Abrams: Anything for small business in Obama's tax plan?

— -- Did you hear the news that President Obama introduced a plan to reduce corporate taxes?

If you did, you may have thought something such as, "Great, my business taxes are going to go down."

Well, don't start spending your savings just yet.

Why not? Didn't the president propose reducing the corporate tax rate from 35% to 28%? Isn't that going to help your small business?

Sorry, probably not.

Why? First, because it's unlikely any tax-reform legislation will get passed this year. Even if Republicans in Congress loved Obama's plan — and they don't — they're not going to pass his plan in an election year.

More important, most of these changes aren't intended for you and other small-business owners. The primary purpose of the lower tax rate proposal is to entice large corporations to keep more of their money and their jobs in the United States instead of fleeing to foreign tax havens.

However, some provisions are aimed directly at small companies:

1. Companies that are C corporations. Here's something important to remember: Most small businesses don't pay corporate income taxes at all.

Overwhelmingly, small businesses legally are formed in such a way that income is taxed at the ordinary income rates of the business' owners. In other words, the income passes through to the owners.

If your company's legal structure is a sole proprietorship, partnership, limited-liability company or S corporation, lowering the corporate tax rate doesn't affect you. As of 2004, only 7.5% of companies with $10 million or less in total revenue were organized as C corporations and thus subject to corporate tax rates.

2. Manufacturing companies. Once again, this matters only if you're a C corporation.

Under Obama's plan, those companies would get an extra tax break to encourage the creation of more manufacturing jobs.

3. Start-ups. This provision, if passed, would affect many new small businesses.

Let's say you're opening a restaurant, and it costs you $125,000 to outfit the place. Believe it or not, now you can deduct a maximum of only $5,000 in start-up expenses. The rest you have to depreciate over 15 years.

The president's plan would double the deductible amount to $10,000, which is still far too low.

4. Businesses that operate on a cash, rather than accrual, basis. Bear with me because I'm going to talk like an accountant.

The two basic accounting methods are cash and accrual. With cash accounting, income and expenses get booked at the time money changes hands. With accrual accounting, they're booked at the time of the deal, regardless of when money actually is spent.

Cash-basis accounting is much simpler and less expensive to manage. Right now, once a business exceeds $5 million in annual revenue or has inventory, it must use accrual accounting.

Obama's plan would allow companies with up to $10 million in revenues to use cash accounting. Not many companies with more than $5 million in annual revenues likely use cash accounting, but if yours is one of them, you will love this provision.

5. Businesses that provide health insurance for their employees when the federal Patient Protection and Affordable Care Act goes into effect.