Tax Breaks for Small Business Owners

There are some tax breaks for small business owners that you can use when you file your tax return this month.  For corporations that filed last March 15, they can still file amended tax returns, too, to claim tax breaks that they missed.   Sandy Abalos, managing partner of a Phoenix accounting firm, says improvements and leasehold placed after September 8, 2010 to December 31, 2011 can claim 100% of expenditure as a first-year depreciation.   John “Trey” Webb of an Atlanta accounting firm, on the other hand, says small business with 25 full-time employees making less than $50,000 per year on the average, can claim health insurance credit up to 35%.  These are some of the tax breaks that an article says you can claim this tax season.

Tax day this year falls later than usual, on April 17. Small-business owners might use those extra 48 hours to make sure they’ve applied these 2011 tax breaks.

Bonus depreciation: This allows businesses to recover the cost of capital expenditures over time, according to Sandy Abalos, managing partner of Phoenix accounting firm Abalos & Associates. Qualifying expenditures–including leasehold, restaurant and retail improvements, placed in service after Sept. 8, 2010, and before Jan. 1 of this year–enjoy a first-year depreciation deduction equal to 100 percent of the expenditure, up to $500,000. The deduction drops to 50 percent in 2012.

Small-business healthcare tax credit: Businesses with fewer than 25 full-time employees making an average of less than $50,000 per year are eligible for a health insurance credit, according to John “Trey” Webb of Atlanta accounting firm Bennett Thrasher. The maximum credit is 35 percent for small employers.

New-hire retention credit: For each full-time employee hired after March 18, 2010, and retained for at least 52 consecutive weeks, businesses are eligible for a credit equal to 6.2 percent of wages, up to $1,000 per employee.

Research and development credit: This is a dollar-for-dollar tax reduction based on relatively complicated formulas. If you invest in wages and supplies for industry research and product development, check with your financial advisor to see if you might benefit.

If your business is a corporation and you already filed the return due March 15, you may be able to file an amended return to claim any tax breaks you missed.

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