April 14, 2017
Did you know that the federal government offers varied tax breaks for small businesses; tax breaks that could do more than just help your small business to keep afloat, but help it to become more successful and thrive, too.
Some of these tax breaks may be yesterday’s news to most small business owners, but some may be new and have been added or enhanced under the Small Business Jobs Act that was made into a law back in 2010.
While the government may class small businesses as those that make sales of $7 million to $25 million a year, and employ up to a thousand staff, there are still tax breaks that can be applied to companies much smaller in size.
Section 179 – writing off expenses:
Section 179 of the Small Business Jobs Act of 2010, permits you to claim some business expenses in the year that they were made, instead of their costs being depreciated over the course of several tax years, and allows up to $500,000 in business expenses to be completely written off under Section 179 for 2010 and 2011.
This enables some small businesses to write off all their purchases for assets and equipment in the year that they buy them. Not only that, but the 50% bonus depreciation provision was extended, giving even more help to small businesses.
Making health care savings:
The taxable income of those who are self-employed, can be reduced heavily by the ability to deduct the whole cost of health insurance premiums, but medical insurance costs can now be subtracted from a self-employed income by completing a form called Schedule SE.
This is the form commonly used by self-employed tax payers to add up their FICA or Federal Insurance Contributions Act, which are the taxes that contribute to Social Security and Medicare. This can all add up to a saving of around 15% on the premiums.
Saving money on cell phone bills:
As all small business owners will know, the cell phone is a vital piece of equipment that most companies couldn’t go without, but up until recently, they have been a nuisance with respect to taxes and administration. Nowadays however, the Small Business Act has de-listed cell phones and other types of equipment used for communicative purposes, and therefor removed the need to keep up to date and accurate records of which calls were made for business purposes, and which were personal.
Lowering your tax bill with these classic tax breaks for small businesses:
While it may seem that some of these tax breaks are small and the effort to record and report them appears to outweigh the benefits, this is not the case. Once you are in the habit of recording your business activities more stringently, you will soon get in the habit of doing so, and any amount that you can claim back in taxes, is a bonus for your business.
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