By Vincent Vienna CPA JD MBA, Smolin Lupin Co.
Pending President Barack Obama's signature, a new piece of legislation may help put small businesses at a tax advantage. The Senate passed the Small Business Jobs Act of 2010 on September 16 by a vote of 61-38. The bill will now go on to the House of Representatives, which is expected to pass the measure without change.
The legislation would also make $30 billion in loans available to small businesses, create a $1.5 billion fund to assist state small-business loan programs and contains $12 billion in tax cuts.
"The tax aspects are certainly beneficial to small businesses." The tax provisions of the act aim to provide access to capital, stimulate investment and encourage entrepreneurship. Provisions of the act include liberalized and expanded expensing for 2010 and 2011, revived bonus depreciation for 2010, five-year carry back of unused general business credits for eligible small businesses, removal of cell phones from the listed property category and liberalized Code Sec. 6707A penalty rules.
Now is a good time for small businesses to purchase equipment before the end of the year to reap the benefits of having greater credits and write-offs, which will reduce taxes substantially.
Generally, if businesses hire certain classes of employees they could save some payroll taxes between now and the end of the year.