As assistant associate administrator of the U.S. Small Business Administration, I travel throughout Washington state and meet with small business owners. Many small businesses don’t realize that 17 small business tax cuts have already been signed into law and an additional five small business tax cuts are proposed for 2013. These tax cuts are available to all types of small businesses, from Main Street shops to high-growth startups.
How can your business benefit this year in tax breaks?
For those investors 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 a qualified small business. Capital gains on investments held more than five years in qualified small businesses are 100 percent exempt for the 2012 tax year.
For those running a new business, entrepreneurs can deduct up to $5,000 for start-up expenditures.
Small-business owners who have purchased new equipment can take a bigger deduction on depreciation.
If you 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 maximum amount a small business can expense on new equipment has been raised to $560,000 in 2012, up from $250,000 in 2009.
Businesses can also write off the cost of their equipment purchases more quickly by allowing up to 50 percent bonus depreciation in the first year of an investment.
For small-business owners who provide 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.
If you’ve been in business for up to five 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.
What small business owner doesn’t use 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. Please be sure to stay tuned to what the SBA is doing to assist small business, helping them start, grow and create an economy built to last. Follow us on Twitter at www.twitter.com/SBAPacificNW and on Facebook at www.facebook.com/SBAPacificNorthwest or contact the local district office in Washington at www.sba.gov.
Calvin Goings is assistant associate administrator for the U.S. Small Business Administration in Washington, D.C.
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