Monday, September 20, 2010

Small Business Tax Breaks

Almost all of the biggest businesses on Cape Cod are small enough to fit into the "small business" category for tax purposes.

The limit on expensing machinery and equipment (instead of depreciating it) will be raised to $500,000 for 2010 and 2011. (The limit for vehicles over 6,000 pounds Gross Vehicle Weight is a $25,000 expense write-off, plus additional "bonus" and regular depreciation.) Any business that buys $2 million or less in such assets will be able to get the full benefit of this break. It will be phased out for businesses that buy more than $2 million worth of equipment.

Similarly, $250,000 in renovations for restaurants and retail stores can be written off, including improvements landlords make for retail tenants.

A welcome tax break for self-employed people: This year they will be able to deduct health insurance premiums on schedule C. Thus they will reduce self-employment tax (the deadliest killer of sole proprietorships).