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Most of the stimulus spending over the past few years has been aimed at propping up the financial sector and helping unemployed Americans. But small businesses have not been left out.
The most recent effort to support them is the Small Business Jobs Act of 2010, which was signed into law by President Obama in September. The law provides small businesses with incentives to invest and grow—hopefully creating jobs in the process.
Here are the key provisions that might help your business:
Lump-sum equipment deductions. Businesses that buy certain kinds of equipment in 2011 are allowed to take the full tax deduction this year. That means they can bypass the process of depreciating the purchase over several years and dividing the total deduction into smaller annual sums.
For the 2011 tax year, businesses are permitted to claim this so-called Section 179 deduction on purchases up to $500,000. So if you’ve been thinking that upgrading your technology or investing in new manufacturing equipment could help get your company to the next level, this could be the year to pull the trigger.
What’s more, certain improvements to restaurants and stores may now qualify for this all-at-once write-off treatment. The limit for these sorts of improvements is $250,000—half of the equipment-purchase limit but significant nonetheless. This category includes structural improvements, new construction, and leasehold and retail improvements.
Bonus depreciation. The Act permits businesses of all sizes to claim a bonus depreciation through 2011. That means businesses may immediately deduct half the remaining cost of new equipment, such as point-of-sales systems, kitchen equipment or furniture.
Greater startup deductions. The Small Business Jobs Act has doubled the deduction for startup expenses to $10,000. Startup costs include everything from buying supplies to buying ads. Qualified expenses above and beyond the $10,000 can still be written off, but the deduction must be parceled out over multiple years.
Goodbye cell phone paperwork. The Act did away with the onerous documentation requirements that applied to cell phones that businesses provided to employees. The result is that deducting cell phone expenses is easier.
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