What the Obama Relection Means For Small Businesses

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This is what we would call a “status quo”re-election in that many of the tax and health care events that were scheduledto go into effect likely will with Obama’s victory. Of course, there will besome compromise with a split Congress, but small businesses can expect many ofthe tax and health care changes to go into effect in 2013.
Section 179 & BonusDepreciationBusinesses that were on the fence aboutwhether or not they were going to make Section 179 purchases, now have a goodreason to move forward in 2012. The Section 179 deduction is scheduled to dropfrom $139,000 to $25,000 in 2013. In addition, bonus depreciation is now 50%for all purchases of new property/equipment and is set to expire all togetherin 2013.
Higher taxes aheadObama has pledged that he would supportextending the Bush-era tax cuts for joint filers earning less than $250,000 ayear. However, he would allow those cuts to expire for those earning over$250,000 annually.  While the Republicancontrolled House of Representatives will fight for lower taxes for all, we dobelieve there will be some compromise. Still, the 43.4% tax rate for highincome earners, which includes the 3.8% investment income surtax, and those with dividend income islikely for 2013.
Health care reform
If there was any hope that the 2013 Obama-care provisions may be delayed,that’s pretty much gone with the Obama victory. This means that smallbusinesses that employ 50 full-time employees will be required by 2014 toprovide health insurance to those workers or face high fines of at least $2,000per employee.
More health care paperwork forsmall business
In addition, beginning in 2013, the same health care tracking requirement forlarge businesses will be applied to those businesses that employ less than 250employees. This means that more paperwork is headed your way. But, let’s beclear that this is a compliance requirement and no additional tax liabilitywill be assessed on W-2 Forms as some have thought.
This is just the beginning
We expect to gain further clarity in the next month and half as lawmakers areforced to meet and compromise on key issues impacting small businesses. Thebest piece of advice we can provide is to plan for what is scheduled to happen in2013, which is higher taxes and more health care reforms.

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