This year, the government passed the Small Business Jobs Act of 2010 which temporarily increases the amount of start-up expenditures entrepreneurs can deduct from their taxes for this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today.
The act also includes a few other incentives for small businesses:
The extension of bonus depreciation;
Extension and expansion of expending capital improvements;
One hundred percent gain exclusion for qualified small business stock;
Holding period reduction for S corporation built-in gain recognition rules;
Simplification for cell phone deductions;
Increase of the deduction for start-up expenses;
Retroactive relief from Code Section 6707A penalty;
Allowance of a deduction for healthcare insurance costs from self employment income subject to Federal Insurance Contributions Act (FICA) tax;
Extension of the carry-back period for eligible small business credits to five years; and the use of all general business credits to offset both regular and alternative minimum tax liability.
As you prepare for 2010 taxes, be sure to consider any tax savings you could get with your small business.
Brook M. Avey, CPA