It's still not clear whether we'll have a recession or not. But the Federal Reserve, Congress, and the president are definitely concerned -- and are taking swift action.
In fact, Congress and the president are pushing for some tax breaks for small businesses. "The features are similar to the incentive tax provisions of the Reagan era's 1981 Economic Recovery Tax Act, which provided business investment incentives," said Mary Canning, the Dean of the Schools of Taxation and Accounting at Golden Gate University.
So, what does this all mean? What can you do?
Let's take a look:
The proposal: The stimulus plan doubles the amount small businesses can write off for investments in 2008 -- from $125,000 to $250,000. What's more, the bill expands the cap for eligibility; that is, businesses making as much as $800,000 (the prior cap was $500,000).
The proposed bill also allows for accelerated depreciation on plant and equipment. Basically, you can write off as much as 50% of such investments in 2008.
What to do? OK, it's not a good idea to make business decisions solely based on taxes. But, if you are wavering on something, then the tax benefit can be a key tipping point. In the case of the new tax bill, you should definitely consider the implications of buying equipment, such as computers, furniture, machines and so on.
Of course, it's important to seek out your tax professional. "Business owners should plan out their 2008 finances in collaboration with their tax adviser and see if there will be opportunities to take advantage of the higher depreciation and Section 179 expensing opportunities," said William Perez, who is a licensed tax professional in private practice and writes the tax section of About.com. "Profitable businesses may consider purchasing additional equipment, but they will need to review their current tax situation to make sure they will be eligible to take full advantage of these tax incentives."
Record Keeping: Oh yea, make sure you keep a file for paid bills, canceled checks and other business items (and keep them in a safe place).
"At a minimum, put receipts in the proper categories throughout the year so it will be easier to total them up at tax time," said Fred Melton, who is a tax expert and an owner/operator of a TimePlus payroll processing service. "You are not required to keep records in a formal 'set of books'; however, you need to find the best record keeping system that works for you. Take record keeping seriously."
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
1-28-2008 @ 9:09AM
swminc said...
As a small business owner, any tax relief received by investing in your own business allowing capabilities to grow thru internal capital equipment purchases, etc, are a PLUS. Especially when these funds are put back into OUR OWN economy in other areas such a manufacturing, etc.
I believe that having a business man (MBA) in the oval office, and not a a lawyer or lifetime politician,
helps give business' a chance at survival!
1-28-2008 @ 10:41AM
wr said...
First, you get a $600 rebate. Then, you get a $10,000 tax bill for bush and repubs deficit spending to enrich the military industrial complex. And you get to put your $600 into your gas tank to enrich the oil companies. Such a deal.
1-28-2008 @ 12:58PM
MyKisa1 said...
One better is Fair Tax.
1-28-2008 @ 2:13PM
B628537aol.com said...
"the Federal Reserve, Congress, and the president are definitely concerned -- and are taking swift action". You have got to be kidding! This whole economy has been spiraling out of control for the past 7 years. A better description of the action by the Federal Reserve, Congress, and the president can be better defined as "Desperate"!
1-28-2008 @ 3:20PM
Vera lee said...
this stimulas money is great, even if it is a small amount. are the receivers going to be taxed on this money as an income or is it considered a gift from the government?
1-28-2008 @ 7:24PM
Gary D Smith said...
This is the first time I have written anything on here but listen to this would you? When Bill Clinton left office he made an Executive Order 13166 that says all U.S. government business has to be printed in any language that the recipient needs it to be in. If you go to any other country their government is not going to print their government business in the language you want it in just because you want it. We are spending billions of dollars doing this and this is why we can't afford Social Security benefits for our own citizens. Congress has borrowed so much from our Social Security Trust Fund and Executive Order 13166 has deflated our government surplus so much that we can't possibly keep up unless we stop printing our government business in every language. If people can only read in their own language and not in English they are not able to read any of our signs in the United States. Have congress or the president abolish 13166 so we can start reversing the money that is going out and then people will have to learn English and it will unite people instead of deviding them into groups.
1-29-2008 @ 12:11AM
Robert said...
I never say a thing either , but I would have to give you a Gold Star if everything you say is true of course.
What about the PROPERTY TAX INCREASES FROM THE BIG HOUSING SUBDIVSION AND REFINANCE BOOM. That all the munipalities jumped on to increase everyones ASSESSED VALUE. OK GOVERNMENT want to do something that makes sense reduce everyones PROPERTY TAX back to what it was four years ago, sinse thats what are current values are realizing today. Keep the $600.00 give us back what you stold.
Make one national tax, that way all the illegal immegrants that our government doesn't want to legalize can pay taxes also, and they could stay illegal. A little tax on everything sold get rid of income tax it is useless anyway, just give the businesses benifits for collecting it at the sale of products. This is such a simple fix and would create so much more revenue from everybody in the country not just the legal ones, but they will never do it, because WHY?
1-28-2008 @ 6:07PM
pho said...
This is awesome!!!!!!
http://www.fakebuddy.com
1-28-2008 @ 7:38PM
Gary D Smith said...
When you say this is awesome are you referring to the problem we are facing with our government money going only out?
1-28-2008 @ 7:15PM
Alouisis said...
This is plain stupid.
We are just building up more water behind a weakened and leaky dam.
When it bursts - whoa, golly bob howdy.
Lollypop economics - give the children candy to shut them up.
1-28-2008 @ 8:01PM
Gary D Smith said...
To stimulate our economy the government has to have all illegal immigrants come in to get registered with a photo ID and stop paying for their medical while they are illegal.
1-29-2008 @ 12:28AM
handouts500K&Over said...
Yup, that's right give out the big money to the people & companies, who least need it, and put chump change in the little guys pocket. How about a roll back on property taxes, or a system that taxes you based on what you paid for your home, (I could afford my home when I bought it, and became part of the community)and income. I know my income hasn't tripled in the last six years, but my real estate taxes have. Why should we have to move from our home? Where should we move to? OH, yeah, the consortiums owned & run by the politicians, and uber rich, have all those empty shoe box skyrises they can rent us when we are forced out of our homes, while they get BIG tax breaks!
1-29-2008 @ 11:28PM
Dead-eye said...
This rebate to people that make $75,000 to $150,000 is the joke of the century. I say if people in that money need a few hundred bucks to see them selves thru this down turn have got their heads where the sun don't shine. Send it to the ones that need it as they spend probably 50% of their money on food, heat, and Drugs. Lets get real folks. This doule out to the wealthy is a slam to the olds people in this country.