Best Tax Breaks for Small Businesses in 2011

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It is important for small businesses to take advantage of all possible tax breaks. There are many different tax breaks that smaller companies may qualify for in 2011. According to the U.S. Small Business Administration, the following tax breaks should be considered by all eligible companies.
The elimination of capital gains taxes for some business stock
The government wants small businesses to be able to make important investments. They have eliminated the capital gains taxes for many of these investments. These breaks can spell big savings.
Higher small business expensing limit
In 2011, small businesses can expense up to $500,000 of the cost of new equipment. Basically they can expense more in the purchase year leading to a higher tax break right away. This break will allow businesses to get new equipment that they may not otherwise have been able to afford. In addition, $2 million is the new phase-out threshold.
Accelerated and extra depreciation
Small businesses can now write off expenses more heavily at the beginning, giving them more immediate tax breaks. The Tax Relief and Job Creation Act allows 100% deductions for expenses in this year.
Cell phones
It is now easier to deduct the cost of cell phones for business use. The changes brought by the Small Business Jobs Act allow cell phones to be easily expensed and deducted.
Increase in carryback of general business credits
The government allows businesses to “carryback” credit for past years. This number of years they can do this has been increased from one to five for some companies.
More appropriate tax reporting penalties
Before 2010, small businesses were responsible for relatively high penalties for tax reporting problems. These penalties have been lowered.
Health care tax benefits
In 2011, small businesses are eligible for several breaks related to health care. They may be eligible for tax credits when they provide health insurance to employees. In addition, they can deduct more of their own insurance costs.
General business credits can be used for AMT liability
In the past, businesses could only use regular tax liabilities against their AMT liability. Starting in 2010, they were able to use general business credits for this purpose as well. This applies to certain small businesses that have had average annual gross receipts of $50 million or less for the three past years.
Tax breaks can add up significantly for small businesses. The owners of small businesses should talk to finance professionals if they are unsure of the tax breaks for which they are eligible. The tax breaks and credits will make it easier for them to invest and build for the future.