By Beau Denton

Fiscal cliff and debt ceiling debates in Washington have left many small business owners confused when it comes to taxes. Aaron Mondon, a principal with CS&L CPA in Sarasota, says the big changes for businesses this year can be narrowed down to three areas: research and development credits, fixed asset additions and work opportunity tax credits.

1. “When people think of R&D,” says Mondon, “they think of lab coats and test tubes.” In reality, many activities qualify for the credit, and Mondon says only one out of 20 eligible small businesses is taking advantage of it. That means there’s a lot of money left on the table, and it can be tens of thousands of dollars.

2. Section 179 of the tax code addresses the limit of fixed asset additions—equipment, vehicles, even furniture—that businesses can write off, and for 2012 the IRS has retroactively increased the limit from $139,000 to $500,000. Mondon says some of his clients are already taking advantage of the higher limit.

3. The work opportunity tax credit is for businesses that employ individuals who may have a hard time getting hired, like veterans or the disabled. Credits range from $6,000 to $24,000. “That’s money right in your pocket,” says Mondon.

The specifications and rules can get complicated, says Mondon, like when deciding between a deduction under section 179 or a 50 percent bonus depreciation deduction, and there are other changes that only apply to certain types of businesses. Don’t be afraid to ask your tax professional lots of questions, and if you don’t have a tax professional, says Mondon, it might be time to reconsider. “Some people do it themselves to save a few hundred bucks, but in the long run they lose money. The changes are too numerous, and things are getting too complicated.”

 

Overheard

“It’s like being nibbled to death by ducks.”

-Global executive coach David Allen, author of Getting Things Done, describing the sensation of keeping your projects—big and small—in your mind instead of in an in-box. Allen was in Sarasota in January to conduct a free seminar for The Zonta Club of Sarasota.

 

Metric

12 Million

Of the 59 million people 25 years and older who held a bachelor’s degree or higher in the U.S. in 2011, 12 million majored in business.

Business majors were also among those who were most likely to be employed full-time, year-round (64.1 percent). Education was the second most popular major at 8 million, but education majors were the least likely to be employed full-time, year-round (41 percent).

SOURCE: American Community Survey Brief, Field of Degree and Earnings by Selected Employment Characteristics: 2011; released October 2012.