There are about 23 million personal businesses in the U.S. These are sole proprietors, self-employed and other solo entrepreneurs that own and operate what our government calls "non-employer businesses."
Based on our work in Washington DC, I am confident that the needs of personal businesses were not considered in any meaningful way in the drafting of the legislation.
But despite this, there are pieces of the package that benefit personal businesses. The key items are:
1. Make Work Pay tax credit: Self-employed and personal business owners can take advantage of this tax credit for 2009 and 2010. It maxs out at $400 for individual filers and $800 for joint filers, so it won't change your life - but hey, every bit helps.
The tax credit phases out based on income, so check with your tax professional to make sure you qualify. Based on some very rough and 7 year old data on personal businesses and household incomes, it is likely that more than half - or over 11 million - personal business owners will qualify for this tax credit.
2. The stimulus package extends accelerated depreciation for certain assets. This is nice for two reasons. First, it means you can deduct the entire cost in the year you buy the asset, and (2) you don't have to bother with keeping track of the asset for depreciation purposes. Check with your tax professional to make sure purchases qualify.
Emergent Research is a personal business and we are updating our IT infrastructure (a fancy way of saying we are buying a couple of new computers and some other IT stuff) this year to take advantage of the accelerated depreciation. Again, the deduction is not going to change our lives. But I'm not turning it down either.
So if you are a personal business, make sure you don't miss out on the tax changes.
We will be discussing these changes and more tomorrow in a SAP sponsored webinar with Chad Moutray, Chief Economist at the SBA's Advocacy Office, Optimal Solutions CEO Sam Sliman and myself. Click here to register for the webinar.