Currently, the unemployment rate exceeds 10% nationally. In the year ahead, most 2010 projections forecast two-million new personal bankruptcies, and the continuation of the rising $13-trillion national debt for the next ten years.  Given the deep economic turmoil, it is no wonder millions of men and woman seek to build their own small businesses that generate over 65% of all new jobs in the United States. 

What’s the good news? The home business deduction, a "home" defined as a house, apartment, condo, mobile home, boat or other structures on the property such as a garage, shed or barn.  You might also use a separate room or part of a room for principle business but it need not be marked off by any form of permanent partition. 

Recently, the Economic Stimulus Package offers small business owners tremendous money saving tax incentives.  For example, on your 2008 tax year, you may be able to expense up to $250,000 for property. This almost doubles the previous limit of $128,000, but is only available for your 2008 tax year. 

Property that often qualifies includes: machinery, refrigerators, grocery store counters, office equipment, printing presses, computers, off-the-shelf computer software, signs, gasoline storage tanks and pumps at retail service stations, a single purpose agricultural or horticultural structure, and livestock (horses, cattle, hogs, sheep, goats, and other furbearing animals). Most passenger automobiles and other property used for transportation are also eligible.  

Entrepreneurs may also write depreciation off faster under the Stimulus Package with two deductions saving significant money.  First Deduction:  For property acquired, placed and kept in service in calendar year 2008, you may be able to write-off 50% of what you paid for it (a special depreciation allowance). Second Deduction:  In addition to the 50% write-off, you can take a write-off of the normal first year depreciation on the remaining 50% of what you paid for the property.  

Examples of depreciable property include: qualified leasehold improvement property, and tangible property with a recovery period of 20 years or less (which includes cell phones, tractor units for over-the-road use, computer peripheral equipment, office furniture and fixtures, and farm buildings). For passenger automobiles, vans and trucks depreciation limits are increased by $8,000 with limits for passenger automobiles going from $2,960 to $10,960. The original use of the property must begin new with the taxpayer after December 31, 2007.  In other words, the property must qualify as “new” to the taxpayer.                                                                

For companies in need of quick relief, the Economic Stimulus Package offers "small business stabilization financing," which gives entrepreneurs money to pay off existing loans. Under the program, the Small Business Association can issue or back loans of up to $35,000; businesses can then use the money to make up to six months of payments on previous loans. Interest on stabilization loans will be fully subsidized, and the loans won't have any payments due for the first year.  

Entrepreneur’s business expenses are deductible even if you paid out of your non-business bank account, personal credit card, or cash. You can deduct interest on business credit cards, loans, banking service fees, licenses, Internet service fees, legal, postage, print or copying costs.  

Hire your kids and save a bundle in taxes. You can pay your children under the age of 18 as much as $5,700 a year, write off the wages as a 100% tax deductible payroll expense, and the children owe no federal income or Social Security tax on the income earned. 

If you purchase an advertisement in a charitable organization’s directory or event program, and buy shirts, jackets, hats or other clothing with your business name or logo, the costs are fully deductible. 

You can go back to school, to take courses that further your education in your current business or that help you operate your business, such as bookkeeping and computer skills, and get a business tax deduction for the cost of tuition, books, fees, and even travel. 

Keep all records including receipts, bills for homeowners insurance, utilities and any other business related information at least six-years. Spend time organizing paperwork into proper files and resolving any notices in a timely manner.      

Use your drive to succeed as an entrepreneur, ask friends to recommend a knowledgeable local account for tax advice. You may just be able to use your unique small business experience to gain a strategic advantage over your competition. Opportunity doesn’t knock, it waits to be discovered.

About Author: Mr. Rickman is a respected analyst, innovative expert in business development and web media marketing services with over 30-years experience, published worldwide. He is also the author of several books including Eight Billion People.  Mr. Rickman holds advanced business and technical degrees from Boston University. For more information visit : http://www.sustainablevirtualbiz.com  or  call (503) 621-4953.