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36 Replies Latest reply: Feb 26, 2009 8:14 AM by CommunityTeam RSS

Event: What's in the New Stimulus Package?

SBC Team Master
Currently Being Moderated
It's a new year, with a new presidential administration. Learn about new tax incentives, relief for business losses, and what you need to know about payroll changes. Understand now what they are so you can take advantage of them before it's too late.

Barbara Weltman is one of the nation's leading authorities on taxes and small business and she will be here on February 24 at 2PM EST to answer your questions about the stimulus package.

Barbara will be covering the following key topics:
  • What are the new tax rules for this year?
  • Is there relief for business losses?
  • How will payroll changes affect me and my employees?

About Barbara:

Barbara Weltman is a contributing writer for Inc.com, PINK magazine and New York Enterprise Report, and is a sought-after media commentator who has been featured in The New York Times, The Wall Street Journal, The Washington Post, Reuters, Forbes.com, Marketwatch.com, WABC-TV, Fox News, CNNRadio and CNBC. Barbara is also a top selling author and has written the titles "The Rational Guide to Building Small Business Credit" which features a foreword by Dun & Bradstreet, "J.K. Lasser's Small Business Taxes" and "The Complete Idiot's Guide to Starting a Home-Based Business." For more information on Barbara, please visit http://www.barbaraweltman.com

What's your stimulus package question?
  • Re: Event Feb 24: Presidential impact on small business taxes
    SBC Team Master
    Currently Being Moderated
    Prior to relying on any legal, tax or financial advice or recommendations provided herein, you are advised to consult with your attorney, financial adviser and/or tax professional to verify the information provided and to determine the applicability of any federal, state or industry specific laws and/or regulations that may apply to you. Bank of America or Barbara Weltman shall have no liability for legal, investment, finance and/or tax decisions based on the information provided.

    The SBOC Team
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    Tori Novice
    Currently Being Moderated
    Hi Barbara, I think its great you're here again to discuss this topic!

    Not to state the obvious, but many small business owners have taken big hits to their bottom line. Is there relief for business losses?

    ~Tori
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      There is relief for businesses that have suffered losses. The tax law allows C corporations as well as owners of other businesses with respect to their share of losses to carry back losses from operations (called net operating losses or NOLs) to certain prior years in order to offset income in those prior years and receive a tax refund. Usually, the carryback period is two years. For 2008 NOLs, the American Recovery and Reinvestment Act (the recovery package) allows small businesses (those with average gross receipts under $15 million) to elect a three-, four-, or five-year carryback period. This should help to increase tax refunds to give businesses money that can be used to survive and grow in this tough economy.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    SBC Team Master
    Currently Being Moderated
    Be sure to check out Barbara's latest article on the economic recovery package. Feel free to give it a read and ask her questions on it during the event.

    Economic Recovery Package: What’s In It for You?
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    DomainDiva Master
    Currently Being Moderated
    Why no money for technology and small business?
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      The recovery package puts great emphasis on green technology. It creates tax credits for energy research and for making various alternative energy improvements (such as installing small wind energy property). While you are correct that there is very limited money targeted for small business in the recovery package (only about 1% of all tax breaks, for example, go to small business and this is spread over 10 years), small businesses can take advantage of these general provisions.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    caffeinated Apprentice
    Currently Being Moderated
    Hi Barbara,

    I read an interesting article today on http://www.boston.com/. Boston's mayor is launching a program to provide small loans to small businesses in hopes that it will help struggling entrepeneurs during this recession. Should small businesses be looking locally for assistance before looking to the federal government? Can you see any advantages/disadvantages from one over the other?

    http://www.boston.com/business/articles/2009/02/23/hub_adds_small_loans_for_small_businesses/

    Thanks, looking forward to your response.

    caffeinated
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated

      80% to 90% of start-ups don't use any outside financing, relying on the owner's personal resources. For businesses that do require additional capital, there are many options. These include (but are not limited to) "rolodex financing" (help from family and friends), national and regional banks (the recovery package reduces some of the SBA loan fees and provides other incentives for lending), and angel investors (the recovery package increases the exclusion for gain from the sale of "small business stock" to 75% as a way to encourage equity investments in small corporations).

