Economic stimulus has small-business benefits

By RODD CAYTON The Press-Enterprise Much of the attention regarding the federal economic stimulus has focused on individual taxpayers, but the legislation also contains some provisions aimed at benefiting businesses. Several Inland tax preparers say the business incentives should help.

There are two primary ones: A 50-percent depreciation allowance for 2008 purchases An increase in the small-business expensing limitation Depreciation is an income-tax deduction that allows a business to address the cost of acquiring, for instance, equipment used in manufacturing, and the declining value of such equipment through wear and tear or obsolescence. The expensing limitation has been raised to $250,000 from $128,000.

That means a company that needs new equipment can list the amount spent to acquire it as an expense, the preparers said. Expensing equipment in the year it’s put into service is an alternative to depreciating it over several years. Michelle Herting, a certified public accountant in Riverside, said the incentives will help capital-intensive businesses that need to buy new equipment.

She also said equipment purchases will have to clear another hurdle thrown up by the current economic malaise: difficulty in securing credit. How are (businesses) going to pay for these purchases if they can’t get any money from the bank? she asked. Deborah St. Martin, an enrolled agent at Oak Valley Tax in Beaumont, said the incentives will certainly help small to midsize businesses, which will be more inclined to make major equipment purchases if they can write off the costs of them.