This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Tax Moves Small Businesses Should Make

BOSTON ( TheStreet) -- The old adage says that nothing is certain but death and taxes. But for small businesses trying to plan for 2010 and beyond, their tax situation is rife with uncertainty and confusion.

Tax cuts passed under the Bush Administration are up in the air. Each tax incentive defines what a small business is differently, in terms of dollars and employees. And thanks to Congressional inaction on the estate tax, nothing is certain about "death taxes" either.

"There's a lot of tax advice we're giving with a 'Yes, but ...'" says Larry Nannis, incoming chair of the National Small Business Association and an accountant at the Needham, Mass., accounting firm Levine, Katz, Nannis and Solomon.

There are several questions that small businesses can address as they try to reduce their tax obligations in the coming years. And there are some good tax incentives, too.

Does your business qualify for the health insurance tax credit?

To encourage health insurance coverage among small businesses, the White House has been touting a new tax credit that will cover up to 35% of the health premiums that small businesses owners pay for their employees and up to 50% starting in 2014. The Internal Revenue Service will soon send out millions of postcards to alert the entrepreneurial public about the credit, which is already in effect.

Eligible firms must employ fewer than the equivalent of 25 full-time workers, and their average annual wages must be less than $50,000. To receive the full 35%, firms must employ no more than 10 full-time workers. The credit phases out as the number of workers increases. This is a little ironic, considering small businesses also receive a payroll tax break for hiring unemployed workers. "[The government] will give you a tax credit if you hire a worker, but if you hire a worker you'll start losing your health care credit," notes Bill Rys, tax counsel for the National Federation of Independent Businesses in Washington.

How should small businesses prepare for the potential end of the Bush tax cuts?

If Congress does nothing, the tax cuts the Bush administration passed will expire in 2011. For small-business owners attempting to stay in a lower tax bracket in 2011, it may make sense to sprint for revenue in 2010. When a company files as an S corporation, a partnership or a limited liability corporation, profits as taxed as part of the owners' personal income.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $126.60 0.00%
FB $86.91 0.00%
GOOG $521.84 0.00%
TSLA $269.15 0.00%
YHOO $39.33 0.00%

Markets

DOW 17,757.91 +138.40 0.79%
S&P 500 2,077.42 +14.31 0.69%
NASDAQ 5,013.1230 +26.2560 0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs