With the Small Business Jobs Act of 2010 now working its way through Congress, and the fact that small businesses fuel the economic recovery – a lot of of eyes are on entrepreneurs these days.
That means plenty of news stories and studies about the state of the small business. Some of it is encouraging, some of it is depressing, and some of it is downright nasty. But we’ve been offering presentation folders online for long enough to know that you can handle all sorts of news.
Let’s take a look!
The Good:
There’s good news concerning tax credits inside the small business legislation being bounced around by lawmakers in Washington, D.C. That is as long as the version of the bill that passes closely resembles the current Senate version.
What could arguably be the biggest benefit in the Senate’s bill is the fact that for the first time, Congress could repeal limitations on general business tax credits for small to medium-sized businesses subject to alternative minimum tax (AMT).
That means many smaller businesses around the nation would be able to claim a Research and Development Tax Credit, the Work Opportunity Tax Credit and more than two dozen other tax credits. These benefits have been provided to major corporations for many years.
There are other tax breaks for small businesses in the legislation as well. Hopefully the extra cash will lead to the ability for smaller companies to have a little extra money to spend on things like advertising, marketing folders, and other expenditures that are sometimes seen as luxuries during a recession.
The Bad:
Where have all the entrepreneurs gone? Back to work – but not for themselves.
According to a study by the business coaching firm Challenger, Gray & Christmas, small business start-ups are on the decline. Activity among new entrepreneurs fell to its lowest rate in more than two decades.
The firm’s research found that start-up activity fell an average of almost 4% in the first two quarters of this year. The study surveyed around 3,000 job seekers including a large number who were former executives and managers. Yet these experienced business people opted not to risk starting their own small business.
Researchers are unsure if that is because there is more work to be found, or because potential entrepreneurs are still too apprehensive about economic conditions.
“Many small business owners are increasingly pessimistic about business conditions and still find it difficult to get a loan,” said Challenger, Gray & Christmas Chief Executive John Challenger.
The Ugly:
The IRS seems to be picking on the little guys.
A study coming out of Syracuse University and reported in Forbes found that in the last five years the number of hours the IRS spent auditing small business increased by 30 percent. However, the amount of time the agency spent auditing big companies plummeted by 33 percent.
In this study, small businesses are those with $10 million or less in assets and large businesses are those with $250 million or more.
The study points out that these numbers are surprising for a few reasons including the fact that “the highest levels of misreported tax dollars per auditor hour are found among the biggest business organizations.”
The study gave an interesting theory as to why small businesses were audited more often than the big guys.
“Choosing to audit the smaller rather than the larger businesses would on its face help individual IRS agents meet their performance targets. But the decision to audit the small companies does not help the government collect more taxes.”
That’s basically because the bigger the company, the larger the amount of tax under-reporting and back taxes owed.
One of the problems this causes for small businesses is the amount of time it takes to deal with an audit. Big corporations can pass the buck to accounting departments and lawyers. However, with a small business, the owner usually has to stop working on his business to handle the issue of the audit.
You have to take the good with the bad and the ups with the down. One thing you can always count on is your friends here at The Folder Store.
We want to see your small business thrive because it’s the small to medium sized companies that come to us for their custom folders.
I titled this post based on one of my favorite films. As an added bonus – check out the the video clip below featuring scenes from The Good, The Bad and The Ugly.
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There are two significant issues with the existing R&D Tax Credit regs that affect small to medium size companies. First, it’s a Tier 1 Issue, which means higher chance of audit. Second, the IRS requires contemporaneous documentation to support a claim for Credit. To address these issues, we built Titan Armor – a low-cost software solution that meets the IRS requirements for the R&D Tax Credit. You can get more information at http://www.titanarmor.com.