While there may only be a few months left in 2010, it’s never too late to continue planning and taking advantage of small business tax deductions before the year is over. In fact, the recent legislation for small business tax relief from the US Senate is slated to become law soon.
What does the new $12 billion tax relief legislation contain? Here is a brief rundown of the potential tax savings and deductions you can make before your 2010 fiscal year ends.
Capital Expense Deductions
Small businesses who are looking to improve or add new capital improvements can be happy to know that the deduction amount has increased to $500,000, up from $200,000 previously. That means you can add new equipment, computers, furniture, machinery, and other fixed assets, deducting the purchases from your taxable income. Purchases can be made in 2010 or 2011.
Deduct Your Startup Costs
Starting a small business costs money. The US government usually allows a $5,000 deduction for startup expenses, such as marketing and promotion, legal, and accounting. The good news is that amount has been raised to $10,000 for the year 2010. Therefore, if you’re in the middle of getting your business off the ground, or are contemplating a startup, do it before the year is out so you can deduct these costs from your 2010 taxes.
2010 Depreciation
The new capital equipment you purchase this year can be used to reduce your taxes. You can deduct up to 50% of the purchase this year, instead of writing off the depreciation over a period of a few years. This tax deduction will also extend into 2011.
Other deductions you can take advantage of before the year is out include:
- Reduced capital gains taxes on 2010 business investments
- In certain instances, the costs of business cell phones
- Health insurance costs for those who are self-employed and buy their own individual insurance policies
Taxes do not need to be dreaded. Take advantage of these tax reduction opportunities for your business before 2010 says goodbye.