A report published by www.bizjournals.com, small business owners in Massachusetts can claim state sales tax exemption on electricity, gas, heating fuel and steam purchases by filling a ST-13 form.The exemption is available to small business owners with five or less employees and generating less than $1 million in income.

The tax exemption can benefit small business owners to the tune of hundreds to thousands of dollars. To inform and alert small business owners, the Massachusetts Department of Revenue has released an online video explaining the details of the tax credit program.

Read more about state tax credits for small businesses.

Texas is the best place to own a small business, according to a study conducted by the Development Counselors International. Thirty-three percent of executives surveyed said Texas’s favorable tax system, low cost of living and business-friendly atmosphere merited the state the number one spot to own a business.

North Carolina came second in the list compiled by site selection consultants, mid-sized companies and large companies. Texas and North Carolina were the only ones chosen by each category of respondents. Executives from mid-sized companies also included Nevada, Georgia and South Carolina in their top five while larger companies opted for Tennessee. Site selection consultants ranked Alabama and Florida in their top five.

An article published Thursday in The New York Times Thursday revealed that the majority of small business owners cannot afford health insurance plans for their employees, largely contributing to the uninsured population.

Unable to foot their employees’ large medical bills, small businesses tend to opt for less-generous insurance covers. Most entrepreneurs subsidize up to a certain amount of a family plan, leaving the remainder to the responsibility of the employee. Those business owners that are providing employee health benefits require employees to bear the burden of the insurance premium.

To mitigate the financial burden on employers, officials in states like Arizona are proposing tax credits for small business owners who offer employee health insurance benefits. Some places like Massachusetts are launching state-supervised insurance programs. Check with your state’s department of commerce for further information.

New legislation will entitle 53 percent of U.S. small businesses to a $1,500 tax write off next year, according to the Office of Advocacy’s July 2008 newsletter.

The Home Office Deduction Simplification Act, introduced by Senator John M. McHugh (R-N.Y) aims to lower the tax liability on home-based businesses by allowing entrepreneurs to deduct their home office expenses. According to the article “tax compliance is 67 percent more burdensome for the small businesses compared with their larger competitors.”

For more information on the legislation, review the SBA’s July 2008 newsletter.

The Small Business Administration recently launched an online tax savings resource center to assist small companies in identifying the benefits of the economic stimulus package introduced in January of this year. The resource center explains the new tax benefits and estimates the first-year depreciation for small businesses using online calculators and tutorials. Because the SBA found that most small businesses remain unaware of the benefits of the package, officials hope that entrepreneurs will take the advantage of this resource.

The stimulus package increases the expensing limit from $128,000 to $250,000 and amount of depreciation deduction by 50 percent in the 2008 tax year. However, it is worthwhile that small businesses consult their tax advisor as there might be exceptions and provisions to these benefits.

For SBA resource center, visit www.sba.gov/stimulus/ and for details of tax changes visit the Internal Revenue Service’s Web site.

To lower the tax liability and receive more money-in-hand, accountants typically advise clients to file business tax returns on a cash basis.

However, small business owners should consider their capital needs and expansion plans before filing returns on a cash basis. The level of free cash flow reported by the business needs to support the capital raising plans.

For example, a company showing a free cash flow of $50,000 on accrual basis compared to $20,000 under the cash basis may be eligible to for an extra $170,000 in debt financing and a 10 year term. This extra money can make or break business expansion plans and can even strengthen the overall credit worthiness of the business owner.