President Obama signed the Small Business Jobs Act Monday, which is expected to stimulate the economy.
The bill could create more than a half-million jobs.
“Small business is the backbone of our economy,” said George Helms, Human Resource Manger for Touring Reliable Products.
Touring Reliable Products is the largest employer in Geneva County.
With nearly 500 employees, Reliable Products has managed to overcome most obstacles faced by small businesses.
“Any time costs go up it makes it harder for us to compete. It's important to provide jobs for our community,” said Helms.
Congressman Bobby Bright added, “People don't realize that small businesses provide up to 75% of all jobs throughout the country.”
“These jobs are very important to our region,” said Senator Harri Anne Smith.
Providing jobs for the community is what the Small Business Jobs Act, promises to do.
Part of the bill will include 8 new tax cuts for business owners.
For example, if you're a business owner and you buy new equipment, you can immediately write off your first $500,000 of the equipment.
Small businesses will receive $12 billion dollars in tax breaks.
“Tax incentives are important for anybody. It stabilizes the economy so businesses can be successful and offer good paying jobs,” said Bright.
Since the bill was just signed Monday, specifics of the bill still aren't clear.
An additional $30 million will be given to community banks to increase lending to small businesses.
“We want to make it profitable for them so they can hire more people.”
A detailed report of the 8 small business tax cuts are below:
1. Zero Taxes on Capital Gains from Key Small Business Investments: Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes.
The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision called for by the President – elimination of all capital gains taxes on these investments if held for five years.
Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
2. Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments: The bill increases for 2010 and 2011 the amount of investments that businesses would be eligible to immediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million.
Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year.
This provision means that 4.5 million small businesses and individuals will be able to make new business investments today and know that they will earn a larger break on their taxes for this year.
3. Extension of 50% Bonus Depreciation: The bill extends – as the President proposed in his budget – a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investments today and know they can receive a tax cut for this year by accelerating the rate at which they deduct capital expenditures.
4. A New Deduction of Health Insurance Costs for Self-Employed: The bill allows 2 million self-employed to know that on their taxes for this year, they can get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes.
This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
5. Tax Relief and Simplification for Cell Phone Deductions: The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to, beginning on their taxes for this year.
6. An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses: The bill temporarily increases the amount of start-up expenditures entrepreneurs can deduct from their taxes for this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today.
7. A Five-Year Carryback Of General Business Credits: The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with a break on their taxes for this year – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.
8. Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business: The bill would change, beginning this year, the penalty for failing to report certain tax transactions from a fixed dollar amount – which was criticized for imposing a disproportionately large penalty on small businesses in certain circumstances – to a percentage of the tax benefits from the transaction.