The American Recovery and Reinvestment Act of 2009 (otherwise known as the Stimulus Bill) passed earlier this year did not include as much help for small business as many had hoped.
While every other industry it seemed received billions of dollars, provisions directly targeting small businesses were few and far in between.
With the tax deadline fast approaching, I rounded up some of those provisions here.
Deduct losses on previous returns.
If your company had a net operating loss in 2008, you can carry this back five years to offset previous net operating profits.
This was increased from the previous limit of two years.
What you do is you look at your previous five years and see if you turned a profit in any of them. You can then amend them to reflect this years loss. Or instead of amending you can file Form 1139 for C Corporations, and Form 1045 for Partnerships, LLC's and S Corporations.
If you don't have any income to offset, you can carry this loss forward.
Deduct Equipment Purchases
Section 179 allows you to deduct in full equipment and other property placed in service.
Usually you must depreciate (deduct over several years) these items.
Section 179 will allow you to deduct up to $250, 000 worth of assets purchased in 2008 or 2009. You must still have a profit after making the deduction, however.
So if you have a profit of $5, 000 but purchases of $20, 000, you can deduct only $5, 000 in full.
For the remaining amount, you can depreciate up to 50% thanks to bonus depreciation.
So of that $15, 000 in equipment purchases not yet deducted, you can deduct an additional $7, 500 this year, even if it puts you into net operating loss territory.
The remaining amount will be carried over and depreciated according to it's appropriate schedule.
Automobile Deduction
For new cars placed into service by December 31, 2009, you can deduct up to $10, 960 for light cars, and light trucks in the amount of $11, 060. This assumes the automobile is used 100% for business.
Author: Joseph Dang
Joseph Dang is an Examiner from San Diego.
You can see Joseph's articles on Joseph's Home Page.
