Big Government Helps Small Business?
How can big government help small business? More specifically, how can the U.S. government help U.S. small businesses. It seems the government's come up with a plan.
The good news is that, with all the hundreds of billions being shoveled at our recent (some say ongoing) recession and continuing financial and economic crisis, we're finally seeing some of that money being sent the way of small business as opposed to humungous (banks, auto companies, etc.) businesses. At least that's what the government's claiming.
As you probably know, most new jobs in America are created by small business. And as you definitely know, there are lots of people who could use a job, unemployment being as high as it is. The government's plan, therefore, is to encourage small business to hire more people. So far so good. Now let's take a look at exactly how the plan would work.
If I hire someone and pay them at least $40,000 per year, I get a $5,000 tax credit. Not bad, you might think. But wait; let's think the through.
The basic problem most small businesses are struggling with right now is that business is "slow." Sales are down. If sales are down, what do I need more workers for? Normally I want more workers when business is booming. Makes sense right?
Now here's the thing that's puzzling a lot of small business owners: the government's going to raise taxes. Wait. If they raise taxes, won't that mean that people will have less to spend? And if they have less to spend, won't that mean that business will - well, slow down...maybe even more.
Now how's that going to benefit my small business? And why would I want to hire someone for $40,000 in order to get $5,000, in the face of slowing business. How's that good for me as the small business owner?
The tax increases we hear are coming will reduce what people have to spend. People spending less will, if anything, put a brake on any recovery we may be experiencing now. Small businesspeople aren't stupid. They see all this. They're not going to run out and hire people to get tax credits.
On top of that, there's all this talk of increased regulation. Who gets hit hardest by government regulation? Right, small business. Not that it doesn't effect big business too, but big businesses typically have people on staff who handle legal and regulatory matters. Not so with small businesses.
A good example is my own wealth management practice - a small business. Under regulations passed in the last few years, a Registered Investment Advisor must have a Chief Compliance Officer. Now, there are some big Registered Investment Advisor businesses out there. But the vast majority are not big enough to go out and hire a compliance officer. So excuse me while I switch hats from owner of the business to chief compliance officer - and take on another layer of administrative responsibilities to add to my already busy day.
And as I look out on the horizon, I'm seeing even more regulatory changes coming - just in my own industry.
So I've got a pretty good handle on the thinking of small business folks, being one myself. And I'm not feeling like my small business is being helped by big government
The good news is that, with all the hundreds of billions being shoveled at our recent (some say ongoing) recession and continuing financial and economic crisis, we're finally seeing some of that money being sent the way of small business as opposed to humungous (banks, auto companies, etc.) businesses. At least that's what the government's claiming.
As you probably know, most new jobs in America are created by small business. And as you definitely know, there are lots of people who could use a job, unemployment being as high as it is. The government's plan, therefore, is to encourage small business to hire more people. So far so good. Now let's take a look at exactly how the plan would work.
If I hire someone and pay them at least $40,000 per year, I get a $5,000 tax credit. Not bad, you might think. But wait; let's think the through.
The basic problem most small businesses are struggling with right now is that business is "slow." Sales are down. If sales are down, what do I need more workers for? Normally I want more workers when business is booming. Makes sense right?
Now here's the thing that's puzzling a lot of small business owners: the government's going to raise taxes. Wait. If they raise taxes, won't that mean that people will have less to spend? And if they have less to spend, won't that mean that business will - well, slow down...maybe even more.
Now how's that going to benefit my small business? And why would I want to hire someone for $40,000 in order to get $5,000, in the face of slowing business. How's that good for me as the small business owner?
The tax increases we hear are coming will reduce what people have to spend. People spending less will, if anything, put a brake on any recovery we may be experiencing now. Small businesspeople aren't stupid. They see all this. They're not going to run out and hire people to get tax credits.
On top of that, there's all this talk of increased regulation. Who gets hit hardest by government regulation? Right, small business. Not that it doesn't effect big business too, but big businesses typically have people on staff who handle legal and regulatory matters. Not so with small businesses.
A good example is my own wealth management practice - a small business. Under regulations passed in the last few years, a Registered Investment Advisor must have a Chief Compliance Officer. Now, there are some big Registered Investment Advisor businesses out there. But the vast majority are not big enough to go out and hire a compliance officer. So excuse me while I switch hats from owner of the business to chief compliance officer - and take on another layer of administrative responsibilities to add to my already busy day.
And as I look out on the horizon, I'm seeing even more regulatory changes coming - just in my own industry.
So I've got a pretty good handle on the thinking of small business folks, being one myself. And I'm not feeling like my small business is being helped by big government
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