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Will New Stimulus Package Offer Small Businesses Real Benefits?

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Jonathan Cooper
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Although the Economic Stimulus Act of 2008, with its allowances for larger credits and write-offs for research-based expenditures, and reducing the amortization period for deducting the expense of rental space improvements are certainly welcome news for small business owners, these provisions, as correctly noted in yesterday’s New York Times article, do little, if any, good for many small companies that made little or no money against which these deductions would theoretically be applied.

Some small business owners are facing a different problem: those who made a moderate sum of money in 2008, but now, due to the recession, cannot afford to pay their taxes. While a spokesman for the Internal Revenue Service stated publicly that the IRS was willing to work with small commercial business owners to ease the burden of paying their tax bills in full, little specifics on how the mechanics of this process will work have been provided.

One provision in the new proposed stimulus plan is somewhat promising: it permits businesses that lost money in 2008 to offset the loss against the surplus that the business had in the five previous years. In that fashion, these businesses could recover, in the form of a tax refund, some of the losses that they experienced in 2008.

While many pundits have postulated that additional help for small businesses are in the works, the proof will be in what makes it (and doesn’t make it) into the legislation that is due to be signed shortly. Time will tell.

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Jonathan Cooper
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