There’s a lot of talk about taxes and regulations and how changes to the system could impact small businesses. Recently, the chatter’s also included potential impacts from healthcare reform and the Affordable Care Act. But what do taxes and regulations really mean for you, your business or the small businesses you most often work with?
We looked for a florist, a mechanic and an insurance agent —small business owners who consumers work with everyday—to ask how they handle the changing news. We ended up talking to an award-winning designer, finding the American dream and learning what it means to be an American entrepreneur. It made it hard to remember we intended to talk about taxes and regulations.
In a nutshell, here’s how taxes work for a small business:
- Tax season is every season for a business. They pay estimated taxes every quarter, based on what they made at the same time the previous year. At times, that means a small business owner may pay taxes on income they haven’t yet brought in. (This is especially true if they’re a single owner, partnership or S-Corp).
- The Small Business Health Care Tax Credit offers a credit on a percentage of the premium a small business pays on health care for employees. But, it’s been controversial. The credit also doesn’t directly help with cash flow, one of small businesses’ biggest challenges.
- Project-based or seasonal business owners, like contractors and repairmen, experience the tax/cash-flow crunch even more so than businesses with steady, recurring income. At any time, a business can appear wealthy on paper but have little cash to spend, invest or hire.
- If a small business builds up its coffers for an emergency (such as needing a new air conditioner for an office building and retail storefront) or as money to hire a new employee, that savings, if high enough, can be taxed heavily.
- One thing everyone can do to support small businesses is to shop locally. The more you buy within your own community, the more small businesses grow, regardless of taxes or regulations.
Enough with the dry tax stuff. If you’re like us, you’ll find the stories of these amazing individuals far more interesting.
Finding the American Dream
Keno’s Collision Tek, Keith Matus
ERIE Customer with Sparks Insurance, Kenosha, Wis.
Designing Something New
Something New Florist and Events, Joe Mineo
ERIE Customer with Chase Agency, Boardman, Ohio