Update on tax legislation and how it affects small business owners

The House passed the tax legislation, and over $800 billion package, and all that is left is for Obama to sign off. The most important feature for business owners is the allowance of a 100% write off on equipment acquisitions through the end of 2011. Business owners that are profitable can utilize this to re-invest in their business and reduce their taxable income. Although this will only help capital spending, this could further weaken the value of the dollar or lead to a dramatic rise in interest rates. Also, many business owners have loss carryforwards for the last few years and wouldn't have to pay tax anyway so having an additional equipment payment may not make as much financial sense. On the most basic scale, if the investment isn't going to more than pay for itself within an 18 month timeframe then it may make sense to delay...regardless of how great of a tax break. This also could lead to an opposite affect of business owners streamlining their operation further by automating and reducing their work force.