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For National Small Business Week, the Internal Revenue Service (IRS) shared the tax benefits and resources available to small businesses this year.
The IRS urged small businesses to take advantage of the tax-saving opportunities available when they file their 2011 returns. Two key provisions that business owners should consider are the small business health care tax credit and faster write-offs on certain capital expenditures.
Also, small businesses that invest in new property or equipment can deduct most or all of these purchases on their 2011 returns instead of recovering capital investments through annual depreciation spread over several years. Claim these tax benefits on Form 4562
The IRS is encouraging those you who are self-employed or own a small business to take advantage of the tax benefits and learn about various IRS resources: www.irs.gov/smallbiz
Should you need help with your taxes or wish advice on how to save more on your returns, EDIF can consult with your business at no cost.
This weekend Congressman Vern Buchanan held a Town Hall meeting in Bradenton, Florida to discuss access to capital, creating jobs and controlling the spending in Washington. The biggest issues highlighted as priority: getting people back to work and reducing our deficit.
The United States projects to collect about 2 trillion dollars in taxes from taxpayers this year. If we take a look at the 2011 budget, our social security (Medicare and Medicaid) costs about 800 billion, defense is another 700 billion, while the interest on our debt is 200 billion making for more than 80% of the taxes the government expects to receive. The tax money we will generate is going to be enough only until July 27th, then we will have to borrow. With a budget set at 3.5- 3.7 trillion dollars, we are looking at a 1.5 trillion dollar deficit.
Currently, our debt is 14 trillion dollars, plus the expected 1.5 trillion we will borrow this year. If you project this number on a 5 year plan, we will be very close to 20 trillion of debt by 2016. In other words, if we borrow at a rate of 4-5%, our government will owe a trillion dollars of interest a year. It is clear that we cannot continue to spend more then what we are making. The US tax code has not been changed in a significant way since 1986, maybe it’s time we update it.
During the town hall meeting concerns were raised about government tax collections. A Federal sales tax, a flat tax, tax simplifications and no loophole were brought forward by participants as a mean for everybody to contribute a fair share. The underground economy is growing and illegal immigrants live in the shadows without declaring income. Names of big corporations making solid returns and paying generous bonuses without paying taxes were also brought up into the conversation.
Employment and job creation was a topic at the heart of the discussion. 99% of the registered companies in Florida are small businesses; they create 70% of all jobs in Florida. “We need to do anything we can to create the best possible environment to help our small businesses expand and grow” said Congressman Buchanan. “Most of the banks today are not lending despite what they say. If you want to borrow half a million dollars today, you’ve got to put up half a million dollars CD” pointed our Congressman.
“To fix unemployment, we need to get our economy going” commented Brian Caswell, President of the Economic Development Investment Fund. “We cannot grow revenues without having a pro-business climate and successful small businesses. They are the job creators for our country. Free enterprise and entrepreneurships is what makes America a great place” added Brian.
“We cannot spend more than we take in, at some point someone will have to pay the deficit back. We need to raise revenues, cut expenses and have a constitutional bounced budget amendment to give taxpayers and the citizens of America the best value for their money” concluded Congressman Buchanan.
If your business is looking for venture capital money, you might have a hard time raising capital in today’s environment. It has become more and more difficult to convince venture investors to put money to work. There are not a lot of investors out there willing to commit; and those who have the means to invest have probably 100 great deals piled on their desk.
Before writing an investor proposal, we would encourage you to review and stream down each of your line items. For example, if you are planning a big budget for salaries and marketing, you might be disappointed to find out that most investors won’t probably advance you the money for what they consider as ‘fluff’. However, if your company is as good as you project it to be, you can earn capital by focusing on business development.
Let’s analyze your line items further and find out your cost of doing business. Do you have to buy inventory or pay for a service? How much money would you need to package your product so you can turn around and sell it? Let’s look at the following scenario: you need USD $200,000 to order inventory, manufacture a product and sell it for $300,000. If you decide to borrow the money instead of raising capital, you could execute your sell order much faster. Your company will now be showing $100,000 in profit. It might not be as much money as you wish to have right away, but your business has made a margin and generated capital.
You can keep growing your business without giving away equity or management rights. Sales solve everything. You might not pay yourself a big salary, have a nice comfortable office or the TV marketing campaign you have dreamed of; but your business will be operating and building a track record.
As long as you are in business, having the right margins and working on client development you should be able to generate revenues. You can borrow money until you grow big enough to show a stable credit record and attract venture partners.
Congressman Vern Buchanan held a meeting at the Sarasota high school auditorium this Saturday, February 12th, to hear from small business owners on current issues facing our area and the country.
The Congressman stated that the biggest thrusts in our economy can be resumed in 2 main points: jobs and small business development. 14 million citizens are out of work which is a big concern for our country. Half of US deficit is estimated to come from unemployment, said Buchanan. The Congressman pointed out that we urgently need to put people back to work so they can start contributing to our treasury instead of writing them unemployment checks.
