Business incorporation may get a boost with new tax incentives for investors

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If investors had more tax breaks, would they spend more money on startup companies? In a recovering economy where small businesses are predicted to be leaders in job generation, it may be a risk that government officials are willing to take.
CNN Money reports that the House of Representatives has passed legislation that will eliminate the taxes on investors’ capital gains from small business investments made in 2010 and 2011. President Barack Obama is supporting the bill, which has yet to be passed by the Senate.

Obama is not alone in promoting the bill. The source reports that nearly 60 percent of the 500 small business owners polled in February by PNC Financial Services Group think their business would benefit from the legislation.

Under the bill, investors would be exempt from capital gain taxes on investments in C corporations with assets of less than $50 million. Additionally, the bill would favor companies that could potentially generate a high volume of new jobs.

With this in mind, entrepreneurs might seriously consider business formation in the coming months. C corporations may not only soon help bring investors, but the entities also offer entrepreneurs medical expense deductions for workers.