How Entrepreneurs Can Profit with Obama

Small businesses need to plan carefully to avoid the impact of higher taxes under the new Administration

By Gene Marks

Regardless of your feelings about Obama—and I say this as a right-leaning small business owner—it's time to take notice of our smart counterparts out there who know his Presidency can translate into lots of profits. Remember, these savvy entrepreneurs know all about surviving and profiting from one political wind to the other. While the rest are watching football or Family Guy this Sunday, you can bet these folks will be plotting their strategy for later in 2009 when the Administration changes and the new Congress takes over. Here are a few shrewd moves and predictions we should all consider.

Think energy.

Sure, gas prices have dropped recently. But we're legitimately spooked. Spooked enough to motivate the next President to commit to doing something about our reliance on foreign oil. Obama plans to invest $150 billion in clean energy technology over the next 10 years. He also plans to create a federal Renewable Portfolio Standard that will require 25% of American electricity be derived from renewable sources by 2025.

Smart business owners will be following this money trail. And they won't even need to be in the energy sector to benefit. They'll just need to be selling and servicing those companies that are in the sector. They'll be changing their marketing, buying new lists, advertising in new places, and attending different conferences than before.

Don't forget about other markets.

It's not just the energy-related industries that will benefit from the next Administration. Obama plans to invest in child care by doubling support for after-school programs and expanding the Child & Dependent Care Tax Credit. He plans to invest $10 billion a year over the next five years to upgrade information technology systems used in the health-care industry. He plans to invest a bunch more money in improving the information and communications technology used to support public safety systems. He will be supporting investments in biomedical research, medical education, and training in health-related fields. He will be a proponent of stem-cell research and will allow more government funding in this area.

Smart business owners will be fathering more children from test tubes and getting them Microsoft (MSFT)-certified while they're still in diapers. Just kidding. Actually, they'll be asking themselves why they're wasting time selling into struggling industries when the next President is saying: Where the money's going to flow.

Let's play some games with our income.

I know that my taxes are going to go up next year. I've seen Obama's proposals. And the strong Democratic majority in Congress. People making more than $250,000 per year will face higher rates. Capital gains rates will go up, too. So will Social Security taxes. And business tax rates.

Smart business owners will recognize as much income as possible this year before potential new tax laws take effect. That means, depending whether you're on cash or accrual basis, getting as many invoices legally out the door and/or as much cash in the door as you can. These savvy business owners will also be finding ways to distribute income over the next few years. Think paying family members at lower rates, bartering, deferring income, and shifting profits overseas. Smart business owners will be lined up outside their accountant's door already, planning these strategies for 2009 and beyond.

Drive up expenses while investing for the future.

Our President-elect has already stated the need for investment in technologies. He's probably going to continue to support the IRS Section 179 Rule which allows qualifying small businesses to deduct certain equipment purchases. He also plans to eliminate all capital gains taxes on startup and small businesses to encourage innovation and job creation. And he plans to make the research and development tax credit permanent.