The United States Senate will vote this week on the Small Business Jobs Act. The bill is expected to pass the Senate, but it will not become law until it is reconciled with small business legislation that was passed by the House of Representatives in June. That said, it is possible that the Small Business Jobs Act could become law before the mid-term elections happen in early November.
While the Small Business Jobs Act that is now before the Senate contains some things that will be good for small business owners, it also contains some things that could be cause for concern. Some benefits of the Small Business Jobs Act include a Small Business Loan Fund, which is designed to encourage small financial institutions to lend to small businesses, as well as other provisions that increase small businesses’ access to credit, especially if the businesses seeking credit can create jobs.
If you are thinking about starting your own business, the Small Business Jobs Act contains an income tax-related provision that may get you thinking that there is no time like the present to get your business up and running. For 2010 and 2011, new-business expense deduction thresholds will increase from $5,000.00 to $20,000.00. Other tax perks include increased deductions for capital expenditures and exemptions from capital gains tax for qualifying small business investments.
Although the Small Business Jobs Act will provide substantial benefits to small business owners, there are tax provisions in the bill that are somewhat scary. Small business owners as a group have a tendency to violate Federal tax laws. Many small business owners make mistakes when filing their Federal taxes or fail to file them altogether. Under the Small Business Jobs Act, the penalties for failing to file a tax return are increasing dramatically, as are penalties for failing to file W2’s and 1099s.