In order to create more jobs however, we need to support our small and medium size businesses. Small firms need money to grow, expand and generate revenues to invest in human resources. ‘What is killing us right now, said Mr. Buchanan, is no access to capital for business owners’. Most of the banks are not in a position to lend. 4 years ago, banks had access to credit and credit lines, which they no longer have. In today’s environment, business owners who need to borrow money won’t be able to put their house down as collateral as there is no equity.
‘We can’t talk about jobs without having successful small businesses’, says Buchanan. Having owned a business himself, the Congressman shared that to him the pursuit of happiness means freedom of entrepreneurship. ‘That’s what makes America so great- if you work hard and play by the rules you are going to be successful’.
The budget and spending cuts were also a hot topic during the Town Hall meeting, with an estimated gap of 14 trillion dollars of debt deficit this year. ‘We’re addicted to credit at Washington and that’s gotta stop’ said Buchanan.
Citizens were concerned about healthcare too and the implication its ramping cost to families and small businesses. The 22-25% increase/year of the cost of Medicare is a truly discouraging factor for small businesses to hire new employees.
Congressman Buchanan resumed the meeting by confirming that the biggest issues facing him and his colleagues in Washington are going to be cutting spending, dealing with the deficit and focusing on jobs.
In Response to TWIS Weekly Breakdown ‘We Need a Braveheart’ (Wednesday, the 19th of January 2011):
Once upon a time in a far Faraway Land called Sarasota County, small business owners were raising their voices against ‘selfish politics and bureaucratic roadblocks’ standing in the way of economic stimulus. The five-year economic development plan of the County seemed undermined by oppressive council formations,committees, subcommittees, groups and platforms… in short too many people gathering together to take decisions without much result.
Enemy of inefficacity, TWISler’s* request is irrevocable: stop gathering to discuss what needs to be done; roll up your sleeves and do it. In those difficult economic times, TWISleris hoping for a Braveheart to rise within the Economic Development Corporation (EDC), establish a new order in the diluted organization and boost business development with Fed’s stimulus money. But is the answer in Braveheart leading EDC?
True, Sarasota needs ‘a fighter with passion, intelligence, bravery and solid organizational skills’, but what if this fighter was already here, right under our nose all if this time? What if Sarasota already had an organization ready to attract new businesses, help creating jobs and strengthening the economy of our community?
This knight in shiny armor is called EDIF (‘Economic Development Investment Fund’). And he’s been preaching about the importance of business expansion and economic recovery through small business funding for over 2 years! EDIF has been banging on the gates of committees’ castle calling over and over for access to capital by deserving business owners.
We’ve let the committees talk about stimulating the private sector, creating jobs and build business opportunities in the Faraway Land of beautiful Sarasota. We have heard all this before- in 2008, 2009, 2010. Let’s not have anymore meetings to agree on what needs to be done. ‘Just do it, don’t talk about it’ says Brian Caswell, the BraveHeart behind EDIF’s fight for change. Sarasota needs to grow and diversify its economy. The County needs to attract new businesses and help local companies with stimulus money. The capital should go towards promising local businesses that have the potential to expand and create additional jobs in the community. How to do this? By providing available funding to organizations like EDIF who’s job is to find the best opportunities for our County.
Let’s spark business development. Let’s give organizations like EDIF the means to execute their mandates and help hardworking business owners soar.
EDIF is an independent Non-Profit 501(c)(3) organization established to provide small businesses with viable lending programs. The organization assist companies expand, increase sales and improve operations through business financing, technical assistance and professional training. WHY? Because we know that sustainable economic development requires a healthy small business sector. Assisting companies prosper will ultimately help the entire community.
The affiliation between lending institutions and small firms is very important to US economic recovery. Small businesses account for about half of the private-sector economy. Access to credit enables US entrepreneurs to bring dynamic ideas, innovative services and new products to the market. Over the past year, the Federal Reserve has been urging financial institutions to lend to creditworthy small firms. The central bank hosted several roundtable events on the subject to gather information and promote small business lending.
Last week, the Federal Reserve announced its 2011 program, intended to encourage banks to lend again. To help rebuild the capital level of financial institutions, the government is prepared to take equity stakes in them. ‘The U.S. economy looks to be in better shape, but a full recovery will only be achieved once small firms begin to prosper’ said Fed’s Chairman Ben Bernanke a few days ago. The Fed expects US’ economy to grow between 3% and 4% this year.
The US Economic Development Investment Fund’s predictions for 2011 are optimistic, but cautious. The organization sees the credit crunch easing, but far from over. ‘2011 will be a better year for small business borrowers. However, we anticipate the banking industry to take some time to recover before waving current lending restrictions’ commented Brian Caswell, President of the Sarasota-based non-profit organization.
The organization was established in 2008 to address the ongoing economic uncertainty and provide hardworking business owners with viable lending programs. EDIF promotes economic recovery through small business funding.
For more information on US economic outlook in 2011 you can consult the recent speech of Governor Elizabeth Duke: http://www.federalreserve.gov/newsevents/speech/duke20110107a.htm
