Ironically a recession can be a very good time to get a business off the ground. A lot of great companies were started during a recession-Burger King, MTV, Microsoft and FedEx to name a few. The Small Business Jobs Act of 2010, or as it’s also known “The Main Street Stimulus,” provides some good incentives to start or expand your business during the current recession. Here’s a brief summary of the main points related to lending initiatives and tax breaks.

Small business lending initiatives

The centerpiece of the bill is the creation of a $30 billion lending facility that would direct taxpayer money to regional banks, on the condition they lend it out to small businesses. Unlike the emergency financial rescue package implemented at the height of the crisis in 2008, banks would have to volunteer to participate in this program. In theory this should make it easier to get a loan for your small business.

Small business tax breaks

• The bonus depreciation scheduled to expire in 2009 has been extended through the end of this year. This tax deduction enables a business to expense fifty percent of the cost of new equipment, such as computers or software, in the year of purchase.
• The section 179 deduction allows taxpayers to write off the cost of a fixed asset in the year of purchase, rather than amortizing the cost over the useful life of the asset. The Act has increased the maximum amount of this deduction to $500,000 for the years 2010 and 2011. (Initially it was to be $250,000 for 2010 and $25,000 for 2011.)
• Prior law required that a business had to substantiate the business use of a cell phone device and plan minutes, which meant a full accounting of the business purpose of each and every minute and then prorating the cost of the device and mobile service accordingly. Business owners will no longer have to keep track of individual calls on their cell phone plans as the Act removes the listed property classification from cell phones and mobile telephone service.
• The Small Business Act expands the start-up expense deduction to $10,000 for the year 2010. The amount was $5,000 for 2009 and will be $5,000 in 2011 unless there is another “stimulus.”
• Those that are self-employed can now deduct the cost of their own health insurance as a business expense that will reduce their self-employment tax. This tax reducing provision is valid only for the year 2010. For 2009 and presumably for 2011, the deduction for health insurance is an adjustment that will reduce the regular income tax but does not reduce the self-employment tax.

For assistance with developing a business plan, a business model, a financial forecast, etc., for your small business idea give Hunzinger Accounting & Financial Solutions a call at 631.734.8016 or email us at info@hunzingerpc.com.