Tax breaks benefit small-business owners

As regional administrator of the U.S. Small Business Administration, I travel throughout Missouri, Iowa, Kansas and Nebraska to meet with small-business owners. I find that, unfortunately, not all of them are fully informed about tax cuts they could be claiming this year.

Many small-business owners don’t realize that President Barack Obama has already signed into law 17 small-business tax cuts. And, most haven’t yet heard he has proposed an additional five small-business tax cuts in his 2013 budget.

Could your business benefit this year from these tax breaks?

Are you a startup? Startup entrepreneurs can deduct $5,000 for startup expenditures, and the President is working to double this deduction in his budget for 2013.

Are you a small business owner who has purchased new equipment? If so, 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, up from $250,000 in 2009. President Obama also signed legislation that allows businesses to 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.

Are you a small business owner that provides 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.

Have you 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.

Are you a small business owner who uses a cell phone? Starting in 2010, the process for deducting the cost of your cell phone and monthly bills was vastly simplified.

Are you an investor 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 qualified small business. Capital gains on investments held longer than five years in qualified small businesses are 100 percent exempt for the 2012 tax year.

Small businesses stand to gain even more from recent proposals that President Obama has proposed in his 2013 budget, including:

• Permanently eliminating taxes on capital gains in key investments

• A 10 percent income tax credit on aggregate wages in 2012 in excess of those in 2011

• Permanently doubling the amount of startup expenses entrepreneurs can deduct from their taxes to $10,000

• Expanding the health care tax credit to small businesses with up to 50 employees

• Eliminating complicated depreciation schedules for most small businesses and simplifying tax returns by streamlining home office deductions

President Obama has also announced a framework for reducing and simplifying the U.S. tax system to enhance American competitiveness. It includes lowering the corporate tax rate from 35 percent to 28 percent and reforming the tax code to make tax filing simpler for small businesses and entrepreneurs. Wouldn’t it be great to focus on growing a business rather than filling out tax returns.

Stay tuned to what the SBA is doing to assist small businesses as they grow and create an economy built to last. Follow us on Twitter at #SBAGreatPlains and on Facebook at “SBA Great Plains” or locate one of the SBA’s District Offices by visiting www.sba.gov.