Small Business

My wife owns a micro-business. I think we're too small to worry about the impact of the stimulus.

 

I own a small business. There's no direct impact on me - but my business serves the general public. If it helps improve the economy as a whole, then that will help my business grow. We're based in Austin, which has seen a massive (though quiet and not really apparent in the city as a whole) drop in sales tax revenue this year:

http://www.window.state.tx.us/taxinfo/allocsum/top20.html

That means fewer people are spending, which hurts the small businesses.

 

I own my own small business doing IT consulting. The economic downturn hit us a couple of months ago because the companies that I support wanted to cut cost so they cut hours. No more mindless 40 hours a week.

I've picked up a few more gigs but everything still seems very shaky and I've had to go back out to do onsite work to make sure everything stays afloat. I much prefer to work out of my house. It's more convenient and saves me money.

There used to be much more work out there which eased my mind. I knew if one thing fell through I could pick up another.

I don't know how the stimulus plan will effect me personally but anything that will get businesses spending more money is ok in my book. Businesses spending money, means they are going to spend more on IT, meaning that I have more options, meaning that they will use me more, meaning I'm making more money.

 

I used to run an internet company, but I sold that last year and now own a coffee shop. So it's entirely consumer-driven - our success is based on having a customer base that's employed and confident enough to to spend money.

We haven't seen any slowdown yet (I watch those sales taxes monthly to see how Austin as a whole is performing and compare our performance), but a longer-term slowdown would presumably have an impact on us since we're a sort of discretionary purchase. Fortunately, a portion of our customer base is students and government employees, so we have some cushion there as they aren't as directly impacted by recessions.

 

I think part of the debate is whether it will get businesses to start spending more money, and just how many jobs it will save or create.

 

Most Sole proprietorships and S-Corps will now be paying higher taxes thanks to Obama raising the federal income tax rate. That will reduce the number of jobs and will reduce investment at these firms. Smart move, huh?

 

A bunch of nonsense. The vast majority of sole proprietorships and S-Corps will be paying the same or less taxes than before, because the vast majority don't reach the income thresholds for the higher tax brackets. And no, it won't reduce the number of jobs. If an employee brings in more than they cost, they'll be hired regardless of a 35% or 39% tax rate. If they don't, they won't be hired no matter the tax rate. A substantive change in tax rates would change the risk profile, but a 3-4% change won't have any major impact. Just as it didn't spur a hiring boom when they were lowered, resulting in the worst job creation economic expansion in US history.

 

Raising any taxes in this environment is crazy: however, if the results of these higher taxes result in fewer large cap companies and more small companies, I think the long term results may be positive.

Of course, for this to happen, the regulators MUST figure out a way lower the barriers to entry, especially in industrial sectors. A very large reason that these companies get so big is that they have to sell a very large volume of product to offset the regulatory costs. I would personally like to see a large number of these regulations reviewed and discarded if possible, but at the very least, the government has a responsibility to assist in the compliance costs.

 

Sole proprietorships don't create jobs, by definition.

 

Not true. I know a plumber whose business is a sole proprietorship, but he has 8 employees. Sole proprietor refers to how the business is owned and how profits are divvied up, not on how many people are part of the organization.

 

Also, that doesn't account for the employment created by the increased economic activity.

 

Have a small business that really won't get any direct benefit of the stimulus. The only part that applies is the accelerated depreciation on capital purchases, though really that just means I pay less in tax this year and more next year. Not that big.

Pretty disappointed that the stimulus didn't have more for small businesses. As always seems the case, the breaks go to the big corporations.

 

I think it hurts you actually, since the tax rates will go up.

 

No taxes went up in the stimulus package. Any tax hikes are scheduled for 2011.

 

I should have been more clear. Since he gets to deduct more in this year, because of accelerated depreciation. He will pay more, when the Bush taxes are phased and the increase in the marginal tax rates in 2011.

 

Interesting. Very good point - that's certainly true if he's above the $200,000 income threshold). But the accelerated depreciation is voluntary, so if that's the case, he can always choose not to accelerate it and avoid that issue if he doesn't need the cash now.