Tax Tip of the Week – Will The New Small Business Stimulus Bill Really Help?

Home » Blog » Tax Tip of the Week – Will The New Small Business Stimulus Bill Really Help?

2009-tax-changes-for-individuals After two years of ignoring small business concerns and spending over 2 trillion dollars bailing out big banks, big business and big unions, congress and the president finally decided to try to help the small businesses who employ almost 90% of employees.

The problem is their 30 billion dollar package is not likely to really be much help for the average small business owner. The following are the key components with my take on how much I think it will really help.

Small Business Loans

The Micro loan program expanded from $35,000 to $50,000 and lower SBA fees are the main items of interest in this section of the bill. Of course, if you are just trying to survive and are not one of the less than 5% of the businesses that even consider an SBA loan annually than this most likely won’t affect you.

Small Business Federal Contracting

Some tinkering with the laws and a push to get federal agencies to solicit bids from small businesses are the main parts of this section. If you are one of the companies that contract with the Feds or have ever considered it then you should find them more receptive to helping you. Again, this is a very small minority of small businesses.

Small Business Exports

The bill contains measures designed to encourage small businesses to become exporters or to increase their export activities. Still not much of use to most small businesses.

Small Business Tax Relief

Section 179 first year expensing increased to $500,000 for 2010 and 2011. If you are planning a major  expansion of your business then this will be a big time bonus for you. Of course, most businesses are waiting for customers to come back and business to pick up.

50% bonus depreciation on new equipment extended for 2010. Again this is helpful if the business feels comfortable expanding.

Write-off of business startup expenses is increased from $5,000 to $10,000 for 2010 and 2011. Not sure I see how this helps existing small businesses.

Self-employed individuals can now deduct the health insurance when calculating social security taxes. This includes insurance for their spouse and their dependent children and children under 27 years of age. Finally, we get to something that will help most small business owners.

Revenue Raisers

Like most everything done in Washington over the last two years – this is not paid for! The main item that will affect many of my clients is that now they must issue a 1099 to their landlord if they paid rent of more than $600 for the year. Just what a small business owner needs – more paperwork.

Oh, and to make sure you file all the newly required 1099s this bill increases the penalty for failing to file them from $15 a piece to $30 each with a calendar-year maximum penalty of $500,000.


This bill will do little to help small business owners and, as a result, will do little to help the economy. This is little more than attempt by the Democrat controlled congress to look like they care. To me, it is more proof of how little they really understand what small business needs are. If they really want to help they need to lighten the regulatory burden, stop the deficit spending that takes capital out of the market place and cut taxes across the board. Instead – they continue to do the opposite.