I have a number of clients come to year-end and realize they have been profitable, have cash on hard, and want to reduce taxes. Their question is always, "What can I do to minimize my tax liability?"

Although sympathetic to their plight, I have to respond, there isn't a whole lot we can do at this point in time to reduce your tax liability.

Tax planning is really something that you should be doing all year long. If you find yourself in a situation similar to the one stated above, here are a couple of things you should consider doing in the next couple of weeks:

1) Any CAPEX items that you need, buy them in 09 (computers, office furniture, phone systems, server, etc). You can take the 179 election and write off the entire amount this year ($250K limit in 2009).
2) If you need any work vehicles, now would be a good time to buy.
3) If you are a cash basis tax filer, delay any money coming in until 2010. In other words, don't push collections real hard the last two weeks of the year. Instead, focus on collections intensively starting Jan 1, 2010.
4) Pay any outstanding bills by December 31, 2009. .
5) Consider opening up a retirement account 401(k), SEP, IRA. At least something. This is a powerful tax saving strategy and wealth building strategy.
6) If your paying any sign on bonuses to key employees/ contractors for 2010, pay those by December 31, 2009.

Although these are all things you can do right now to reduce your tax liability, the best tax planning strategy is to consult with a tax advisor throughout the year to consider tax strategies along the way. The last thing your tax advisor wants to hear at year-end is, "I have all this income, please help me reduce my tax liability." However, if you meet with them regularly to keep them abreast on what is happening in your business, they are better able to work with you to come up with a plan to reduce your tax liability so at the end of the year, we can all rest comfortably knowing we have done everything we can throughout the year to have the best tax strategy in place to reduce our liability.