The one-time tax break for buying new or used equipment ends December 31st for small businesses.
The tax incentive for up to $500,000 expires at the end of the year and small businesses should take advantage of this incentive to upgrade resources.
In 2012, the limit drops to $125,000 and the following year to just $25,000.
Among the items covered under this tax provision are computers, software, machinery, and vehicles.
According to Harris Abrams, a senior tax analyst for Thomson Reuters, “if a small business was looking at making a major purchase, they can write off the total amount this year. A significant tax break against profits.”
Even if a company was not profitable but had the cash or can obtain a loan, the tax loss carry forward can help the firm in future years, experts say.
One caveat to this approach: For purchases over $500,000 business leaders can write the excess off in subsequent years. However, if the firm spends more than $2 million on depreciable items, every dollars spent over that level will reduce a dollar of the deduction.
The moral is to be careful on what is spent and stay below the $2 million level.
After three years of bad economic news, surveys show employees will be happy with even inexpensive holiday gifts because they indicate appreciation by management of their efforts. Two surveys show this is an excellent way of improving morale as economic uncertainty continues.
Business leaders who are planning or need to improve their retails spaces or restaurants or retail spaces should consider doing so in 2011. Under a separate rule, qualified renovations that are ready by the end of 2011 can be written off over 15 years rather than the usual tax code provision of 39 years.