Guidant Financial Group Blog

On September 27, President Obama signed into law the Small Business Jobs and Credit Act of 2010. The primary intent of the law is create 500,000 jobs and make credit more accessible to small businesses. On top of that, the bill also provides approximately $12 billion or so in tax breaks.

If this news already has you searching for your tax advisor’s number, then you’re one step closer to taking full advantage of the many benefits the new bill has to offer, including:

• A $30 billion fund that would make low-cost capital available to smaller banks (those with less than $10 billion in assets) that can, in turn, lend those funds to small businesses.
• Grants totaling $1.5 billion to state lending programs that support small businesses.
• Loan limit increases on government-backed loans and extension of SBA loan incentives.
• Tax breaks in the $12 billion range for start-up businesses, equipment purchases, venture capital investments in small businesses, etc. ( “TaxDude” bloggist Dean Zerbe offers a good summary of these tax benefits at Forbes.com.)

But what does this really mean to you as a current, or prospective Guidant client? Well, here are 5 provisions included in the bill that should be carefully considered.

1. Start-Up Deduction: This bill doubles the amount you can deduct for business start-up expenses. For 2010, you can deduct up to $10,000 in expenses; this is reduced by the amount that your expenses exceed $60,000. (In the past, the deductable amount for start-up expenses was $5,000, and it was reduced by expenses exceeding $50,000.)
2. Equipment Purchases: Businesses can now write off up to $500,000 worth of equipment purchases through 2011. (This is a doubling of the previous deductable amount.) Also, thanks to a depreciation extension, you can write off portions of purchase costs over a period of time. In fact, you can write off 50% of first-year capital expenditures for “qualifying property” put into service in 2010.
3. Carry Back Provision: This is particularly helpful to small businesses faced with losses over the past few years. Ordinarily, a small business can deduct losses from earlier profits via what is commonly known as a “carry back” provision—which involves filing an amended tax return for that earlier profitable year. Thanks to the new Small Business Jobs bill, the carry-back provision has been extended to five years for qualifying small businesses.
4. Capital Gains Exclusion (Note that this has a January 1, 2011, deadline): “Qualified small business stock” acquired before January 1, 2011, will be 100% excluded from taxation on capital gains. This only applies to personally owned stock in a C corporation with less than $50 million in gross assets that is held for at least five years. There are numerous types of businesses excluded from this provision, though, so check with you tax advisor before you get too excited about this benefit.

If you’ve noticed the words “qualifying” or “qualified” more than once in this blog, there’s a reason for it. As with most tax laws, there are exceptions to the general rule. While we can introduce you to some of the benefits offered by the new Small Business Jobs and Credit Act of 2010, we’ll leave it to your own CPA or tax advisor to school you on the specifics.

We can, however, offer this one solid piece of advice: Some of these benefits have an expiration date, so take advantage of them while you can!

You may have already heard that American Express recently launched a new initiative called “Small Business Saturday.” When a force like AMEX gets behind the small business community, it’s important for us to publicize the effort with our clients.

Small Business Saturday is the Saturday following Black Friday – the biggest shopping day of the year. On this Day, the 27th of November, AMEX is attempting to boost small business sales by offering incentives to consumers who purchase goods and services from local small businesses. The credit card company is offering a $25 statement credit to the first 250,000 card holders who shop at a local small business on Small Business Saturday.

In addition, AMEX is also offering another incentive to small businesses in the form of free advertising. Through a partnership with Facebook, the first 10,000 small businesses who register for the program will be awarded $100 in free Facebook advertising.

I would be curious to know if any of our small business clients are planning to take advantage of the free advertising opportunity. It would also be great to hear from you about your personal experience with the “Small Business Saturday” promotion. I think all of us in the small business community applaud the efforts of a major corporation that understands the myriad benefits from increasing the number of consumers who frequent small businesses.

If you’d like to sign up your small business, and take advantage of the $100 in free Facebook advertising visit: http://smallbusinesssaturday.com/.

All the best for a successful Black Friday and Small Business Saturday!

David Nilssen (Co-Founder of Guidant Financial Group)