      In assessing any loan option, consider interest costs, fees for arranging the loan, the say (if any) that the lender will have in your business, and other factors. Also look into equity financing (bringing in investors rather than borrowing). Equity financing does not require any loan servicing (i.e., there's no immediate drain on cash flow).
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    Vince Novice
    Currently Being Moderated
    Barbara,

    What are "bonus depreciation" and "loss carrybacks?" How do they fit into the new stimulus package for small businesses, if at all?

    Vince
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Bonus depreciation is a rule in effect for certain new property purchased and placed in service in 2008 and 2009 that allows half the cost to be deducted in the year of purchase, along with any first-year expensing and a regular depreciation allowance. It applies to any equipment or other property with a recovery period for depreciation purposes of 20 years or less, off-the-shelf software, and qualified leasehold improvements. While 50% bonus depreciation applies automatically, you can opt not to claim it so that you'll write off more of the cost over later years of ownership.
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated

      "Loss carrybacks" refer to the ability to carry back net operating losses to prior years. As stated in an earlier response, the tax law allows C corporations (and owners of other businesses with respect to their share of losses) to carry back losses from operations (called net operating losses or NOLs) to certain prior years in order to offset income in those prior years and receive a tax refund. Usually, the carryback period is two years. For 2008 NOLs, the recovery package allows small businesses (those with average gross receipts under $15 million) to elect a three-, four-, or five-year carryback period. The tax refund that results from net operating loss carrybacks can be used to help your business now.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    Howard Novice
    Currently Being Moderated

    What impact will this have on payroll?
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    flowman Newbie
    Currently Being Moderated
    new to the community, hello barbara....... i'm in the retail chain very small.. trying to get loan very hard as you no.. trying to make end tough.... as a retailer how do apply for this talf loan i'm afraid this might be the only way to save my business....how this works is a little confusing.... i'm most confused about what they are saying about collateral such as sba looans, cc, auto etc. do i use these as collateral or what.. in the coming years they are going to shut down the exit ramps to the small community i'm loocated not to reopen. need money to invest in advertising, equipment, debts etc..can't wait to hear your reply thanks flowman
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Under the American Recovery and Reinvestment Act of 2009, the SBA will get $730 million to help loan programs for small businesses (for example $30 million to expand the microloan program). The SBA will guarantee a greater amount of commercial loans (up to 90%) and eliminate some fees. Overall, however, this is no guarantee that commercial banks will make SBA loans; whether this will ease financing for small businesses remains to be seen.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    Food2Go Newbie
    Currently Being Moderated
    Barbara - I purchased a used truck for my business is that deductible?
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      When you use a vehicle for business, you can deduct your actual costs or rely on a standard mileage rate. Actual costs include an allowance for depreciation on the purchase of a vehicle (you can only opt to expense the entire purchase price if the vehicle is not subject to dollar limits in the tax law-if it weighs more than 6,000 pounds or is a non-personal use vehicle). Admittedly, this is a confusing subject. You can find details about this in my book, J.K. Lasser's Small Business Taxes 2009, or from the IRS in Publication 463, Travel, Entertainment, Gift, and Car Expenses, at http://www.irs.gov/pub/irs-pdf/p463.pdf.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    SBC Team Master
    Currently Being Moderated
    Barbara, welcome back to SBOC and thanks for joining us today! As Barbara gets started with addressing the questions already posted, Community feel free to start asking additional questions. And remember to refresh your screens periodically to see Barbara's latest response.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    jackzee Newbie
    Currently Being Moderated

