Strategies: 8 Ways Obama Can Help Small Businesses
President Barack Obama, congratulations on your victory.
Saul Loeb | AFP | Getty Images
President Barack Obama arrives on stage after winning the 2012 U.S. Presidential election.
During the campaign both you and former Massachusetts Gov. Mitt Romney sang the praises of small business — in one debate, the two candidates referred to small business more than 25 times.
Now it’s time to put your policies and some money to work for small businesses and entrepreneurs.
I’m not talking about just tinkering with a few small revisions in the 179 tax deductions. It’s time for some innovative thinking.
In my nearly two decades advocating for small and emerging companies, I’ve gotten had a unique perspective on entrepreneurs in America. So, Mr. President, below are a few of my suggestions to truly help small companies in your next term.
(Read more: Obamacare Is Here to Stay. Now What?)
And if you would like to tell me what you’d like Obama to do for small businesses in his next term, tweet me @RhondaAbrams.
1. Job creation. The hardest employee for a small business to hire is the very first one.
This country has about 22 million nonemployer businesses. Most will never need or be able to afford employees, but if even 1 percent could be given incentives to hire, we would create 200,000 new jobs.
Try giving a 25 percent tax credit for a company to hire its first payroll employee, who would have to be someone other than a family member. That would encourage successful one-person businesses to cross that intimidating threshold of taking on their first employees.
2. Growth teams. Small businesses face very real challenges: technology, the cloud, social media, mobile, new manufacturing techniques.
You should finance a special task force to provide the technical and management assistance they need. Fortunately, the government already has a nationwide corps of capable, effective, efficient and, dare I say, cheap small business advisers — the fantastic Small Business Development Center network.
They already are stretched to the limit, so let’s give them some added targeted money for these purposes.
3. The definition of small. To help small companies compete for government contracts, loans, and grants, agencies have created been small-business set asides.
But believe it or not, companies with a thousand or more employees qualify, and during your administration the ceiling actually was raised.
Lower the limit so true small businesses have a better shot at these valuable opportunities.
4. A self-employment standard deduction. Instead of having to keep piles of receipts and track every expense, set a sliding scale of standard deductions that sole proprietors can take based on business income up to a set amount, say $ 75,000 or $ 100,000.
That would get rid of a lot of paperwork.
5. A separate Small Business Administration. Forget your idea to merge the agency into one department with a bunch of others.
Small businesses need their own advocate and programs.
6. Tax-deferred reserve accounts. Enable small companies that have pass-through tax structures, such as S corporations or limited liability companies, better known as LLCs, to set aside pre-tax reserve accounts.
Now if small-business owner has a good year, that entrepreneur must pay tax on all income, even the money stays in the business, rather than being taken out for personal purposes. Allow that money to be kept for a rainy day and taxed when actually used.
7. The home mortgage deduction. As part of necessary tax reform, one proposal would eliminate the home mortgage tax deduction or add it to a bucket with deductions such as charity and education.
Eliminating special treatment for home ownership could have dire effects on small businesses. Home ownership affects a large percentage of small companies that specialize in real estate, construction, home maintenance or design.
If a cap must be placed, set it according to the income of the taxpayer not the amount of the deduction because homeowners in high cost-of-living states will exceed it quickly.
8. Health exchanges. Mr. President, now that you’ve been re-elected, the Affordable Health Care Act that some have derided as Obamacare is likely to go forward.
Many Mr. President, keep this in mind: The average lifespan of a Fortune 500 company now may be as brief as 15 years. The future of America depends on small and new businesses.