Last week we discussed the recently-passed fiscal cliff bill and some of its potential drawbacks for small business owners. The legislation includes a number of tax increases that could affect both businesses and their customers. However, there are some benefits as well.
First, the legislation provides tax breaks for research and development. A tax break was extended by one year and applied retroactively to 2012. Employers will get tax breaks for 6 percent and 14 percent of their expenditures for R&D. This will not only save businesses money but promote innovation and enable them to develop new technology to drive their businesses.
In addition, the legislation provides for tax breaks for purchasing or leasing software or equipment under Section 179. This is similar to the R&D tax break in that it may help businesses innovate while saving them money on taxes.
Lastly, the Work Opportunity Tax Credit (WOTC) will continue, offering businesses tax incentives for hiring underemployed groups. This rewards businesses who hire youths and veterans, both helping employers and jumpstarting the greater economy by boosting employment.
As with any significant change in law, it may take some time to gauge the full effects of this legislation for business owners. But working with a professional can help you make sure that your business is ready for whatever the future holds. Consider working with an experienced business law attorney who can advise you of relevant laws, help you navigate complex regulations and protect your business – and your future.
Source: Free Enterprise, “5 Ways the ‘Fiscal Cliff’ Bill Affects Small Biz,” Andrew Lu, Jan. 3, 2012
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