What Obama’s Proposed Tax Cuts Mean For Small Biz
For Dane’s take on Obama’s plan read Generate Wealth Because the Government Can’t.
Here’s a welcome report for entrepreneurs this new year: President-elect Barack Obama’s massive stimulus plan is expected to include three key tax breaks for small-business owners.
Details are still emerging, but the plan could include a longer window for businesses to “carry back” losses; an incentive to invest in machinery, equipment and other capital improvements; and a tax credit for job creation.
Here’s how it might work: If you experienced a downtick last year, you can claim a net operating loss or NOL, which is essentially when expenses exceed revenues. Current tax law allows you to use that NOL to offset the past two years’ income, which could win you an immediate cash refund. Under the Obama stimulus plan, that carry back period would be extended, allowing you to use that NOL to reduce the past five years’ tax bills. That’s “a big deal,” she says. “It allows you to get an immediate cash infusion that you can use to help you survive now.”
If you do get a cash refund, another proposed tax break might spur you to plow that money back into your business. The Section 179 (first-year expensing) deduction for purchases of new equipment or machinery is expected to increase to $250,000. Currently, the limit for 2009 is $133,000.
Another piece of the Obama stimulus package could be a one-year tax credit for job creation. The president-elect has pledged to create 3 million new jobs to offset 2008’s steep losses. Republican Congressional leaders have indicated they would support tax relief, although size and scope would need to be worked out. The emergency package could be passed within weeks of Obama’s inauguration.
Photo by senate.gov.
home based business on January 13th, 2009 1:52 pm
These are great ideas. I think this is a great place to start and not only an incentive to start businesses, create jobs, and expand, but also to choose not to go out of business! Smart!
Jaclyn on January 13th, 2009 2:55 pm
I highly agree…these are awesome idea’s and relief actions for small business’…this should make the small business’ feel better about the future…especially if it passes in a few week’s from now.
Curt on January 14th, 2009 8:39 am
Obama’s plan is a disaster. The government cannot create jobs. We need government to drastically contact so that it is a much smaller burden on society.
best boat insurance on January 14th, 2009 10:19 am
I have to second Curt’s statement.
The only thing the federal government is really good at is spending our money. The only jobs the federal government can successfully create is federal jobs, which require more and more of OUR money every year.
Dane on January 14th, 2009 7:38 pm
I’m with Curt. Obama’s going to be a disaster for the economy. My take is here: Generate Wealth Because the Government Can’t.
cassy on January 21st, 2009 12:01 pm
good idea coming from the new president Obama,will have to see and wait now what really is his agenda about the small business, coz he is already now in the whitehouse taking his office us the most powerful man in the world,for me i think Obama will make the small business grow in his term!
Wendy In MT on February 2nd, 2009 1:11 pm
I think the government will be too busy with big business to worry much about small business for a while. People need to take their financial health into their own hands. Starting a business is a good way to do that. There are lots that do well in recessions.
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