Taxes Matter to Small Businesses


small business taxesWill small business go out of business after the upcoming election?  It’s quite possible–especially if Congress chooses not to extend the individual income tax rates.

I recently attended the National Federation of Independent Business (NFIB) held on Oct 20th and gain quite a bit of insight into what can be expected in the upcoming election.  If you haven’t checked out this website or virtual conference,

I’d highly recommend it as a small business owner—it’s a phenomenal resource.

One of the resources the conference offered was a discussion on small businesses and taxes and how and why it matters if you’re a small business owner—

The Small Business Tax Increase Clock is Ticking

As a small business owner myself, I’m overtly interested in taxes and what an increase in personal income taxes will mean to my business and what it can mean to those of you looking to open an office in Austin.

I’d like to share a portion of the discussion with you.  You can also find it posted on their website.  So, if you’re a small business owner and want to understand more about the upcoming election and what a tax increase could mean for you and your small business—read on.

The Small Business Tax Increase Clock is Ticking

Small businesses face an enormous tax at the end of 2010 if Congress does not extend expiring individual income tax rates and address the return of the estate tax.  Higher taxes are a major concern for small business owners.  Taxes consistently rank as the number two problem facing small business owners in NFIB’s monthly Small Business Economic Trends survey. In 2009, 80 percent of NFIB members supported extending all of the individual rates.  Small businesses created 2/3 of the net new jobs in the last decade. With small businesses struggling to recover from the recession and unemployment near 10 percent, no small business should face a tax increase.

Individual Income Tax Rate Increases Affect 75% of Small Businesses

• According to an NFIB poll, 75 percent of small businesses are organized as pass-through entities (sole proprietors, partnerships, S Corps, etc.), meaning they pay taxes on their business income based on the individual tax rates.

• Increasing the individual rates will mean that business owners have less money for business investment and job creation. One study found that a 5 percent increase in individual tax rates decreases business investment by 10 percent. (Robert Carroll, “Entrepreneurs, Income Tax, and Investment, January 1998).

• Raising the tax rates on the top two income brackets also has a negative impact on small business job creation. Based on an NFIB small business survey, the businesses most likely to face a tax increase by raising the top two rates are businesses employing between 20 and 250 employees. According to U.S. Census data, businesses with between 20 and 299 workers employ more than 25 percent of the total workforce.  NFIB supports permanently extending the individual income tax rates.

Make sure you take action and VOTE if this matters to you!

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