It’s Tax Season! Do You Know the Tax Credits that Might Benefit You?
By Cassius Butts, Regional Administrator, U.S. Small Business Administration
As Regional Administrator of the U.S. Small Business Administration, I travel throughout
Georgia and meet with small business owners. Recently, I heard from Nathan McNeal,
at McNeal Professional Services, who took advantage of some of the newly authorized
federal tax cuts. Unfortunately, not all small businesses are as informed as this wireless
engineering firm in Kennesaw, GA.
Many small businesses don’t realize that President Obama has already signed into law
17 small business tax cuts or that the President has proposed an additional five small
business tax cuts in his budget for 2013. These tax cuts are available to all types of small
businesses, from main street shops to high growth startups and everything in between.
President Obama knows that the story of America’s success has been written by our
entrepreneurs and small business owners, and that’s why he is doing everything he can
to make sure small businesses have the tools they need to create an economy built to
last.
How can your business benefit THIS YEAR in tax breaks?
Are you an investor in a small business?
Some capital gains have been fully eliminated on certain small business stock,
which provides an incentive for financiers to invest in qualified small business.
Capital gains on investments held more than 5 years in qualified small businesses
are 100% exempt for the 2012 tax year.
Are you a start-up?
Start-up entrepreneurs can deduct $5,000 for start-up expenditures, and the
President is working to double this deduction in his budget for 2013.
Are you a small business owner that has purchased new equipment?
If you have bought new equipment, you can write-off a larger portion of the cost
of that new equipment this year rather than depreciating the cost over time. The
President has raised the maximum amount a small business can expense on new
equipment to $560,000 in 2012, up from $250,000 in 2009.
President Obama also signed legislation which allows businesses to write-off the
cost of their equipment purchases more quickly by allowing up to 50% bonus
depreciation in the first year of an investment.
Are you a small business owner that provides health care to your employees or to
yourself?
Tax credits are available for starting or continuing to provide health insurance
coverage for your employees, and this applies even if you are self-employed.
Have you been in business for up to 5 years?
You may “carry back” your business credit up to five years to offset taxes and
assist in difficult economic times. Businesses can apply their 2011 credits to
previous tax payments going back to 2006.
Are you a small business owner that uses a cell phone?
Starting in 2010, the process for deducting the cost of your cell phone and
monthly bills was vastly simplified.
As you can see, there are a lot of tax cuts that small businesses can benefit from this
year, but small businesses stand to gain even more from a number of recent proposals
that President Obama has put forward. President Obama proposed several additional
tax cuts for small businesses in his 2013 budget, including:
- Permanently eliminating taxes on capital gains in key investments
- 10% income tax credit on aggregate wages in 2012 in excess of those in 2011
- Permanently doubling the amount of start-up expenses entrepreneurs can deduct from their taxes to $10,000
- Expanding the healthcare tax credit to small businesses with up to 50 employees
- Eliminating complicated depreciation schedules for most small businesses and simplifying tax returns by streamlining the home office deductions
President Obama has also announced a framework for reducing and simplifying the U.S.
tax system to enhance American competitiveness. This includes lowering the corporate
tax rate from 35% to 28%, and reforming the tax code to make tax filing simpler for
small businesses and entrepreneurs so that they can focus on growing their businesses
rather than filling out tax returns.
Please be sure to stay tuned to what the SBA is doing to assist small business, helping
them start, grow and creating an economy built to last. Follow us on Twitter
#SBASoutheast and on Face Book, SBA Southeast or contact your SBA Georgia District
Offices by visiting www.sba.gov/ga.
This article was reprinted with permission from the Blairsville/Union County Chamber of Commerce. You should always seek EXPERT help if you have questions regarding tax advice.
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