On Monday, Sept. 27, President Obama signed the Small Business Jobs Act into law. What do we have to look forward to this time from Washington? Will it create jobs? Will it save taxes? Will it help you? To get those answers, let’s take a look at the latest from Washington.

 

The bill promises $12 billion in projected tax breaks. It offers small business owners and small business investors some nice opportunities for federal tax savings. It will allow business owners to write off 50 percent of the cost of new equipment immediately, and raise the deduction for startup expenses all the way up to $10,000. Long-term investors in certain small businesses will be exempt from capital gains taxes. And, owners of retail shops and restaurants will be able to get deductions for remodeling expenses.

 

The following is a general rundown of the provisions of Small Business Jobs Act:

 

General Business Credit Carried Back Five Years. Under current law, a business’ unused general business credit may generally be carried back to offset taxes paid in the previous year, and the remaining amount may be carried forward for 20 years to offset future tax liabilities. This bill extends the one year carry back for general business credits to five years for certain small businesses.

 

Increase Small Business Administration (SBA) Loan Limits. This provision increases 7(a) loan limits from $2 million to $5 million, 504 loans from $1.5 million to $5.5 million, and microloans from $35,000 to $50,000.

 

Extend Elimination of Small Business Administration (SBA) Loan Fees. This provision extends the American Recovery and Reinvestment Act small business lending program that eliminates the fees normally charged for loans through the SBA 7(a) and 504 loan programs and increases the government guarantees on 7(a) loans from 75 percent to 90 percent.

 

State Small Business Credit Initiative (SSBCI). This bill provides $1.5 billion in grants to states to support small business lending programs. States will apply for the funds to be used for approved programs that leverage private lenders to extend greater credit to small businesses and manufacturers. The program allows states to build upon successful models for state small business programs, including capital access, loan participation, collateral support, state-run venture capital and credit guarantee programs.

 

Extension of Bonus Depreciation. Businesses are allowed to recover the cost of capital expenditures over time according to a depreciation schedule. Congress temporarily allowed businesses to recover the costs of certain capital expenditures made in 2008 and 2009 more quickly than under ordinary depreciation schedules by permitting those businesses to immediately write-off 50 percent of the cost of depreciable property placed in service in those years. This bill extends the additional, first-year 50 percent depreciation for qualifying property purchased and placed in service in 2010.

 

Improved Small Business Contracting. This bill removes the red tape and closes loop holes that too often put government work into the hands of multinational corporations instead of Main Street businesses. Increasing contracts to small businesses by just 2 percent can create more than 60,000 jobs.

 

This legislation also provides for a periodic review of small business size standards to ensure that size indicators are consistent with inflation and industry growth of small businesses. It establishes accountability of large business prime contractors for prompt payment to small business subcontractors.

 

Enough already! 

 

Did you understand the above? If you did, you are either a Certified Public Accountant or a business owner, but what about the rest of the world? If you didn’t understand it, good for you, you can put your brain cells to much better use. 

 

I’ve got an idea. Let’s get rid of the complicated tax code that is, to put it mildly, overwhelming!   Banish a system that deals out breaks based on an over lobbied Congress. Let’s make it simple. Let’s get rid of the IRS and replace it with a simple flat tax that everyone can mail in so that everybody pays their fair share of the cost of good governance!