Corporate Travel Cuts May Hurt Business Recovery
A new survey, by the U.S. Travel Association, of business leaders finds that while corporate travel budgets are often the first target of cost-cutting measures, a majority believe that companies who increase travel during an economic downturn will be better positioned to build competitive advantage. Nearly three-quarters (72%) of businesses surveyed say that increasing travel while others are cutting back creates an opportunity to build market share and new customer relationships. More than half (53%) also believe that companies that reduce their business travel will give an advantage to competitors who maintain their travel commitment.
Banking Still Done the Old-Fashioned Way
A recent Gallup poll shows that most bank customers still bank the old-fashioned way, at branch locations. In an age of ubiquitous ATMs and a proliferation of online banking options, 94 percent of customers use the branch channel, and about two-thirds visit a branch at least once a month.
Tax Changes Impact Businesses
RSM McGladrey, an accounting and tax consultancy firm, released an analysis of the potential implications of the Obama Administrationās tax changes on businesses.
International Tax Provisions ā The current cumulative federal and state corporate tax rate for U.S. businesses is 40 percent ā already 60 percent higher than the corporate rate in China. The budget blueprint calls for $210 billion in federal revenue from international enforcement, reform deferral and other tax reform policies. Most of this revenue would come from eliminating businessesā ability to defer recognition of foreign-earned income until those monies are repatriated to the U.S.
LIFO Elimination ā The budget blueprint seeks to generate $61 billion by eliminating last-in, first-out (LIFO) accounting for all businesses. LIFO is a well-established accounting principle that allows businesses to more accurately match expenses with receipts.
Individual Tax Provisions ā The 2011 sunset of the Bush-era tax cuts for those individuals earning $200,000 or more stands to have a significant impact on small and mid-sized businesses paying taxes at the individual rate. For business owners, this means increased taxes on revenues they use to expand their businesses or simply keep them afloat.
Business Mileage Rate Adjusts
The IRS periodically adjusts the standard mileage rate to reflect changes in the cost of fuel, repairs, etc. Effective Jan. 1, 2008, the rate was increased to 50.5 cents per mile. On July 1, 2008, the rate was increased again to 58.5 cents per mile. If a person uses the standard mileage rate to calculate their vehicle expense deduction, multiply the business miles for the first and second half of 2008 by the appropriate rates and add the two amounts together. Effective Jan. 1, of this year, the business mileage rate is now 55 cents per mile.
Deductions For Business Purchases Changes
Section 179 allows a small business owner to deduct 100 percent of the cost of new purchases, such as equipment, machinery, and furniture, rather than depreciating these costs over several years. Under recent economic stimulus legislation, the section 179 cap has been increased to $250,000 for 2008 and 2009.