On Sept. 27, 2010, President Obama signed into law the Small Business Jobs Act, the most significant piece of small business legislation in over a decade. The new law will provide critical resources to help small businesses continue to drive economic recovery and create jobs. The new law extends the successful SBA enhanced loan provisions while offering billions more in lending support, tax cuts, and other opportunities for entrepreneurs and small business owners. Among the most pertinent items for capital goods purchasers:
- The law expanded the number of small businesses eligible for SBA loans by increasing the alternate size standard to those with less than $15 million in net worth and $5 million in average net income.
- The New Law Provides $12 Billion in Tax Relief, including 8 tax cuts, including:
2. General business credits carried back five years
3. Accelerated/bonus depreciation
4. Zero capital gains taxes for those who invest in small businesses
5. Increased deductions for start-ups
6. Deductions for employer-provided cell phones
7. Deductions for health insurance costs for the self-employed
8. Limitations on penalties for errors in tax reporting that disproportionately affect small business
Extension of 50% Bonus Depreciation: The bill extends a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investments today and know they can receive a tax cut for this year by accelerating the rate at which they deduct capital expenditures.
The savings are only available for 2010 and 2011 with a 50% bonus depreciation expiring after 2010. Purchases should be made before the end of 2010 to take advantage of this law. As with all tax and financial transactions, refer this to professionals for comprehensive information.
Scott Stone is a 23-year veteran of the material handling industry.