A question for the self employed and small business owners . . . . .

[Stinky The Clown]

. . . . Obama is proposing, among other things, a 100% write-off for business investment. Are you able to talke advantage of it? If you are, will you?

I can tell you that I'm sure hoping our company can.

[matt819]

1. Not here

First, I don't have that much need for capital investment. I need inventory, and no credits are going to help that, and the banks. . . well, let's not go there.

Next, getting a credit for a capital investment is fine. Of course, if that's what your business needs, it's super. But before you can write it off, you have to have it to spend. If you do, congrats. I don't know many small businesses that a) have that available capital or b) are willing to make that investment in this market.

[SmileyRose]

2. It will depend on financing. - and the banks have all but pulled out on most small business.

I keep the books and know all the financial ins and out at work. We let half the staff go and the rest took 30% cuts to save the business. They've turned a profit on paper every month - and still had to fight the banks for financing. A business owner does not have much time or energy left to plan for expansion if all they do is fight the banks..............

[Brickbat]

3. Deleted; I found what I was looking for.

[ChoppinBroccoli]

4. I May Be Misunderstanding The Verbiage

I'm a sole proprietor (I run a single-person law firm with no employees), and every business expense I've ever had (and I've been in business 10 years now) has been 100% deductible. That's really all Schedule C is, an itemized accounting of all your business expenses, and at the end, the total amount spent on the business gets subtracted from the money the business made.

But again, I may be misunderstanding the language being used here. Is there a difference between "business investment" as it is used in this context, or does it just mean "money you spend on your business?"

[mtnester]

5. I think they are also talking about depreciation

which normally takes a couple years. In addition to the actual "cost" of the item as a business expense, there would be either another deduction and also/and or the "instant" depreciation...I think that would become more clear after today

[Hannah Bell]

6. That's what was confusing me. I understood you could already deduct the cost of a capital purchase

as an expense.

Isn't depreciation more like writing down the value of the item in the buisness, i.e. in year 1 it's a 100,000 asset, but in year two only a $90,000 asset?

If you allow all the depreciation to be booked in the year you buy the asset, seems like it's allowing you to deduct double the value of the asset in one year?

[mtnester]

7. Eeesshh...I think so

that is why I let "the guy" (accountant) sort that stuff out.

I am awaiting the details so I can grill him on them myself.

[matt819]

13. This probably wouldn't apply to you

Let's say you had a couple of employees and needed a telephone system, incorporating data, voice, and data security. That might be an investment of $25,000 (just a figure out of the air). There's your capital investment. Or you're a construction company and need to buy a new tractor. That's not something you would expense. We're a retailer, just my spouse and me. We pretty much expense everything on Schedule C. Depreciation doesn't add up to much, one way or the other, even taking into account our work vehicles.

So, in short, this may be an attractive benefit, but, as I noted above, it takes capital, which is scarce with small businesses.

[rusty fender]

8. The only big piece of equpment that my

company might need this year is a fork-lift. I'd definitely take advantage of the write-off, but then, only if my access to my neighbor's fork-lift is cut off.:shrug:

[hedgehog]

9. Reading this thread made me realize that this write-off is aimed at increasing manufacturing.

It won't help you buy product to sell or even materials, but it will buy equipment to make things.

Coming around from the other direction, equipment to make things is one item we still manufacture a lot of in this country, so this is a two-fer as far as boosting the economy goes.

[supernova]

10. That's what I'm thinking

That companies who have been holding off on investing in new equipment now will have an extra tax incentive to go ahead and buy it.

[matt819]

14. Exactly

And god forbid the banks should actually come through and begin lending again.

What I find troubling about this state of affairs (apart from the macro view of the disintegration of our economy) is, where does one go when things improve? For example, my bank was just fine until it wasn't fine anymore, and they now want to pretend we don't exist. And other banks have basically said, gosh, we wish we could loan you money, but we can't. What happens when the drought is over and we come through? At that point I'm not particularly inclined to give future business to the bank that betrayed me (a local, community bank, by the way), and the other banks have pretty much told me they're not interested. So much for relationships. So much for a partnership in the community. You're on your own.

[supernova]

11. I don't know

I will be starting a food business in the next 12 months.

But it will just be me initially. Making product, taking it to local venues to sell at a rented booth.

I will be making the product in a commercial coop kitchen which has yet to be built.

I could do with some small utensils and that kind of thing, but would it be worth it for that? So, I would be surprised if it applies to me.

[hedgehog]

12. It might be the difference between buying that good set of pots and getting by with

the cheap set and burning some food.