As we have learned the Small Business Jobs Act was recently passed into law and many small business owners have been searching for the portions of this law which may help them survive. As a small business owner myself, I too have been looking and located a few things which may provide those answers. I have found a few things which I think might help. There is much more to this law but I believe that these three are the ones which would most represent many of the real small businesses.
• Start Up Help: Currently, new companies can deduct up to $5K (this amount is reduced by the amount that the start-up’s expenses exceed $50K). The new bill increases the deduction in start-up expenses from $5,000 under $50,000 to $10,000 under $60,000 for 2010.
• Extension of Depreciation: Businesses can temporarily write off 50% of capital expenditures made in 2008 and 2009 and extends that first-year depreciation for equipment purchased through the end of 2010.
• Section 179 Increase: “Section 179” of the tax code allows businesses to write off capital expenditures immediately rather than depreciating the asset over its economic useful life. This bill not only extends the benefit through 2011 but also increases the limit to $500K.
To those who are not quite sure why I say “real” small businesses is because lately there has been many who call themselves a small business but have thousands of employees, earn over 1 million dollars net profit each year and are owned by major corporations. Average employee size, as determined by the Small Business Administration is from zero to one thousand five hundred (0-1,500) employees. For the real small business, the start up help can immediately put money back in the packet of Mom and Pop companies and over time, stop the cycle of the typical life of new businesses ending in the first three (3) years.
The extension of depreciation could also be viewed as a God-send because now you can deduct more for equipment that you purchase and capital expenditures. Now small businesses can go out and purchase those top-of-the-line manufacturing equipments that they will need to be competitive without fear of having to eat a substantial part of the cost. With the ever increasing cost of material and equipment, many real small businesses can not seem to afford the updated version of certain equipment but now they can. They can now also write off capital expenditures immediately rather than adhering to a depreciation chart with the new increase in Section 179 of the new law.
While I am sure that there are more benefits in this new law, the ones that we cover now are those that will work for real small businesses nationwide and those that we can take advantage of today. Some of these may only be temporary so real small business owners should check in more detail before attempting to use them, but the fact that they are now more available to all of us is well worth the effort.