction.
7. Personal investments into the company. If you've made investments into the business, make sure they aren't classified as income, so that you don't pay taxes on them. They should instead be classified as an increase in owner's equity investment.
8. Loan payment structure. Are your loan payments broken out into principal reductions and interest expense? Separate each payment and record the interest expense on your profit and loss statement and update the loan principal amount on your balance sheet.
9. Mileage. If you're using personal vehicles for business purposes, give your tax accountant a log of your mileage, so you can take the appropriate deduction.
10. Documentation. Once you have prepared your data for your accountant, keep your documentation for the appropriate length of time in case of an audit. Most accountants recommend you keep documentation for seven years.

New rules that apply specifically to 2006 tax returns provide five additional factors to consider now:

1. Speed up equipment deductions. If you acquired any business equipment or furnishings in 2006, you can take first year expensing instead of depreciation over five, seven or more years. Called the Section 179 deduction, this allows you to immediately deduct up to $108,000, even if you financed some or all of the purchase price. If 2006 was not a profitable year for you, selecting depreciation will give you a tax gain in future, profitable years.


2. Save for medical costs. If you had a high deductible health plan for 2006, you can make tax deductible contributions to a health savings account. The cap on deducible contributions for 2006 is $2,700 for yourself or $5,450 for family coverage. If you were 55 or older by the end of 2006, add another $700 to the HSA. Funds in HSAs accrue on a tax deferred basis, and can be withdrawn tax free to pay medical expenses not covered by insurance.


3. Put more into retirement. If you set up a profit sharing or other retirement plan by the end of 2006, you can make tax deductible contributions up to the extended date of your 2006 return, which is October 15, 2007. If you did not set up a plan in 2006, you can create and fund a Simplified Employee Pension (SEP) plan by the extended due date of your 2006 return. Discuss the allowable amount you can contribute with your accountant.


4. Deduct maximum allowable care expenses. If you use your own car for business travel, use the deduction method that gives you the greatest write off. Check with your accountant to see if actual costs, which include gas and repair, or the standard IRS mileage rate is best.


5. Claim telephone excise tax. The federal long-distance phone tax from February 28 to August 1, 2006 is refundable. You can claim actual costs, use a formula provided by the IRS or take a standard deduction of from $30 to $60, depending on how many used the long-distance service.

While you may only have to file income taxes once a year, it's something you should be thinking about throughout the whole year. Many of the business decisions you make will have tax implications, and knowing those ahead of time can save you a lot of money.

Ideally, a small business owner should visit his tax accountant at least quarterly, and any time a major business decision is made. The accountant should be seen as part of the company's strategic team that helps the owner make the best decisions possible.

Tax time looms every April, and when you wait until the last minute, it can be a lot of hard work. This is not only the time to do the work, but also a good time to vow to maintain complete records throughout the year, and consult regularly with your tax person for proactive advice. Smart tax strategies like these not only keep you organized, but they can also help you significantly reduce your company's tax liability.

Portions of this article were edited from a story published on Entrepreneur.com by Pam Newman. Newman is the website's financial management columnist and president of RPPC Inc., a small business training and consulting company. She is also the author of, "Out of the Red," a management accounting guide for small business owners. Portions were also edited from an article in MYBusiness magazine, a publication of the National Federation of Independent Business.