As the dreaded April 15 tax deadline looms, business owners need to ask themselves: Do I have all my paperwork? What deductions am I forgetting I can take? How does the stimulus bill affect taxes this season? And what on earth happens if I get audited? bMighty has the answers for small and midsize companies.
Each tax season is different. The laws change, so "you can't look at last year's return and carry numbers over," said Barbara Weltman, a tax expert for small businesses. And the stimulus bill that became law last week has brand-new tax implications for small and midsize businesses.
The Internal Revenue Service Web site is a great place to find forms and answers to frequently asked questions. There's even a Small Business and Self-Employed Tax Center for specific questions, like which expenses can be deducted.
But bMighty has also done a bit of legwork so that your business will be ready for the April 15 deadline.
What's In The Stimulus Bill?
While a lot of smaller businesses are crying foul over the stimulus bill, saying it ignores their kind in favor of large enterprises, there are tax provisions that need to be considered. The stimulus bill increased the small-business capital-gains exclusion from 50% to 75%. The IRS defines capital gains as "almost everything you own and use for personal purposes, pleasure, or investment," and notes that you must report all capital gains.
Don't Miss: How The Stimulus Bill Will Affect Smaller Businesses
In addition, the stimulus bill extended carrybacks of net operating losses (NOLs) for small businesses to five years for NOLs arising in the 2008 and 2009 taxable years. An eligible small business is one that averages $15 million or less in annual gross receipts.
Depreciation of capital expenditures has changed, too. Last year, Congress temporarily allowed the recovery of costs of capital expenditures made in 2008 at an accelerated rate by allowing a business to immediately write off 50% of the cost of depreciable property acquired in 2008 for use in the United States. The stimulus bill extends the benefit for another year.
With the stimulus package, smaller companies will get more help with health care, said Chas Roy-Chowdhury, head of taxation for the Association of Chartered Certified Accountants. There also are measures to help small and midsize businesses buy cars with tax deductibles, for which there are sales tax deductions, too.
Finally, business that create jobs for unemployed veterans and youth that have been out of work and out of school for the past six months will get tax credits.
Next Page: Deducing Which Deductions You Can Take
