Can you believe it's the end of the year already? Time zips by so quickly and then the holiday season is upon us. But before you ladle out the eggnog, remember this is your last chance to take action before your 2010 tax liability is carved in stone. Here's what you need to do:

1. Get your books in order. Take a close look at your bottom line. Discuss your profit and loss and the balance sheet with your bookkeeper to ensure accuracy. Compare this year's bottom line to last year's to see how your company has evolved.

2. Organize your receipts. If you've been collecting a shoebox full of receipts all year, start organizing them now. As an entrepreneur, part of taking your business seriously is to keep records that inform your financial position. Consider QuickBooks or other accounting software programs.

3. See your tax pro. This is the perfect time to discuss your potential tax liability. They're not in the midst of tax season's frantic pace and can carve out time to make recommendations for you. 

4. Create a 2010 file. This is best done at the beginning of the year. But if you haven't done it yet, set up a file for 2010 income-tax documents. Store receipts and documentation that pertain to taxable events, such as charitable donations, paid property tax bills, pictures of your home office, documentation for trade shows you've attended, etc.

5. Calculate your mileage. If you use your vehicle for business, record your odometer reading on December 31. Did you also record it on January 1, 2010? If not, try to find a repair receipt near the beginning of the year that includes the number. The Internal Revenue Service requires your total mileage, business mileage and commuting mileage, if any.

6. Consider your retirement funds. Open and make a contribution to a Health Savings Account (HSA) and/or a retirement plan. An HSA is an excellent way to get a full deduction for medical expenses. You must be in a high deductible health insurance plan to qualify. Your contributions to the HSA account are written off above the line just like your IRA contributions. For 2010, you may contribute $3,050 for self-coverage and $6,150 for family coverage.

7. Start thinking and planning for 2011. There were a number of tax law changes enacted in 2010 that may impact your business:

  • The Retained Worker Credit is a general business credit of 6.2 percent of wages paid (limited to $1,000) for each retained worker, which is defined as one who is employed for at least a year. There are some caveats, so discuss it with your tax pro.
  • The Section 179 expense deduction has been increased to $500,000 for 2010 and 2011. This write-off allows for the full deduction of the cost of machinery, equipment, fixtures, and furniture rather than depreciating the item over its useful life. 
  • Form 1099 reporting has been extended to include payments for products after December 31, 2011. This is currently under discussion for repeal. 
  • The Small Business Health Care Tax Credit is a nice incentive for providing health care for your employees. Beginning 2010 through 2013, it's a credit of up to 35 percent of premiums paid. After 2013 it goes to 50 percent. This one gets tricky as well, so discuss it with your tax professional. You must employ 25 or fewer full-time employees to be eligible. 
  • There is a new limit for the amount of farming losses a taxpayer can claim in a year. It's the greater of $300,000 or the net farm income the taxpayer has received over the last five years. Losses not allowed in the current year may be carried forward to future years.
  • Beginning in 2011, the IRS in an effort to reduce paper is requiring taxpayers to electronically file federal tax deposits. Go to www.irs.gov and click on the EFTPS button on the right side of the homepage. Of course, this requirement will not apply if your payroll tax liability is less than $2,500 for any given quarter. You simply pay the liability when you file Form 941 at the end of the quarterly reporting period.