In 2011, President Obama unveiled the American Jobs Act, most of which has been approved by Congress. Key to the Act are tax cuts to help small businesses as well as incentives for entrepreneurs to start their own business. This is positive news for all of you who have been thinking about following your dreams and start the ball rolling with business formation in 2012.
Some of the tax cuts that could affect Colorado small businesses include:
- Cutting the payroll tax in half for 98 percent of businesses which includes taxes paid by businesses on their first $5 million in payroll. In Colorado, 130,000 firms will receive a payroll tax cut under the American Jobs Act.
- A complete payroll tax holiday for added workers or increased wages, including complete elimination of payroll taxes for firms that increase their payroll by adding new workers or increasing the wages of their current worker (the benefit is capped at the first $50 million in payroll increases).
- Extending 100% expensing into 2012. This continues an effective incentive for new investment.
- Reforms and regulatory reductions to help entrepreneurs and small businesses access capital.
Specifically addressing the last point, reforms that will impact Colorado small business includes accelerating payments to small businesses that contract with the federal government, creating a one-stop online portal for small businesses to access government services, and working with the Securities and Exchange Commission to enhance private-sector investment opportunities for small businesses.
Whatever your political leanings, the federal government does play some sort of role in the small businesses environment, especially in times of economic duress, whether through tax legislation or temporary fiscal expansion. As a small business Colorado attorney, I make it my responsibility to stay informed on legal, tax and legislative changes that will impact my clients, because rarely does one happen without affecting the other.
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