As a small business owner, there are certain key issues that become of concern from time to time; these are referred to as "Strategic Issues" because they require decisions that can be of strategic importance to your business. One of these strategic issues relates to the use of a "Net Operating Loss (NOL) your business has incurred.

After your business has recognized all the income from sales, and all the expenses of operating your business, for the specific tax year in question, the operating expenses may exceed the operating income. When this occurs, the business is experiencing a Net Operating Loss (NOL). For the tax year in question, this means a there is no income tax liability. However, in many instances, the business had a profit in a previous tax year, or is anticipating a profit in subsequent tax years. A Net Operating Loss (NOL) can be used to reduce prior year's tax liabilities by offsetting profit from that prior year. This means that the business may generate a tax refund from prior years; and in some instances, this refund is actually paid to the individual owners of the business. Furthermore, a Net Operating Loss (NOL) may alternatively be applied against future years profit of the business.

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