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
TheStreet Open House

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,614.81 +215.14 1.31%
S&P 500 1,941.28 +37.27 1.96%
NASDAQ 4,419.4780 +103.4040 2.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs