3 Things You Should Know About Small Business: Jan. 2
NEW YORK (TheStreet) -- Happy New Year! What's happening in small business today?
1. So what does the fiscal-cliff tax deal mean for small businesses? The good news is the deal will mean greater certainty with regard to taxes, as it extends or makes permanent a number of increased tax provisions including tax rates on ordinary income, estate tax, dividends and capital gains, the research-and-development tax credit and the alternative minimum tax (AMT), according to Forbes.
On the one hand, the AMT exemption has been raised to $50,600 for singles and $78,750 for married couples. The fix is retroactive for the 2012 tax year, Forbes says.
The biggest expiring, yet unsurprising, tax provision is the payroll tax cut.
In another blow, top rates for ordinary income will rise to 39.6% for singles making more than $400,000 and marrieds making more than $450,000, on top of the 0.9% tax increase on ordinary income over $200,000 ($250,000 married) already set to begin in 2013 thanks to the health bill, the article says.
"The increase in the top rate, the AMT relief provided for 2012 tax year and the hidden tax increases -- all combine to make it possible that many small and medium businesses that weren't eligible for business credits thanks to AMT limitations in 2011 will now potentially be able to take advantage of these dozens of credits. In essence, a backdoor opportunity for small businesses," the article says. "The time is now -- before filing 2012 tax returns -- for business owners to have a sit-down with their accountants and focus on all of these business credits."
2. Tax agreement will allow for steady franchise growth this year. While franchise growth is expected to somewhat slow this year, the International Franchise Association says the passage of H.R. 8, the American Taxpayer Relief Act of 2012, was "critical to ensuring the positive growth forecast for the franchise industry in 2013 and for consumers across America," IFA CEO Steve Caldeira said in a statement.