What Does the Small Business and Work Opportunity Act Mean for You?

A change in tax law always causes a struggle for small businesses, whether it is intended to help them or not. Tax laws can be confusing enough as it is, but when the laws change, many small businesses find themselves to fighting to keep up with all of the new rules and regulations. The most recent major overhaul to the tax code is the Small Business and Work Opportunity Act of 2007. This provision was fought over bitterly by small businesses, with some thinking it would boost their profitability and other claiming it was going to force them into bankruptcy. The debate is over and the act is now law - what does it mean for you in terms of running your business and filing your taxes?

The most controversial part of the Small Business and Work Opportunity Act, at least as far as small business owners were concerned, was the increase in the federal minimum wage. Under this act, the minimum wage will increase in a series of increments, from $5.15 to $7.25 within three years. This marked the first increase in the minimum wage for more than ten years, and many people complain that the increased rate is still way out of line with living costs and condemns millions of people to life below the poverty line. Some small business owners, however, said that this increase in wages would raise their overhead by way too much and that they would be forced to cut jobs or only hire part time employees. The minimum wage increase is in effect, however, and all businesses are required to abide by it and any state minimum wage laws that might be on the books in your area. The rest of the Small Business and Work Opportunity Act is designed to help small businesses balance the increased cost of their wages.

Perhaps in no other part of the act is this gesture more clear than in the increased tax cuts for employing certain members of the population. This group of people is generally categorized as "designated community residents," and it includes parolees and people with criminal records, veterans and military personnel with little work experience, at-risk youth and the disabled. Although tax cuts already existed for businesses that hire people in this group, the definition of the group has been expanded from including people up to the age of 25 to including them up to the age of 40. This means that companies may have more people on their payroll that qualify them for this tax cut now.

Also significant are the chances in the laws applying to how husbands and wives who co-own a business file their tax returns. Now, each partner can file their return separately, increasing the overall number of deductions that each couple is allowed to take.

Navigating these new tax codes can be confusing and intimidating. If you need help figuring out how they apply to your business, visit a professional tax preparer or tax attorney who can make sure you maximize your deductions without raising IRS ire.

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Source: http://www.smbiz.com/sbspec179.html