    I heard that the new administration increased our property expense deductions. Can you tell us what is exactly included in 'property'? Does that include computers, and major office furniture like shelves, and counters? Also does it matter if the equipment is new or used?
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      First-year expensing, also called the Sec. 179 deduction (after the section in the Internal Revenue Code creating it) is a deduction for the cost of buying new or used equipment for your business. Equipment means computers, office furniture, machinery, off-the-shelf software, and other equipment. There is a dollar limit on how much of the cost can be expensed (up to $250,000 for property placed in service in 2008 or 2009) and this dollar limit starts to phase out when a business buys equipment for the year over another dollar limit ($800,000 in 2008 and 2009). The deduction applies whether you pay cash, charge the purchase, or finance it in whole or in part. This deduction isn't automatic; you must elect it. However, you can only benefit from the deduction if your taxable income at least equals the write-off (i.e., no benefit if your business lost money). You can find details about this in my book, J.K. Lasser's Small Business Taxes 2009, or from the IRS in Publication 946, How to Depreciate Property, at http://www.irs.gov/pub/irs-pdf/p946.pdf.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    SBC Team Master
    Currently Being Moderated
    Barbara is live on SBOC right now! We are collecting questions right now. Simply hit reply and your question will be put in the queue. And don't forget to refresh your screens often to see Barbara's latest response!
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    simon07 Novice
    Currently Being Moderated
    My wife set up shop on eBay and she has purchased $5,000 in camera equipment to take razor sharp photos of her jewelry. Is that deductible under new guidelines? She makes and sells handmade jewelry part time as a hobby.
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Whether the cost of camera equipment can be expensed (rather than depreciated over a number of years) is answered in post #25. However, you raise another tricky tax issue. When a person has a hobby activity, overall business expenses cannot be deducted in excess of income from the activity. This is called the hobby loss rule. Then, the business-type expenses are not claimed as business deductions reported on Schedule C but rather as miscellaneous itemized deductions on Schedule A (only amounts in excess of 2% of adjusted gross income are deductible). Whether a person is in business or merely engaged in a hobby depends on many factors. If there's a reasonable expectation of making a profit and can show that the activity is run in a businesslike way (you keep good books and records, have a separate business bank account, and a business plan for success), then you are treated as being in business-even if the activity loses money-so you won't be subject to the hobby loss rule. You can also rely on a presumption in the tax law that you're in business and not a hobby if you have profits in three out of five years.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    SBC Team Master
    Currently Being Moderated
    Barbara is live on SBOC right now! We are collecting questions right now. Simply hit reply and your question will be put in the queue. And don't forget to refresh your screens often to see Barbara's latest response!
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    Howard Novice
    Currently Being Moderated
    Barbara I have another question...I made some improvements outside my store. I planted a new tree (at my business expense/not the city) and put out a trashcan for patrons (this is important because I sell lottery tickets in my store). Is my business eligible for any deductions or write-offs?
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      Supplies are deductible now, but when you buy property, such as plants, trash cans, and other items that can be expected to last for more than one year, they are subject to depreciation and their cost usually is recovered over a number of years fixed by the tax law. However, you can elect to expense (fully deduct) the cost of these items (see post #25 for an explanation of first-year expensing). Again, first-year expensing can only benefit you if you're profitable. Otherwise, you'll have to rely on depreciation to deduct some of the cost now and the rest in the future. You can find details about this in my book, J.K. Lasser's Small Business Taxes 2009, or from the IRS in Publication 946, How to Depreciate Property, at http://www.irs.gov/pub/irs-pdf/p946.pdf.
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    SBC Team Master
    Currently Being Moderated
    Barbara thank you for all the responses. Can you tell the Small Business Online Community what else they should know about the stimulus package?
    • Re: Event Feb 24: What's in the New Stimulus Package for You?
      BigIdeas4Biz Newbie
      Currently Being Moderated
      The stimulus package was massive--$787 billion dollars. There are many provisions designed to help consumers, businesses, state and local governments, and others. In the next few weeks, be on the lookout for more information about programs related to this new law. For example, the IRS has set up a page on which it will post relevant new. Go to http://www.irs.gov/newsroom/article/0,,id=204335,00.html?portlet=6. Similarly, there is information on many other government departments' and agencies' websites. I will also be posting developments through my website at http://www.barbaraweltman.com/.
      • Re: Event Feb 24: What's in the New Stimulus Package for You?
        BigIdeas4Biz Newbie
        Currently Being Moderated
        Another point to note in the recovery package...Small business owners may be able to reduce their estimated tax payments for 2009 (the first one is due on April 15, 2009) as a way to conserve cash. Under the recovery package, individuals (which includes sole proprietors as well as owners of pass-through entities) with adjusted gross income under $500,000 and who derive more than half of their income for the year from a business that employs 500 or fewer employees can avoid federal estimated tax penalties this year if they pay at least 90% of the tax shown on the 2008 federal income tax return. (Check state laws on state estimated tax requirements.)
  • Re: Event Feb 24: What's in the New Stimulus Package for You?
    SBC Team Master
    Currently Being Moderated
    Barbara on behalf of the Community I'd like to thank you for sharing your expertise.

    Community, if you want to learn more about the stimulus package and get other critical tax tips please visit Barbara Weltman at http://www.barbaraweltman.com.
  • Re: Event Feb 24: What's in the New Stimulus Package?
    CommunityTeam Novice
    Currently Being Moderated
    Thanks for a great event Barbara! Community if you miss any of our live events, you can always read the event transcript.

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