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Tax Breaks Every Small Business Should Know

Tax Breaks Every Small Business Should Know

Starting a new company or maintaining an established business alive can be difficult in the current economic climate. One source estimates that within four years of opening, there is a 50 percent risk of a new company failing. As if the fear we’re not enough, entrepreneurs have to contend with complicated tax codes as well.

Fortunately, in 2010, policymakers made several favorable changes to the tax conditions facing company owners. They followed up with further changes to the tax conditions facing corporations in 2015 while extending some of the 2010 tax breaks.

Here is a list of some of the most relevant reforms made in 2015, as well as a look at some 2010 tax credits that have been carried over:

2015 and 2016 New Tax Breaks

The tax credits available in 2015 and 2016 to small businesses are essentially identical to those given in previous years. Some changes in eligibility and write-off thresholds have, however, occurred. Some of these may help small business owners significantly. While others, particularly change to Section 179, maybe a cause for concern among some entrepreneurs.

Section 179 changes

In the past, small businesses were permitted to write off eligible purchases of equipment worth as much as $500,000. The incentive expired at the end of 2014, meaning the allowable deduction amount immediately drops to $25,000 (toward qualifying transactions worth $200,000). Lawmakers have agreed to extend the deduction in recent years, but the fate of what will be allowed under Section 179 next year remains uncertain. However, for those organizations that do not operate in a calendar year, it might still be possible to take advantage of the maximum $500,000 cap. It is complex, in other words. Concerning what is and is not deductible in 2015 under Section 179, it is best for a business owner to consult his or her tax advisor.

Business Mileage

When completing their taxes, smart business owners have long written off the expense of business mileage. Companies must operate less than five cars, no large fleets allowed in order to apply for this deduction, and cannot seek section 179 deductions on vehicles. The mileage credit for 2015 rose to 57.5 cents per mile up from 56 cents per mile in 2014. This change in mileage deductions may have a big effect on organizations that incur large travel expenses. Opting to subtract the regular mileage rate ensures that company owners are unable to deduct operating costs such as maintenance, fuel, and registration fees for automobiles. Those are taken into account in the 57.5 cent deduction.

Incentives Depreciation

Bonus spending enables all firms to subtract a portion of investment costs immediately instead of delaying them by depreciation. Bonus depreciation was extended to 100 percent at the height of the recent recession. Sadly, incentive depreciation caps were lowered to 50 percent a few years back, which is where they remain. The good news is that 50 percent is still more appealing than the 30 percent that was acceptable when incentive depreciation was first implemented.

Also Read : Business Loan Requirements, A Complete Checklist

Options for Small Business Health Programs

The Small Business Health Options Program also referred to as the SHOP Marketplace, allows small business owners to take advantage of tax breaks of up to 50% of the cost of the health insurance they give workers. It is also possible to subtract such premium expenses not protected by the program’s tax credit. The SHOP Marketplace, initially planned to be available in 2013, was postponed until the open enrollment period for the Patient Protection and Affordable Care Act was introduced in 2015. The SHOP was open that year for organizations with 50 or fewer full-time equivalent workers. In 2016, the scope of the initiative will expand to include organizations with 100 or fewer full-time workers.

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Tax Incentive Audit Benefit Cash Payment Income Concept

Tax breaks from 2010 are still in place

The small Businesses interest deduction

From time to time, many company owners find themselves having to take out business loans to keep their operations on track. The good news for small business owners needing rapid capital infusions is that interest on business loans can be deductible, depending on the circumstance. With your tax solicitor, this can be checked.

Also Read: Key Steps to a Successful Business Loan Approval

Depreciation and Mobile Phones

In 2010, the federal government agreed that mobile phones had become almost as important as landline service to companies. Thus, not only the cost of mobile phones but also the cost of phone depreciation is included in the 2010 Small Business Jobs Act. Eventually, this alteration was made permanent. A depreciation of seven years

Tax Deductions for start-up Businesses available

According to U.S Small Business Administration, the deductible start-up costs include the cost of “investigating” the formation of a corporation and the cost of “getting a business ready to operate.” As of 2015, the deductible start-up costs are not as large as they were in 2010.

