Tax tips for small business (restaurant)

Bruce Freeman for the Republic writes: Dear Professor Bruce: I am the owner of a restaurant, and I know tax season is fast approaching. As a small business owner, I need some good tips and guidance on what I should be doing. — Answer: Since the year has ended, there is very little that you can do to reduce last year's taxes. However, you can start being proactive right now. Here are a few tips from accountant Michael H. Karu of Levine, Jacobs & Co. of Livingston, N.J.:

-- Recordkeeping is important. The more work you do, the less work required by your CPA, which translates into lower fees. While there are several excellent packages on the market, we recommend using QuickBooks for most small businesses.

-- Review your credit card charges monthly, and ask for lower rates. You always have the ability to go elsewhere if the rates are better. Also, some credit cards try to take the discounts when the charges are submitted. It makes it more difficult to reconcile. Contact them and ask to be billed monthly.

-- Check pricing with other vendors. You may be able to get better pricing by moving some of your purchases to someone new.

-- Review your insurance policies for proper coverage and rates.

-- Consider using a Simple IRA as a retirement vehicle. There are no filing requirements and the company match would be no greater than 3 percent of compensation or the amount contributed by employees, whichever is less.

-- If you have children who are 18 and younger, and have them on your company payroll -- assuming you are either filing as a sole proprietorship or a partnership in which you or you and your spouse own 100 percent -- they are exempt from payroll taxes. Don't confuse that with income taxes. They still are liable for those.

-- If you sell gift certificates, remember to treat them as a liability until redeemed. Also, if you donate gift certificates to your favorite charity, keep track of them and deduct them from sales when redeemed.

-- Workers' Compensation Insurance is required. By getting your coverage through your payroll company, you can avoid dealing with the annual audit, eliminate improper coding of employees, and since the cost is paid weekly, you can better manage your cash flow.

-- If you maintain inventory, be sure to match the invoices to the purchase orders and develop a reorder policy so you don't overstock.

-- Use a time clock to log employees in and out. Overtime is expensive and accurate timekeeping can help to keep those costs down.