Regulations in Relation to Small Businesses
Revision as of 17:42, 8 February 2016 by imported>Jackie
Information dump: not organized yet!!
- The IRS small business forms aren’t overwhelming for big businesses, but for entrepreneurs “the regulations, taxes, and fees are very costly and subsequently discouraging” (opinionated post)
- Forms that small businesses have to fill out:
Contents
Highlights from the Small Business Jobs Act of 2010
- Puts more capital in the hands of small businesses and entrepreneurs
- SBA loan provisions were extended through 2010
- Higher loan limits
- Permanently increased microloan limits from 35,000 to 50,000, helping more entrepreneurs with start-up costs and small business owners in underserved communities
- More small businesses became eligible for SBA loans
- Increased alternate size standard to those with less than 15 million in net worth and 5 million in average net income
Jumpstart Our Business Startups “JOBS” Act (2012)
Amendments made regarding crowdfunding in October 2015
- “New rules and proposed amendments are designed to assist smaller companies with capital formation and provide investors with additional protections” (SEC)
- Raised the threshold for exemption for SEC registration
- Went from 500 holders of record and total assets exceeding $1 million to either 2000 holders or 500 holders who are not accredited investors and total assets exceeding 10 million (NLR)
- More companies are now exempt from registration requirements of the federal securities laws
Protecting Americans from Tax Hikes “PATH” Act (2015)
Qualified Small Business “QSB” Stock
- Tax break for taxpayers who invest in early stage or start-up companies
- Non-corporate taxpayers who “acquire QSB stock in a C-corporation at original issuance, hold such stock for more than 5 years, sell such stock at a gain, and meet certain other requirements” can now claim complete tax exclusion (JDS)
- Gain from the sale of the QSB stock will not be subject to capital gains tax
- Requirements
- Corporation cannot be engaged in ineligible businesses
- Gross assets must not exceed $50 million
- For the taxpayer, the amount of gain that can be excluded is limited to the greater of $10 million or 10x the tax basis when the QSB stock was first acquired
S-Corporation Built-in Gains Tax
- Tax planning opportunity when acquiring a C-corporation with built-in gain assets
- S-corporations are not subject to entity-level taxation, so there is no double taxation, whereas C-corporations pay tax on sale of assets and then shareholders pay a second level of tax on dividends
- “To prevent avoidance of the entity-level tax applicable to a C-corporation, a corporation with appreciated assets that elects to convert from C to S-corporation status is taxed on a post-conversion sale of any such appreciated assets, to the extent of built-in-gain at the time of conversion, if the sale occurs within a prescribed period after conversion. The law initially set the period at 10 years, but the period was temporarily reduced to 7 and then 5 years during the economic downturn. The 5-year recognition period has been extended indefinitely. ” (JDS)
Prevents Tax Increases
- Provides small business tax relief, including increased small business expensing (Section 124)(PATH)
- Permanently extends the small business expensing limitation and phase-out amounts
- Expensing limitation increases from 25,000 to 500,000
- Phase-out amounts increase from 200,000 to 2 million
- Offers incentives for innovation, including the research and development tax credit (Section 121) (PATH)
- Permanently extends the R&D tax credit
- Eligible small businesses (<$50 million in gross receipts) can claim the credit against AMT liability, and the credit can also be used by certain small businesses against the employer’s payroll tax liability