At that time, the provisions of the Small Business Jobs Act allowed start-up owners who invested up to $60,000 to deduct expenditures of up to $10,000. Today, the start-up expense limit is $50,000, with company owners authorized in the first year to subtract up to $5,000. Company owners with start-up expenses in excess of $55,000 for their first year do not receive the $5,000 deduction.

Is a business loan right for you?

There are many tax incentives that small business owners need to be aware of but business owners need to keep up because tax laws are changing. Last year’s deduction does not apply anymore. The right to reduce the cost of interest on business loans is one of the most consistent deductions available to business owners. However, when securing loans from family and associates, those deductions do not apply.

if you consider taking out a business loan , JNA Financing provides small business loans

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The Best Business Loans Options for Freelancers

The Best Business Loan Options for Freelancers

You have a lot on your shoulders as a freelancer. You have to play every role in your business, after all, and keep an eye on your finances. If you find that you need a little (or even a lot) extra money to get your work done, one part of that is finding out the best business loans for freelancers. Fortunately, for freelancers, there are many options for business loans, regardless of your financial status or the kind of freelance work you do.

We’ll go through the best business loan choices for freelancers in this guide and help you find out which is the best choice for your needs. There are loans that help you get more money and those that are targeted with less income for younger freelance companies. We will also discuss what paperwork for this funding you will need to apply for, so you can get a head start on your application.

Best Business Loans for Freelancers

These are some of the best loans for freelancers to consider for business

Business Credit Card

As you’d imagine, a business credit card is a credit card primarily meant for business expenses. And while many would not actually think of a credit card as a form of business loan, it is a powerful funding tool that can open a lot of doors for capital-seeking freelancers.

You apply to a financial institution, much like a personal credit card, and get approval for a certain credit limit. You pay off the card monthly, or you will pay interest (calculated as an APR) if you hold a balance before you repay the balance. For company-related purchases, you’ll just need a business credit card.

If you use a credit card for business rewards, you can receive points or cash back when you spend, an advantage over other kinds of business loans. These incentives can be invested back into the business. You will have the option to apply for a business credit card with a 0 percent promotional APR, which provides you with a limited time to spend without interest on the card. Often, these terms are up to a year, giving you some additional spending power without interest charges.


In general, approval for business credit cards is very quick-even faster than other loans. And for a number of credit ratings, there’s a selection of cards, so there’s a fair chance there’s a card out there for you. (It is assumed that the higher the credit, the better the choice of options, and often the lower the interest rate.)

One of the big advantages of business credit cards that you may not have considered: when you pay off your balance in full and on time, as you show your financial obligation to lenders and building history, you are actually generating your business credit score. If you plan to apply down the road, this will make you a better applicant for company loans. So, even if a business credit card isn’t the best funding option for your needs as a freelancer, for that reason alone, it may be worth applying for one anyway.


Before the promotional duration expires and a variable APR sets in, you’ll need to pay back the balance in full. Such APRs can be very high, so schedule accordingly.

Business Line of Credit

One of the most common and best choices for freelance business loans is a business line of credit.

These loans are not that different from business credit cards that you spend against a credit limit, but they have higher levels of capital and interest rates than credit cards that are more preferable. You will negotiate with a lender to get approved for a certain credit limit, and then, when you use it, you will use whatever portion of that limit you need. Often, you pay interest only on the amount you use.


Among business loans, business lines of credit have some of the most flexible approval terms. There are a number of criteria for the income, time in operation, and credit score of candidates.

For many applications, these loans are also perfect as they can be spent flexibly. Approval is also fast, in as little as a single day, often.


The strength of your credentials will dictate how attractive your interest rate and repayment terms are, as with most business loans.

Also Read : Understanding Cash Advance and Personal Loans

SBA Microloan

You may have heard of SBA loans, which are some of the loans available that are most wanted. That’s because, with long repayment times, high capital amounts, and low-interest rates, they offer some of the best terms available. The U.S. assures them. Small Business Administration, which helps extend such beneficial terms to lenders.

If you produce quite a bit of income and have been running your company for a significant amount of time, an SBA loan would probably not be available. (Although you can look into SBA 7(a) loans, the most common of the programs, if you meet those criteria and have great credit.) However, that’s where an SBA microloan comes into play.


