Small businesses have a long track record of providing a beneficial economic force in America. The entrepreneurial spirit that drives the success of small business ventures continues to burn brightly, even in light of the present day market volatility. Small businesses play a key role in the foundation of economic recovery and future job growth. This potential economic gold mine has not gone unnoticed by the U.S. government. In fact, President Obama recently proposed a plan that gives small businesses tax breaks and offers assistance for start-up costs. These small business benefits are just one feature of Obama’s 2013 budget plan.
What are the Future Expectations Regarding Small Business Tax Breaks?
As part of the 2013 budget proposal, the changes that can affect small businesses include the following:
- The elimination of capital gains taxes related to investments in small businesses.
- Deductions for the purchase of equipment and software.
- Start-up money for new small business ventures.
- Incentives for firms to hire more employees and provide more pay.
- An increase in the limit amount for mini-public offerings.
What Current Tax Benefits are Available for Small Business Owners?
Entrepreneurs who are planning to start a new small business venture, as well as owners of existing small businesses don’t need to wait for the implementation of the proposed 2013 budget to take advantage of tax breaks and benefits. Over the past couple of years, many new tax benefits have already been signed into law. According to the U.S. Small Business Administration, tax relief laws, such as the Tax Relief and Job Creation Act, HIRE Act, Recovery Act, and the Small Business Jobs Act, provide billions of dollars in tax relief.
There are currently numerous tax benefits available to help bolster the economy by supporting the growth and development of small businesses.
- New equipment purchase write-offs. – Rather than depreciating the cost of new equipment over several years, small businesses are able to write off up to $500,000 in equipment costs during the year of purchase.
- Zero Capital Gains Taxes. – This tax break eliminates the capital gains taxes for certain small business stock, making it more affordable for investors to support small business ventures.
- Start-Up Cost Deductions – The amount of money required to start a new business frequently acts as an initial stumbling block for potential entrepreneurs. The Small Business Jobs Act plays a key role in reducing this expense by allowing a $10,000 deduction for new business expenditures.
Other current small business tax benefits allow for credits and deductions relating to health care coverage, hiring unemployed workers, tax penalty limitations regarding errors in tax reporting, cell phone deductions, and the carry back of general business credits.
All these recent changes and proposed tax breaks provide a type of silver lining surrounding the U.S.’s current economic status, especially for entrepreneurs waiting for just the right time to turn dreams of business ownership into realities.