Thinking of starting a business? You may have a tax break or two to take advantage of!

As has now become usual, I have so many excuses as to why I am not regularly posting here. I apologize – aside from all my travails and super-secret projects, I now have a cat, squeaky, and I have been trying to making him feel at home, while invading his privacy through a blog at http://yamanoor.com/blog/ .

Back to the futurepresent, I read this Bloomberg businessweek article and I thought I would pass on the tip to you. The tip has to do with available tax deductions if you start your business this year.

Sitting on the fence? Have you been drinking a lot of tea and avoiding starting that company you have been thinking about? Well, there is new regulation that appears poised to push you over the fence.

The tax break, according to the article, appears to come in three forms – startup expense benefits, capital expenditure benefits, bonus depreciations and additional depreciations. The original article and additional links are available at the end of this post.

1. Startup Expenses – It appears that the annual deduction allowed to be claimed for businesses is usually $5,000, and this year, in an effort to get more people started, it is $10,000. It appears that this holds true only for 2010. It also appears to cover a range of startup expenses such as legal expenses, accounting expenses, marketing expenses and so on, as quoted by someone, on the Businessweek article.

2. Capital Expenditure Benefits – In 2010 and 2011, companies that invest less than $2 million in capital investments can now deduct up to $500,000 in taxes. It appears this is phased down northwards of $2 million. This looks like an especially sweet deal if you are already in business. If you are just starting up, this may not be as useful, but still worth something.

3. That pesky health insurance - Yes, that pesky thing that has turned half of us into zombies who would rather panic than apply logic. Well, unless you hit yourself in the head, healthcare has always been a problem. The new law helps you if you are a sole proprietor or a single person LLC , in 2010 (and only this year) you will be able to deduct your healthcare expenses.

This is a one-time bitter-sweet benefit, and may still benefit a few of you out there! There are other large and small benefits that the White House touts. Remember, if you do start up, and hire hitherto unemployed folks, there is another benefit in there for you.

Other benefits from starting up

1. There are a lot of folks with a lot of ideas up there. However, as the much beaten cliché says, “ideas are dime a dozen”. Of course, you will tell me you are passionate, and you will get out there and build a company and you know what the gap is and how you are going to fill it and so on – Good! Now, if you actually register a company and start paying taxes, this will definitely help you. You now have a deadline – no more excuses! Get out there and do it.

2. Benefits dry up if you do not use them. From Karen Klein’s well written articles, I deduce that some of these benefits, such as the temporary healthcare deduction have been won through a lot of battles – and are still temporary in nature. I know it doesn’t make sense for companies that employ a team of folks, but as long as you are a lone ranger out there, be a good one, register start-up and take advantage. This will let the Government consider expanding benefits for other lone rangers – perhaps, even for your next start up!

3. Yes, it appears that a lot of people are touting their anger out there. The recession has ended, yet growth is slow. Yet, the morrow belongs to folks who tough it when times are not as good, as opposed to people who wait and wait till the tide comes in….

Till next time!

References:

1. http://www.businessweek.com/smallbiz/content/oct2010/sb20101019_201595.htm

2. http://www.businessweek.com/smallbiz/content/oct2010/sb20101011_393281.htm

3. http://www.whitehouse.gov/the-press-office/2010/09/10/fact-sheet-president-obama-has-signed-eight-small-business-tax-cuts-law-