There are a number of ways small businesses can take advantage of the 2009 stimulus
plan. You might be able to get a refund on previous returns, deduct more this year,
or pay less in estimated taxes. Don't forget to check out our
bonus deprecation calculator and net
operating loss (NOL) calculator to find out how much you could save.
Get a Refund on Previous Returns
If your small business had a net operating loss (NOL) in 2008, you can carry the
loss back over five years (instead of the usual two years). This means you can get
a refund of taxes you paid in prior years. Our
NOL calculator can help you see how much you could get back.
How Do I Do This?
Gather your last 5 years of tax returns.
If the average income is $15 million or less for 2006, 2007, and 2008, you can amend
your last 5 years of tax returns.
Start with tax year 2003 first, then amend tax years 2004 through 2007.
Instead of actually amending your return, you can file a different form to get any
money you're due back sooner. C Corporations can file Form 1139. Owners of Partnerships, S Corps,
and LLCs can file Form 1045. The IRS generally will process these within 90
days.
Any additional losses can be carried forward.
For more information, see the IRS's Q&A on this subject.
Fully Deduct Equipment Purchases
You can deduct (write off) up to $250,000 worth of the assets your small business
purchases during 2008 and 2009. In tax speak, this is because the Section 179 deduction
has been increased. The nifty thing about Section 179 is that it allows you to immediately
deduct most business equipment the year you buy them instead of depreciating their
value over the course of several years, like you used to have to.
How Do I Do This?
To be eligible, you must still have a profit (or break even) on your 2009 tax return
after taking this deduction. Example: If you have $10,000 in income and have a $25,000
purchase, you can deduct only $10,000 this year (and then you can depreciate the
remaining $15,000 in future years).
You can claim this deduction for most personal property, like computers, monitors,
printers, scanners, office furniture, machinery, and tools.
You can't claim this deduction for "real property" — real estate or building
improvements.
Claim this deduction on your 2009 tax return Form 4562, Part I - or just answer
the questions your tax software asks you.
Deduct 50% of New Assets
You can now deduct (write off) 50% of assets that were purchased Jan 1, 2008 through
Dec 31, 2009. In tax-speak, you'll see this referred to as "bonus depreciation".
Our Bonus Deprecation calculator can
help you see how much you can take in deductions on your 2009 tax return.
How Do I Do This?
This asset must be new and not real estate.
First your business can deduct up to $250,000 worth of new (and used) assets thanks
to the Section 179 deduction. Then your business can deduct 50% of the remaining
cost of most new (not used) assets with the bonus depreciation extension.
The benefit of taking the accelerated bonus depreciation is that it gives you a
larger depreciation deduction this year and decreases your taxes. This frees
up funds to finance other projects or reinvest how you see fit.
For example:
If your company's computers are outdated and need to be replaced, taking bonus depreciation
on this year's assets could help finance the upgrade.
Reason NOT to take it:
If you expect increases in income in future years that will push you (or your partners)
into a higher tax bracket, electing not to take the bonus depreciation may be more
advantageous than taking it.
By not taking the bonus depreciation this year, you will get larger depreciation
deductions in later years when you may need it more.
Deduct more for new autos
You can take a bigger depreciation deduction if you buy new passenger autos or light
trucks for your business. Most autos (with the exceptions of large SUVs and pickups)
are subject to auto depreciation limits. The new bonus depreciation extension now
increases the maximum first-year depreciation deduction by $8,000.
How Do I Do This?
Buy and place a new vehicle in service by Dec 31, 2009.
For new cars, the estimated maximum first-year depreciation deduction for 2009 is
$10,960 (assumes 100% business use).
For new light trucks, the estimated maximum first-year deduction for 2009 is $11,060
(also assumes 100% business use).
Pay Less in Estimated Taxes
If your total income is less than $500,000 and 50% of it is from a small business,
you only have to pay 90% of your estimated taxes in 2009.
How Do I Do This?
There are two ways to determine the 90% in estimated tax. One is to look at your
2008 tax return. Find the total tax you paid and multiply it by 90%. Then pay that
amount over the four quarterly payments.
The other is to project your 2009 total tax liability and pay 90% of your projection
over four quarterly payments.
We recommend the first option as long as your 2009 tax liability is not going to
be significantly lower.
How to Get a Small Business Loan
The 2009 stimulus package authorizes the
Small Business Administration (SBA) to temporarily eliminate or reduce fees
for participation in its flagship loan guaranty programs. The new law also increases
the percentage of qualifying loans that the SBA can guarantee. Additionally, in
March 2009, President Obama unveiled a $15 billion government plan to buy small business loans
in the secondary loan market to help increase lending.
The SBA offers a free primer on how to apply for a loan, as well as answers
to someof the most frequently asked questions. We offer up some of the biggest ones
here with their help.
How do I apply for small business loans?
You can apply for loans directly with your lending institutions, including banks,
credit unions, and Small Business Lending Institutes.
Business.Gov provides an excellent SBA Loan Application
Checklist.
Can I go to any lender to take advantage of these new small business programs?
Only lenders who have been approved to participate in SBA lending programs can assist
you with an SBA-guaranteed loan. Contact your local SBA district office to obtain
a list of approved participants in your area.
