Steps to recent small business tax breaks

Written By Steps To Faculty Published August 4th, 2010

President Obama recently gave small business owners special tax breaks to encourage hiring and trade. If you are a small business owner or plan on starting a business you should be aware of these 2010 tax code changes as each will affect you business now and in the near future. Take a look.

Step 1 Start hiring

President Obama set forth a $5,000 tax credit for every new employee that you add to your business. There is no restriction on the size of your business and the credit is retroactive to January 2010. If you start a business (2010) then you are still eligible for this tax credit, but for only $2,500. Since the Internal Revenue Service issues the tax credit, be sure to have solid documentation that you increased your staff and payroll and that the functions created are justified. Be aware that you cannot terminate one highly employee ($75,000) and then turn around and hire 5 employees that are lower in pay ($12,000) to qualify for this credit.

Step 2 Raise wages or raise the number of hours employees work

As part of the 2010 Hire Act, small business owners can also receive compensation for any increase in their Social security taxes in their payrolls in 2010. If you raised any wages or increased the number of hours employees work you can receive reimbursement up to $106,000.

Step 3 Claim credits four times per year

The Recovery Act of 2009 also has a clause that lets business owners claim credits on a quarterly cycle rather than on an annual basis. By doing so, businesses have a better cash flow. This reimbursement has a $500,000 limit however.

Step 4 Take advantage of no capital gains tax

Encourage investment in your small business. The President has placed a clause in the Act that eliminates capital gains tax on any small business investment.

Step 5 Get a loan if you need to

The final clause in the Recovery Act calls for $27 billion to be available for small business owners who need loans to run their business. Of this amount, $17 billion is for loan guarantees, $3 billion is for commercial real estate property guarantees, $25 million in micro loans,and $3 billion for debentures for new job and business creation. The size of the small business loans available increased to $5,000,000 up from $2,000,000.

Remember, small business is the engine to jump start the economy. Please visit for more great business advice.

Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.