Barbara’s Blog

With the election only days away, take this posting as an important reminder to cast your vote (if you didn’t vote early). Before you vote, consider the positions of candidates with respect to small business issues if these issues matter to you (and they should). Are the candidates going to be helpful in supporting legislation favorable to small business and owners?

Use resources to help you decide:

• National Federation of Independent Business’ How Congress Voted shows how members of Congress voted on issues related to small business. Lawmakers who voted with small business 70% or more of the time have been designed by NFIB with a Guardian of Small Business Award.
• Small Business & Entrepreneurship Council’s Congressional Scorecard for the 112th Congress shows how those in Congress voted on 20 key issues.

Should business owners suggest how employees should vote?

This is an interesting question that’s been raised recently. An Entrepreneur blog post discussed the issue.

While there’s nothing illegal about sharing your political views with your staff, I think making any suggestions about how they should vote is problematic. Just read the comments to the Entrepreneur blog to get a taste of how this action by an owner can be viewed.

There have been some instances recently where business owners have told employees that a particular election result would cause them to have to layoff workers. Is sharing this information with staff an unfair business practice?

My opinion on this: I’d be glad to share my views with anyone who asks and wants to debate the issues, but I wouldn’t go as far as dictating what employees should do with their vote.

Giving employees time off to vote

Whether you have to do so depends on where you’re located. Some states require employers to allow employees to take up to three hours off, with pay in some places or without in others; some states have no mandatory time-off rules. Check FindLaw for the rules in your state (the information here appears to be up to date even though it’s under a 2008 presidential election banner). You can always be more generous in giving time off than the law requires.

Final thought

Vote!

How big is small business? Is entrepreneurship on the ascendency?

There is much conflicting information in the media. Here are some of the facts from or based on government sources:

All businesses in the U.S.

The Joint Committee on Taxation’s report on choice of entity found that the “vast majority” of businesses in the U.S. are sole proprietorships, with more than 22.6 million non-farm sole proprietorships in 2009 out of 33.6 million total business returns.

There were:

• 1.7 million C corporations (some of which are mega-public companies)
• 1.9 million farms
• 3.1 million partnerships (which includes limited liability companies)
• 4.1 million S corporations

The number of pass-through entities (businesses structured so that profits and losses are taxed on owners’ personal returns) has nearly tripled since 1987.

Startups

The SBA says that from 2007 to 2010, the rate of startups declined by 12%. In 2008, the startup rate fell below 3% in a quarter (compared with the previous quarter) for the first since tracking began in the 1990s. The latest startup rate for which data is available is 2.7% in the second quarter of 2011.

A Kauffman Foundation report found that new firms (less than five years old) were 35% of all companies in 2010 as compared with 49% in 1982.

States with the best business climates:

• Small Business & Entrepreneurship Council Report found that South Dakota, Nevada, Texas, Wyoming, and South Carolina were the top five locations.
• The Tax Foundation Report found that Wyoming, South Dakota, Nevada, Alaska, and Florida were the top five locations.

Bankruptcies

It appears that bankruptcy filings in federal court are on the wane. According to court statistics, there were 13% fewer filings for the 12-month period ending March 31, 2012, as compared with the previous 12-month period.

Comment on the numbers

Like a Georges Seurat painting, statistics create the broad picture of the state of business today. However, each little dot in the picture is a unique entity on which an owner has pinned his or her hopes, dreams, and financial resources.

Anecdotal stories that I hear from entrepreneurs around the country continue to show three main themes: strong desires to start a business, continued struggles to keep a company going, and, unfortunately, failures (folding a company, selling out, or going into bankruptcy).  There’s no single statistic that can capture the state of small business today.

Each year, the federal government celebrates small business. There are awards, speeches, seminars, and luncheons for the men and women who risk it all to innovate, employ, and serve the U.S. economy. This year’s Small Business Week — May 20-26 — is more of the same.

I think it’s great that we recognize the achievements of select businesses and honor them. However, it seems a little off base for the federal government to be participating in the celebration. More small businesses could be starting and growing were it not for some of the policies of the federal government.

A report from the Small Business & Entrepreneurship Council found that small business isn’t happy with Washington. The survey found an intense dissatisfaction with the overall direction of federal policies and what they meant to the economy, with 61% of small business owners saying they not satisfied with economic policies from Washington.

The National Federation of Independent Business (NFIB) found that taxes continues to be a top problem for small businesses because of uncertainty and looming hikes as well as the regulatory burden imposed by compliance. Key findings:

• It costs around 206% more (an estimated $74 per hour) for small businesses to comply with the federal income taxes than for larger companies.

• If changes in tax law are not made before the end of this year, the nearly $500 billion in new taxes will fall disproportionately on small businesses.

• Many of the most popular tax breaks for small business have expired or are about to expire.

• Family-owned businesses are threatened by the prospect of a rising estate tax, which is set to jump from 35% this year to 55% next year.

Getting back to the dream of owning one’s own business? Entrepreneurs want to innovate, hire, and thrive. To do this, they need a climate of certainty about the rules within which they operate. Taxes have to be fixed for the foreseeable future. Regulations have to be eased. Lending policy has to stabilize. Right now, we’re living the nightmare.

What can small business owners do? Congress should not wait until a lame duck session to address tax and other matters. Small business needs certainty now. Make your voice heard.