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Begich's Legislation will improve tax rules for small business expansion.
Always looking for ways to help Alaska’s small businesses succeed, U.S. Sen. Mark Begich has introduced legislation designed to maximize profits through depreciation. The Begich Small Business Expansion and Jobs Act allows small businesses to extend the ability to take deductions on new equipment purchases and leasehold improvements over several years instead of just in the first year.
The idea came from Anchorage small business owner Jonathan White, who owns SteamDot Coffee Company, during a discussion Begich hosted in Anchorage this winter with several small business owners.
“The best ideas to help small business often come from small business,” Begich said. “By talking to Jonathan about the way deductions work, I learned the current law makes it difficult for new businesses to maximize the potential from deductions on new equipment and improvements when they are just beginning. My legislation will make it so businesses owners can take the deductions once they are generating more of a profit and it is more beneficial.”
Current law requires the equipment deduction for small businesses has to be taken in the year of the purchase and does not include leaseholder improvements. Begich’s bill allows a small business to elect which year to take the deduction within 20 years of the purchase and allows leaseholder improvements to qualify. The bill is limited to small businesses earning less than $1 million annually in net profits before taxes, and the deductions only apply to new equipment purchases and/or leaseholder improvements (which include painting, flooring, installing retail counters, etc.).
Just last week, Sen. Begich held a small business workshop in Anchorage with more than 200 local business owners to talk about ways to access capital, network, and essentially grow the business, creating more jobs in the economy. He also attended the grand opening of LIME Solar in East Anchorage, which recently went through the process of purchasing equipment and improving their leased space. This bill will help reduce the financial risk of entrepreneurs and small business owners trying to start or expand a business and create new jobs.