What's in the small business stimulus package for small business owners?

If you own a small business and you're looking for practical takeaways on how the stimulus package might affect a small company, here's the Cliff's Notes version of the bill.

Help for Small Business Owners Who Need to Raise Money

Expanded SBA Microlending will come as good news to many entrepreneurs. The money allocated to microlending was increased by $6 million. This is for small business loans of $35,000 or less. They are available throguh SBA partners lending organizations.

If you are thinking of applying for an SBA loan, you will be happy to know that SBA 7(A) loan guarantees have been increased to up to 90% of a qualifying loan, no more than $150,000 but still a nice increase. The SBA will also temporarily eliminate or reduce fees on their loan guarantee programs, which is a nice added bonus.

Of course, SBA lenders have not been lending. The latest small business stimulus program attempts to crack that code by allowing the Treasury Department to spend up to $15 billion to buy pooled SBA loans. With this secondary market in place, expect banks to start lending again. Cross your fingers that it will happen!

Another great source of funding is government agency grants. Many start-ups get funding via programs like the Small Business Innovation Research (SBIR) grants and Small Business Technology Transfer (STTR) programs. Monies for these federal grants programs has been expanded and that money will filter down to small businesses as they win government grants.

Help for Small Business Owners Who Lost Money

Your accountant can explain this one better than us, but here's how it seems to work. If your business lost money, you can go back in time two years and apply a loss to taxes you've already paid. You can also carry forward a loss for two years, allowing you to reduce future taxes. You can only do this if your gross receipts are at or below $15 million.

Help for Small Business Owners Who Need to Buy Equipment

Through 2009, you can write off up $250,000 in spending for equipment (machinery, vehicles, computers, etc.). That's up from $125,000. Prior to the stimulus, you'd have to depreciate your spend over $125,000. Long story short, this can lower small business taxes for many business owners.

Help for Small Business Owners Who Hire New Employees

If you're in the mood to hire, there's some good news. The small business stimulus package contains some nice hiring tax credits. If you give a job to a new employee who falls in a targeted group of disadvantaged individuals , you can receive a $2,400 credit per worker . In addition, the Work Opportunity Tax Credit allows a 40% tax claim on the first $6,000 in wages paid to these new workers.

Two new categories of disadvantaged workers have been added to the new package. These include veterans who have been unemployed for at least 4 weeks and left the military within the past 5 years, and disconnected youth, with disconnected being defined as between the ages of 16-25 with no formal education and no work in the past six months.

Why Small Businesses Fail?

Success in business is never automatic. It isn't strictly based on luck - although a little never hurts. It depends primarily on the owner's foresight and organization. Even then, of course, there are no guarantees. Starting a small business is always risky, and the chance of success is slim. According to the U.S. Small Business Administration, over 50% of small businesses fail in the first year and 95% fail within the first five years. In his book Small Business Management, Michael Ames gives the following reasons for small business failure:

1:Lack of experience
2:Insufficient capital (money)
3:Poor location
4:Poor inventory management
5:Over-investment in fixed assets
6:Poor credit arrangements
7:Personal use of business funds
8:Unexpected growth Gustav Berle adds two more reasons in The Do It Yourself Business Book:
9:Competition
10:Low sales More Reasons

It's true that there are many reasons not to start your own business. But for the right person, the advantages of business ownership far outweigh the risks.

* You will be your own boss.
* Hard work and long hours directly benefit you, rather than increasing profits for someone else.
* Earning and growth potential are far greater.
* A new venture is as exciting as it is risky.
* Running a business provides endless challenge and opportunities for learning.

How To Start A Small Business

If you want to start a new business then you should follow these few steps:

1-Business Ideas:

First of all to start a business you will need to create a business idea.While this is an obvious step but many people don't have exact idea what they want to do actually but just a desire to do something.For the budding entrepreneur, there are many options like; buying a Franchise or an Existing business, or to others for ideas for a start step.Once you have decided on the business you wish to start then the real work begins.

2-Business Plan:

Writing a business plan is your second and most important step, this is how you and others will evaluate your business. When seeking financing ,the investors or lenders will want to read your plan before they supply you with funding. If you're financing the business yourself, you will still want to have a written plan to develop business strategies and financial projections. A key element within the business plan is the marketing plan, which explains marketing strategies that will be used to advertise and promote the products or services. The goal setting steps of the plan will help you to analyze the success of the business in future years and clearly illustrate the capital needed to operate the company to break-even.

3-Getting Financing:

Now when you done with your business plan , you are ready to go find yourself some capital. Most small businesses have three options for financing: friends & family, investors or bank loans. Each of these options has different considerations for the business. Investors and even friends & family usually want ownership and control of their portion of the business. Bank loans burden the business with an additional expense of the loan payment, which can erode the business profits.

4-Legal Issues

You've got the plan, the money and the enthusiasm; you're ready, right? Not yet, as with everything you need to take the legal issues into consideration. First you should choose a legal structure: Sole Proprietorship, Partnership, or Corporation. Your financing decisions will have an effect on what legal structure you choose. Now you can file with the state to incorporate and obtain a federal Identification number.

5-Getting Start

Where are you going to run your business? Will a home office do or is commercial space needed to service your customers? Do you need to hire employees to help you run the business? What are your bookkeeping needs, do you need an accountant? Finally, who could forget taxes, what taxes do you have to pay and collect? Now that your business is through the start-up phase, you can now look forward to the issues of managing a small business.