Financial advisors who work with the self-employed and small business owners may find much to like in the Small Business Jobs and Credit Act of 2010, H.R. 5297, signed by President Obama on Sept. 27.
Much has been made of pieces of the law with an adverse impact on small businesses, such as the new paperwork mandates, which are aimed at increasing tax revenues.
Aside from the law’s more annoying provisions, however, are some potentially profitable options for small businesses. Agents who take a close look at the law can be in a position to enhance their value considerably to small business and self-employed clients.
This can help advisors reap more sales of retirement plans, life insurance and annuities. Plus, the stimulus provisions can also benefit personally those advisors who run their own businesses.
To sum up, the Small Business Jobs and Credit Act (SBJCA) of 2010 includes these provisions:
Creates a $30 billion lending fund to encourage banks to lend money to small businesses.
Provides tax incentives valued at $12 billion to encourage job creation by small businesses.
Offers grants to support at least $15 billion in small-business lending through state programs.
Allows participants in 401(k) and related retirement plans to roll over pretax account balances into a Roth account.
Beginning next year, allows holders of nonqualified annuities (annuity contracts held outside of a qualified retirement plan or IRA) or a cash-value life insurance contract to elect to receive part of the contract in the form of a stream of annuity payments, leaving the remainder of the contract to accumulate income on a tax-deferred basis.
Lets small-business owners deduct the costs of health insurance for themselves and their families from self-employment taxes for payroll tax purposes on 2010 returns.
The law provides a moderate income boost for many of your small-business clients. But more importantly, it also can provide opportunities to guide these clients in taking advantage of some of the law’s provisions.