SBA microloans provide entrepreneurs with up to $ 50,000 in funding for more nascent companies. In these applications, women, minorities, and veteran entrepreneurs are also prioritized, which can be a help if these identities apply to you. Qualifications are less comprehensive than regular SBA loans, the largest of which are company income and time.


SBA microloans do not finance rapidly, like other SBA loans, so do not apply for this loan if you need capital quickly. Otherwise, it’s worth considering this loan if you have the time, as it still comes with the preferred terms and great resources like other SBA loans.

Best Business Loans for Freelancers

Business Grants

Business grants may provide small companies with financing (a freelancer runs a small business in many cases) and the recipient doesn’t have to pay back the money. This certainly sounds perfect, but it is worth noting that there are both pros and cons associated with company grants.


Accepting free money, of course, is a great choice for finding a company. Not to mention, some grants often include other types of funding, such as mentorship and ads. At the national, federal, and local levels, there are a lot of grant opportunities. There are also several private firms providing grants.


They may be very competitive to acquire because of the significant benefits of business grants, and you can waste a lot of time applying for funds that you may never receive. It will help reduce the competition to apply for a grant that is explicitly tailored to help freelancers like yourself (such as grants for women or minorities).

Invoice Financing

As a freelancer, whether they are not yet due or are overdue, you have undoubtedly experienced getting a lot of unpaid invoices. And invoice financing is a common way to get the money quickly if you need the revenue sooner rather than later.

You provide the unpaid invoice to a lender with invoice funding, and they will provide you with a large portion of the money (often around 85 percent) that you can start using right away. For each day the invoice is outstanding from your customer, there is a small fee, and, once they pay up, you repay the cash, and they will return the balance to you, minus these fees.


Another major advantage is that these loans are easy to approve and have lower approval barriers than other business loans, because the invoice acts as loan collateral.


Bear in mind, since you pay fees, you won’t get the full amount of your invoice back, but many freelancers find the expense worth the premium in order to access their capital quicker and boost cash flow.

Also Read: Personal Loan: Eligibility And Ultimate Guide Before You Apply

Personal Business Loan

If you don’t have business assets to put up for collateral, a personal loan for business is another choice to consider.


For this reason, capital sums are smaller than corporate loans, but private business loans can still help freelancers out immensely.


Instead of business properties, these loans are secured against your personal assets , which means they can be somewhat riskier than business loans.

Short-Term Loans

You will be offered a lump sum of money when you take out a short-term business loan that you will have to pay back for a fixed period of time, with interest.


Typically, short-term loans can be accessed very fast and typically come from online lenders. A short-term loan will provide a solution if you need cash quickly.


Unfortunately, this form of loan typically has a much higher APR and a shorter maturity period (usually three to 18 months), so this is not the most economical business financing choice.

How to Apply for Business Loans for Freelancers

Every lender and form of business loan will have its own unique criteria for application. That said, among these, there are several common documents that can be prepared in advance of your application. That’s particularly helpful if you’re quick to look for money.

You’ll want to pull through:

  • Financial statements, including balance sheet and statement of profit and loss,
  • Two years of returns on corporate taxes
  • Two years of personal returns of taxes
  • Personal ID
  • Approximately three months of business bank statements (some creditors will directly link to your business bank account, in which case you do not need to provide them)

It is also worth noting that a greater number of documents would be needed for SBA loans, which is part of why these loans take much longer to process.

You’ll want to know exactly what you’re looking for from company funding, among the options for business loans for freelancers you have. You’ll want to ask yourself before you apply:

  • The amount of capital you need
  • What it wants to be used for
  • How quickly the financing is required
  • How consistent is your income to be able to repay your loan in full and on time
  • How effective your qualifications are, like profits, credit score, and time

Keep the above points in mind when you assess your loan options to find out which loan is right for you.

Final Thoughts

Although the road to the best business loans for freelancers may not be as easy as it is for large businesses, you can feel good that you have plenty of options to explore.

Note that it’s important to know exactly what you’re going to be using the money for as you go, and how much you’re going to need. Even if you are accepted for more than you apply for, never take a loan for more than you can afford, which can cause serious financial difficulties and place your assets at risk. For freelancers, that can be particularly scary if you work alone.

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