Small business are expecting to grapple with the same challenges as last year in 2013, as well as new ones resulting from uncertain negotiations regarding tax and budget issues. Small companies throughout the U.S. are likely to proceed with caution, while reducing their hiring rates.
Scott Shane, a professor of entrepreneurship at Case Western Reserve University, explained:
“Uncertainty is the bane of every small business. Their only rational response is to pull their horns and slow down.”
Todd McCracken, president of the National Small Business Association, agreed with Shane’s outlook. He explained that lawmakers are still discussing the fiscal cliff, tax increases and budget cuts. Even if a decision is reached, small businesses won’t have the security they need to grow.
“It almost surely won’t be comprehensive enough that we won’t be revisiting it next year,” McCracken explained.
Another major concern is personal tax rates. S corporation proprietors, partners and owners all report their business’s income on their individual Form 1040 returns. Their companies, therefore, are basically taxed at personal rates.
The Section 179 deduction is also going to shrink next year to $25,000, significantly lower than last year’s $125,000. In 2011, the deduction was $500,000.
McCracken said: “It’s a huge change for companies planning on making investments.”
Sorry, comments are closed for this post.