How Will the New Small Business Act Affect You?

Written on September 30, 2010 – 3:38 am | by Ashley Johnson

The Small Business Jobs Act of 2010, signed into law by President Obama on Sept. 27, contains several provisions that take affect this year, intended to immediately benefit entrepreneurs and small businesses. If you’re thinking of expanding or starting a business, now is the time to do it.

Below are some of the major provisions of the bill and what they could mean for small business owners.

Community banks will receive $30 billion to encourage small business lending.

Since large banks haven’t significantly loosened up on lending (they say the demand for loans simply isn’t there), this provision could stimulate lending to small businesses turned down by big banks and other lenders.

SBA loan limits permanently rise from $2 million to $5 million for 7(a) loans and from $4 million to $5.5 million for 504 loans. Also permanently increases SBA microloans from $30,000 to $50,000. Temporarily increases maximum SBA Express loans from $350,000 to $1 million. Intended to give small businesses working capital to expand, and hopefully, start hiring again.

No taxes on capital gains for angel and venture capital investors on small business investments. This is a temporary measure that applies for the rest of 2010. The idea is to encourage investment in small business immediately. If the investments are held for five years, the investors will be 100 percent exempt from capital gains taxes.

Tax deductions of up to $500,000 for small businesses that purchase new business equipment. The deduction applies to 2010 and 2011 taxes. Previously, businesses would have been able to write off up to $250,000 in 2010 and only $25,000 in 2011. This makes it attractive for businesses to invest in their growth now, in the hopes that will immediately stimulate economic growth.

Write-off of up to $10,000 of startup expenses for new businesses. A temporary measure that increases write-offs from $5,000 to $10,000 on 2010 taxes.

The self-employed can deduct 100% of their health-care costs on their 2010 taxes for themselves and their families.

Landlords must fill out 1099 tax forms for major contractors. This provision is considered a major downside of the bill that will create more paperwork for some business owners. The measure is permanent and there is no set expiration date.

Perfect Business!