Business formation might translate into extra tax savings this year

Many business owners will attest to the fact that corporate tax breaks are one of the most beneficial aspects of incorporation. Now, entrepreneurs considering business formation might be interested to learn that 2010 will bring new tax savings for small companies.According to a report from the Courthouse News Service, the IRS has made some generous amendments to tax laws. Small business owners will now have the opportunity to base their quarterly tax payments on just 90 percent of the previous year’s due instead of on the full amount.

To qualify for the reduced estimated tax payments, an entrepreneur’s income must be less than $500,000 and more than half of it must come from a small business.

The tax decrease is part of the American Recovery and Reinvestment Act of 2009, which is fitting as small businesses are supposed to be one of the lead drivers of economic recovery. According to a report from the Small Business Administration, small businesses have generated 64 percent of net new jobs over the past 15 years.

With these new potential tax benefits, entrepreneurs might consider now a good time to undergo business formation. Online incorporation sites can provide an overview of different business types and how to incorporate a business.