The government has provided for some new tax incentives for small businesses in 2011 forward. Please review the following incentives. They may help you when making management decisions and help your business grow.
Bonus depreciation is available when purchasing NEW equipment. For tax year 2011, you can write off the entire cost in one year. In 2012, you can only write off 50% of the cost. The purchase of real estate does not qualify.
If you purchase USED equipment/furniture it will qualify for “Section 179” if you have a profitable year. There is a $500,000. limit for 2011 purchases and a $125,000. limit for 2012 purchases. Certain types of real estate will qualify for “Section 179” deduction in 2011 ONLY.
There is a Small Employer Health Insurance Credit equal to 35% of the employer’s contribution. This credit is available when you offer insurance to your employees for the first time or maintain existing coverage AND the employer pays at least half of the premium cost. The employer can have NO MORE than 25 full-time employees and the average wage paid cannot exceed $50,000.
You can now deduct the cost of your health insurance paid for you, your spouse and dependents. The insurance plan must be established under the business and personal services must be a material income-producing factor.
Business losses that occur when your expenses exceed your income can be off-set against other income or gains on your tax return. If there are remaining business losses they can be offset against income in another year. This change will enable you to take full advantage of the loss.