We’ve had a number of small businesses wondering how the recent passing of the stimulus package will ultimately affect their bottom line. Based on our research, the following seems to be of importance for small business owners.
- If you lost money. Some small businesses will be able to use monetary losses to their tax advantage. To qualify your gross receipts have to fall at $15 million or under. You can use your losses to alleviate your tax bill for two years prior to the loss and 2o years following the loss. Ask your accountant about this important change to the tax regulations.
- Money for equipment. A business can normally write off up to $125,000 in spending for equipment such as vehicles, machinery and computers. In 2008, that amount was temporarily increased to $250,000. The stimulus package maintains the $250,000 level through 2009. However, if you already spend more than $800,000 on these types of capital expenditures, the deduction is phased out. For this reason it is geared more toward small business spending.
- Hiring tax credits. You can receive a $2,400 credit per worker on your taxes providing you hire a worker who falls in a targeted group of disadvantaged individuals. The Work Opportunity Tax Credit allows a 40% tax claim on the first $6,000 in wages paid to such a worker. Two new categories of disadvantaged workers have been added to the new package. These include veterans who have been unemployed for at least 4 weeks and left the military within the past 5 years, and disconnected youth, with disconnected being defined as between the ages of 16-25 with no formal education and no work in the past six months.
- Increased SBA lending. An additional $6 million is allocated to micro-lending through SBA sponsored non-profit lending organizations. The SBA has also been authorized to temporarily eliminate or reduce fees on their loan guarantee programs, and increases the amount of the guarantee to 90% for qualified loans.
Although there is alot more to the stimulus package than the four items above, we feel that the impact of what is left does not affect ALL small businesses, but may be geared toward certain industries and certain types of businesses. The above four points affect ALL small businesses.
To read a very good article on the full package from Forbes, click here.