Some Ways in Which Small Businesses Can Benefit From the Economic Stimulus Plan
Now that the Economic Stimulus Plan has passed, what are the effects upon small businesses? Although rebates for individuals are the primary crux of the plan, there are other provisions intended to stimulate job creation and some tax incentives which savvy business owners should consider.
Perhaps the main provisions which benefit small businesses are the new rules concerning equipment purchases and depreciation.
The amount that small businesses can write off for investments in 2008 was doubled by Congress - up from $125K to $250K.
This means another $125K can instantly be written off, instead of waiting for it to depreciate over time.
Also, the cap has been raised to a total amount of $800K.
This amount is much higher than the previous amount of $500K.
Yet another point of the plan is called bonus depreciation, also known as accelerated depreciation.
This point lets smaller businesses make equipment purchases in 2008 and write off 50% of the cost.
That is, if a company spends $750K in 2008 on new equipment, they can totally write off the first $250K.
The amount which remains could also be written off at a rate of 50%.
That leaves the final $125K for depreciation.
Again, the first $250K is a write off, the next $250K another write off, and the first year's depreciation is added as well.
In a case when the company spends less than $250K, it's allowed to write off the total amount, simultaneously bypassing the need to keep records of depreciation for the next six years or so.
There are many companies which will be given a total deduction for all regular purchases of machinery, equipment, and vehicles.
In most cases this deduction is permitted even when the purchase is totally or partially financed.
Taking this into consideration, now could be a great time to invest in the IT infrastructure of the business.
The primary value to smaller businesses will take the form of less taxable income and a decreased tax burden.
These businesses are receiving incentives to make investments this year, instead of waiting.
These benefits, along with the intended increase in consumer spending from individual rebates, add up to a good outlook created by the plan.
Perhaps the main provisions which benefit small businesses are the new rules concerning equipment purchases and depreciation.
The amount that small businesses can write off for investments in 2008 was doubled by Congress - up from $125K to $250K.
This means another $125K can instantly be written off, instead of waiting for it to depreciate over time.
Also, the cap has been raised to a total amount of $800K.
This amount is much higher than the previous amount of $500K.
Yet another point of the plan is called bonus depreciation, also known as accelerated depreciation.
This point lets smaller businesses make equipment purchases in 2008 and write off 50% of the cost.
That is, if a company spends $750K in 2008 on new equipment, they can totally write off the first $250K.
The amount which remains could also be written off at a rate of 50%.
That leaves the final $125K for depreciation.
Again, the first $250K is a write off, the next $250K another write off, and the first year's depreciation is added as well.
In a case when the company spends less than $250K, it's allowed to write off the total amount, simultaneously bypassing the need to keep records of depreciation for the next six years or so.
There are many companies which will be given a total deduction for all regular purchases of machinery, equipment, and vehicles.
In most cases this deduction is permitted even when the purchase is totally or partially financed.
Taking this into consideration, now could be a great time to invest in the IT infrastructure of the business.
The primary value to smaller businesses will take the form of less taxable income and a decreased tax burden.
These businesses are receiving incentives to make investments this year, instead of waiting.
These benefits, along with the intended increase in consumer spending from individual rebates, add up to a good outlook created by the plan.
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