Small businesses: Four tax breaks that end with 2013

Robbie MossBlog, Compliance / Regulations, Tax

small business tax breaks

The end of the year is approaching fast, and with it’s taking 55 federal tax breaks with it’s departure.  Usually prone to extensions anyway, this year is looking to be a little different, and so we are here to warn the small businesses out there that can benefit from a friendly reminder!


First, don’t forget about any R&D credit opportunities.  This tax incentive is likely to go away entirely.  For those of you looking to improve manufacturing processes or make other improvements with your operations, now is the time to act on this provision that, without any better way to put it, is on life support.  Remember that the IRS continues to see the R&D tax credit as a significant issue, and so proper documentation on your claims will be CRITICAL.


Second, energy tax incentives.  Businesses that build and renovate their properties may qualify for special braks if they go green, per the 179D tax deduction.  It could be something as simple as retrofitting your lighting to newer technology, such as LED’s.  Offices, warehouses, distribution centers, hotels, we’re looking at you!


Third, and speaking of 179D, don’t forget to deduct the cost of asset acquisitions such as furniture, equipment, hardware, software, and more.  This is discussed in the expensing and bonus deprecation area.  If you have any of these needs, 2013 is the time to do it because the expensing limit is scheduled to drop from $500,000 to $25,000!  Yikes!  Remember to comb over the eligibility details – anything purchased must be in service by the end of the year.  Even businesses without taxable income can utilize this break, as that allows those businesses to write off 50 percent of any qualifying purchases INSTANTLY.  Careful, the property must be new!

Finally, this break doesn’t necessarily benefit you this calendar year but it’s important to know the benefits in 2014: New regulations that activate in 2014 allow your business to write off small asset acquisitions without the IRS disallowing the deduction.  You can write off up to $5,000 per item that features an invoice backed by a financial statement.  Without one, it’s only $500 per.  To take advantage of this break you must have a formal capitalization policy that is effective the first day of the year, and you must abide by the policy you wrote in terms of how you make financial statements.