Some Government Stimulus for Small Businesses

Recessions are bad for small businesses that do not yet have the margins to withstand large revenue declines. Declining revenue squeeze profits forcing many businesses to cut costs, reduce labor and pass on growth opportunities as cash flow and access to capital dry up like morning rain puddles in the summer heat.

But, recessions can also present great opportunities for business owners who utilize this time to improve business functions, accommodate customers from shuttered competitors and take advantage of our government's efforts to spur economic growth.

Earlier this year, the new Administration passed a huge economic stimulus bill - the American Recovery and Reinvestment Act of 2009. While much of the attention of this bill was focused on re-building infrastructure, savings jobs and Federal Agency build out programs - there are a few lesser know items of this act that can help many small business owners face this potentially bad year.

While none of these provisions infuse capital into a business - they can help businesses survive this down period and better position them for when the recovery does come about.

Presents from the Past: Businesses that made profits (on which they paid taxes) during the last five years (not the last two years) can use losses realized today to offset the previous five years of profits (thus losses today are not wasted or carried forward into the unknown). Some firms may even be eligible for a tax refund.

Accelerated Depreciation: Businesses that intend to purchase equipment can speed up their recognition of depreciation in 2009 - even businesses that have no such intentions may think this a good time to replace old equipment or buy new machinery. Accelerating depreciation can reduce taxable income this year - essentially offsetting the price of the purchase.

Individuals as Businesses: A provision for individuals that business owners, who are considered their business and vice versa, may be able to deduct the state and local sales tax from car purchases - even if they do not itemize deductions - (for individuals with incomes up to $250,000). Vehicle must be new and can include cars, light trucks, motor homes and motorcycles. If your business is anticipating purchasing a new vehicle for its operations and you are taxed as your business - there may be no better time.

While the government is not exactly bailing out small businesses, these are still a few of the provisions that every business owner should be taking advantage of. Once the recovery does take place, these provisions will disappear. So, while these are no where near the billions in bailout dollars larger organizations are receiving, they are still part of the government's economic stimulus plan and should be utilized to help ease the financial burdens all small businesses are facing.

Lastly, with the recent end of the 2008 tax filing deadline - there is no better time to start thinking about what you can do to improving your tax obligations in the coming year.

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