Clifton Gunderson LLP - A nationwide firm of Certified Public Accountants and Consultants

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MILWAUKEE - (April 08, 2009) - It will be months before the effects of the massive government stimulus plan are felt in the offices, factories and shops across the country.  In the meantime, businesses can take a number of actions to help shore up their viability and ensure they emerge from the recession stronger than ever, according to Clifton Gunderson, one of the nation's largest certified public accounting and consulting firms.

Clifton Gunderson offers five steps companies can take to create their own stimulus plan and prosper during the recession.

1. Make working capital management a key priority.  With credit markets still icy it's important to keep cash flowing.  To do this keep accounts receivables current, know when to part with slow paying customers, postpone paying suppliers as long as possible and keep inventory lean.
2. Take advantage of special accelerated depreciation tax deductions.  The "American Recovery and Reinvestment Act" signed into law on Feb. 17, 2009 has special tax savings for small and medium sized businesses planning to make capital equipment purchases this year.  Small businesses can write off 100 percent of the cost of most capital equipment purchases in 2009 up to a maximum of $250,000.  Special limitation rules apply if the small business purchases more than $800,000 of qualifying new and used assets in 2009.  In another provision of the Act, the new law extends bonus depreciation into 2009.  The bonus depreciation rules allows companies to deduct 50 percent of the cost of qualifying "new" asset purchases as depreciation in the first year and generally the remaining 50 percent over the next five to seven years.  Combining these two breaks can substantially offset most or all taxable income for the year for many small businesses.  By reducing taxable income, a business can trim its estimated income tax payments, which will increase its cash flow in 2009.
3. Make use of the longer carry-back period for 2008 losses.  The "American Recovery and Reinvestment Act" temporarily allows eligible businesses to obtain refunds of taxes paid in previous years by carrying back any 2008 net operating losses for up to five years.  Prior to the passage of this Act, a two-year carry-back rule applied.  Now eligible taxpayers can elect to have any 2008 net operating loss go against income as far as five years ago.  Taxpayers also are given the option as to which years the loss can be carried back against to maximize their refund potential.  Again by electing to use a 2008 net operating loss to offset income from prior years, the business will be generating a cash refund from the IRS that can be used currently in the business.
4. Review your retirement fund to see if it is meeting your goals.  Many small to medium sized businesses offer a Safe Harbor 401(k) plan because it is a good option for attracting and retaining valuable employees yet doesn't require the extensive discrimination testing of more traditional 401(k) plans.  The Safe Harbor 401(k) Plan allows eligible employees to contribute a portion of their own salary to a retirement plan and employers are required to contribute either matching or non-elective amounts to the plan on behalf of eligible employees.  However, during a recession companies are focused on conserving cash so this kind of a plan many no longer be needed.  As part of a yearly review, employers should examine their retirement plans for cost effectiveness and to see if the retirement plan is meeting their current goals.
5. Plan your tax obligation by meeting with your tax advisor during the year.  Don't wait until tax time to meet with your tax advisor.  Meet with a tax advisor several times during the year to discuss the current state of your business, your current balance sheet and any changes to your business goals.  For example, last year's goals may have been 20 percent growth, while this year's goals may be to limit sales losses to 20 percent.  Early meetings will help you and your tax advisor to focus on strategies for utilizing new tax incentives, strengthening your cash position, thoughts for your retirement, insurance planning and other money saving ideas.

About Clifton Gunderson

Clifton Gunderson, ranked as one of the nation's largest certified public accounting and consulting firms, provides a wide range of assurance, accounting, tax, and consulting services to clients in a variety of industries. Founded in 1960, Clifton Gunderson has a staff of more than 2,000 professionals serving clients from 45 offices across the country. The firm has been recognized as one of the country's best places to work.