Greenville Business Magazine 2009 December issue : Page 17

››industry trends Tax Changes Try to Spur Business Spending BY RICHARD BREEN PHOTOGRAPHY BY COMMERCIAL IMAGING Jason Sweatt, Elliott Davis LLC ››industr ››industr ››industr ››industr ustry trends Tax Changes Try to Spur Business Spending BY RICHARD BREEN PHOTOGRAPHY BY COMMERCIAL ustry trends Tax Changes Try to Spur Business Spending BY RICHARD BREEN PHOTOGRAPHY BY COMMERCIAL IMAGING Jason Sweatt, Elliott Davis LLC Green Green Recycling service has operated in Greenville for two years. But that doesn’t mean she is looking to throw away money in the form of unused tax breaks. “I definitely think about the tax implications,” she says, particularly when it comes to capital spending. “It depends on what it is and how much it’s going to cost my company.” Consumer spending may be the main driver of the U.S. economy, but business spending is important, too. ››industr ››industr ››industr ry trends Tax Changes Try to Spur Business Spending BY RICHARD BREEN PHOTOGRAPHY BY COMMERCIAL IMAGING Jason ndustry trends Tax Changes Try to Spur Business Spending BY RICHARD BREEN PHOTOGRAPHY BY COMMERCIAL IMAGING Jason Sweatt, Elliott Davis LLC Green Recycling service has operated in Greenville for two years. But that doesn’t mean she is looking to throw away money in the form of unused tax breaks. “I definitely think about the tax implications,” she says, particularly when it comes to capital spending. “It depends on what it is and how much it’s going to cost my company.” Consumer spending may be the main driver of the U.S. economy, but business spending is important, too. due due to be reduced or phased out. Both have to do with asset depreciation. “Depreciation is usually a pretty big one for businesses that are purchasing quite a bit of equipment,” says Sherry Kelly, managing partner with Liberty Tax Service in Greenville. A “section 179” deduction allows businesses to treat some property as a one-time expense rather than some- thing that has to be depreciated over a number of years. Qualifying businesses ››industr ››industr ››industr y trends Tax Changes Try to Spur Business Spending BY RICHARD BREEN PHOTOGRAPHY BY COMMERCIAL IMAGING Jason Sw ndustry trends Tax Changes Try to Spur Business Spending BY RICHARD BREEN PHOTOGRAPHY BY COMMERCIAL IMAGING Jason Sweatt, Elliott Davis LLC Green Recycling service has operated in Greenville for two years. But that doesn’t mean she is looking to throw away money in the form of unused tax breaks. “I definitely think about the tax implications,” she says, particularly when it comes to capital spending. “It depends on what it is and how much it’s going to cost my company.” Consumer spending may be the main driver of the U.S. economy, but business spending is important, too. due to be reduced or phased out. Both have to do with asset depreciation. “Depreciation is usually a pretty big one for businesses that are purchasing quite a bit of equipment,” says Sherry Kelly, managing partner with Liberty Tax Service in Greenville. A “section 179” deduction allows businesses to treat some property as a one-time expense rather than some- thing that has to be depreciated over a number of years. Qualifying businesses and and put into use by the end of 2009. It can’t be used equipment, either. “It’s got to be new stuff,” says Jason Sweatt, a CPA and shareholder with Elliott Davis LLC in Greenville. “They want you to buy new stuff to stimulate the economy.” There is also a tax break called “bonus depreciation.” “When businesses buy certain equipment, the IRS allows a 50 percent depreciation up front,” Kelly says. It was going to be phased DECEMBER 2009 | GREENVILLE BUSINESS MAGAZINE 17

>>industry trends - Tax Changes Try to Spur Business Spending

Richard Breen

Elizabeth Garrison is one businessperson who doesn’t feel that bad about paying taxes. “It means your company’s growing,” says Garrison, whose Ever-Green Recycling service has operated in Greenville for two years. But that doesn’t mean she is looking to throw away money in the form of unused tax breaks. “I definitely think about the tax implications,” she says, particularly when it comes to capital spending. “It depends on what it is and how much it’s going to cost my company.”

Consumer spending may be the main driver of the U.S. economy, but business spending is important, too. This year’s tax code reflects the federal government’s desire to see companies open their wallets again. The two biggest changes are not changes at all, but continuations of tax breaks that were due to be reduced or phased out. Both have to do with asset depreciation.

“Depreciation is usually a pretty big one for businesses that are purchasing quite a bit of equipment,” says Sherry Kelly, managing partner with Liberty Tax Service in Greenville.

A “section 179” deduction allows businesses to treat some property as a one-time expense rather than something that has to be depreciated over a number of years. Qualifying businesses can expense up to $250,000 of section 179 property in 2009. “It was actually going to go down to $133,000, but they’ve extended it,” Kelly says.

The property has to be purchased and put into use by the end of 2009. It can’t be used equipment, either. “It’s got to be new stuff,” says Jason Sweatt, a CPA and shareholder with Elliott Davis LLC in Greenville. “They want you to buy new stuff to stimulate the economy.”

There is also a tax break called “bonus depreciation.” “When businesses buy certain equipment, the IRS allows a 50 percent depreciation up front,” Kelly says. It was going to be phased out, but has been extended through 2009. “Consideration has been given to extending that again,” Sweatt says. “Businesses that are looking at purchasing depreciable assets should be considering this rule.”

Vehicles “are always a big thing for small businesses,” according to Kelly. If a vehicle is outfitted for a specific work use and not used for passengers, “they could possibly be able to use that vehicle as a section 179 deduction,” Kelly says. If it is used for passengers, she says, “you can do the 50 percent first-year bonus, but the limit is $10,960 for cars and $11,060 for vans and trucks.”

Another thing to keep in mind is whether a business has taxable income. “If businesses are in a loss situation, they may want to wait until 2010 to make those purchases,” Sweatt says.

Small businesses usually have to pay estimated taxes based on 110 percent of the previous year’s taxes. This year, they only have to pay 90 percent, a nice break for those making less money in 2009.

On the state level, there is a property tax change this year impacting businesses with real estate used for warehouse/distribution services. The assessment ratio has been trimmed to 6 percent from 10.5 percent. “That’s big dollars,” Sweatt says. “And it doesn’t have to be a separate facility.”

For the self-employed, the Making Work Pay tax credit may be a pleasant surprise. It’s $400 for individuals earning less than $75,000. “The way they will typically see this credit is once they file their tax return,” Kelly says. Wage earners who have a W-4 on file with their employer are already seeing a portion of the $400 bonus in each paycheck.

Employment taxes, hospitality taxes and sales taxes consume a good bit of Shane Clary’s time. The owner of Good Life Catering Co. in Greenville says “it gets a little hairy” toward the end of each month, trying to reconcile various taxes and maintain cash flow.

For more complicated issues such as depreciation of his two delivery vans and a truck, he trusts his accountant. “That’s what I pay the professionals for,” Clary says. “The tax rules are a lot easier understood by those guys than a little old cook like me.”

Previous Page Next Page

Publication List