Tax breaks for small businesses

The newest round of small business tax cuts, signed into law in September, allow 4.5 million small businesses and individuals to increase the amount of investments they can write off, which is good news for those hoping to form an LLC or start a corporation.

With the new legislation, more startup expenses can be deducted, explained BusinessWeek contributor Karen Klein. Those who opened up a business in 2010 or plan to do so can now deduct up to $10,000 in startup expenses. Previously, the maximum deduction was $5,000.

In addition, companies can deduct as much as $500,000 in expenses for machinery, furniture and computers. Entrepreneurs who purchase new equipment are able to write off 50 percent of that cost this year, rather than watching the full cost depreciate over time.

According to the White House Press Secretary, Robert Gibbs, the legislation will continue to lend support to small businesses struggling to access the credit they need by creating a new $30 billion Small Business Lending Fund, extending Recovery Act provisions such as raising Small Business Administration loan guarantees and eliminating fees and doubling the maximum size of most SBA loans.