How much can I apply for?
For most loans, the SBA's maximum guarantee for any borrower remains at $1,500,000
or 75% of a $2 million loan.
What if I already have a small business loan? Can I get a rebate?
If you had a 7(a) loan or 504 loan approved on or after February 17, 2009 and already
paid the fees, you might be able to get a rebate.
SBA is in the process of developing a refund mechanism and expects to begin issuing
refunds around May 1, 2009. If you have already paid lenders for the fees on eligible
loas, the lenders must reimburse the borrowers from the SBA refund.
What kind of savings will I see from the temporary elimination of the borrower fee?
For a Section 504 loan, the 1.5% application fee that is frequently charged to small
businesses will not be charged. Fees for a 7(a) loan are based only on the guaranteed
portion of the loan and depend on the size of the loan. The fees range from 2% to
3.75%. With the temporary elimination of fees, you should save $6,750 on a $300,000
loan with a 75% guarantee fee of 3% ($300,000 x 75% x 3%).
I got laid off from my job. I want to start a new small business using my skills.
Can I get a loan from any of these new programs?
Absolutely. SBA loan programs are available to start-up businesses as well as those
that are already established.
When applying for a loan, you must prepare a written loan proposal or business plan.
The proposal should outline your business strategy over the next several years and
briefly explain who you are, your business background, the nature of your business,
the amount and purpose of your loan request, your requested terms of repayment,
how the funds will benefit your business, and how you will repay the loan.
If you're a small business looking at the massive government spending taking place
under the 2009 stimulus package, you might be wondering how to get your piece of
the pie. Well, one way is through government contracts. We'll breakdown where a
lot of the spending is going – so you can determine if there's opportunity for your
business. Plus, we'll offer up tips for how to get government contracts and helpful
resources for more information.
Top Places for Government Spending
Of the $787 billion that encompasses the total stimulus package, $212 billion is
allocated for tax relief, and $575 billion is allocated to spending through the
federal government – though a fair amount of this will trickle down through state
governments as the feds try to bailout the states.
See Top Spending
Healthcare: $147.7 billion
Tackling Medicaid and improving computers across the healthcare system.
$86.6 billion for Medicaid; $19 billion for health information technology; $10 billion
for health research and construction of National Institute of Health facilities.
Education $90.9 billion
Improving schools across America.
$44.5 billion for local school districts – for teachers, but also for modernization
and repair.
Infrastructure $80.9 billion
Big spending on roads, bridges, and railways.
$51.2 billion for roads, bridges, railways, other transportation, and sewers; $29.5
billion for government facilities and vehicle fleets; $7.2 billion for broadband
and wireless internet access.
Energy $61.3 billion
Green energy, energy efficiency, and an upgrade in the power grid.
$11 billion for an electric smart grid; $6.3 billion for state and local governments
for energy efficiency; $6 billion for renewable energy and electric transmission
loan guarantees; $6 billion for cleanup of radioactive waste; $5 billion for weatherizing
modest-income homes; $4.5 billion for state and local governments to increase energy
efficiency in federal buildings.
Housing $12.7 billion
Repair and modernization of public housing.
$4 billion for repairing and modernizing public housing; $2.25 billion in tax credits
for financing low-income housing construction; $2 billion to help communities purchase
and repair foreclosed housing.
Environment $7.2 billion
Safe drinking water and wastewater infrastructure.
$4 billion for wastewater infrastructure; $2 billion for drinking water infrastructure.
Making the Government Your Customer
Preparation is the key to landing government contracts. According to PublicSpend.com, there are seven things small businesses
should be doing to get ready:
Search FedBizOps.gov for federal contracts over
$25,000.
Get certified. Many state and local agencies give preferential treatment to small
businesses with the right certifications.
Team up with larger companies in your industry that already offer products and services
to the federal government. FedSpending.org
can help you find them.
Network with execs at federal, state, and local agencies. Find out what their needs
are. Build the same kind of relationships you would with your other customers.
Think outside the box. You may be able to win government stimulus contracts by positioning
your company slightly differently than you have in the past. Be flexible and the
money may follow.
Above all else, remember that the government is your customer now. Government spending
is expected to reach its highest levels since World War II. In fact, it will account
for almost $1 out of every $4 spent in the United States. There's never been a better
time to get to know your local government agencies and learn how your business can
serve them.
Find Out More
There are a lot more resources that can help you navigate the world of government
spending and contracts. You just have to find them. We list some popular sources
here. Let us know if you find more.
See Top Resources
Track stimulus projects: Onvia tracks stimulus projects from across the country
at www.recovery.org.
See where government spending goes: USASpending.gov
offers a breakdown so Americans see where their money is going.
Evaluate government spending: The White House offers data and evaluates its
spending programs at ExpectMore.gov.
Find grants: You can find government grant opportunities stemming from the
2009 stimulus package at Grants.gov.
Select Find Grant Opportunities from the left nav, then Recovery Act
under search by category.
Navigate the federal government:
USA.gov's mantra is "Government made easy." We can't vouch for that, but
they do have a wealth of information.
Most people will choose Other here. Farms are treated a little differently, and,
in most cases, rental real estate is ineligible for the bonus depreciation deduction.
