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.
|A Day in the Life of a Mortician|
|50 Years, 50 Toys|
|Chicago Shuts Down Innovative Business|
|They Harvest Christmas Trees By Helicopter?|
|UnBrella: Turning the Umbrella Upside Down|
|How to Embed Your Online Store Directly Inside Your Viral Videos|
|100 People you Should Follow on Twitter in 2014|
|How the heck does the stock exchange work, anyway?|
|This Video Will Make You Wish You Were an Entrepreneur in the 1980s|
|The Chinese Train That Never Stops|