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Washington Watch - February 4, 2010

Wednesday, February 03, 2010

Micro-Businesses Suffering Under Slowing Economy, Poll Shows

While Congress and the Obama Administration are hoping that small businesses will continue to be the engine of job creation and spur recovery, the sluggish economy has had a negative impact on the operations and hiring plans of many small businesses. Over sixty percent of the self-employed and micro-business owners indicate that their business has experienced a significant decrease in sales and/or revenue, and almost fifty percent say they have had to utilize their personal savings or retirement savings to address cash flow issues, according to a study undertaken by the National Association for the Self-Employed (NASE).

More than three-quarters of the micro-business owners surveyed (77 percent) are not planning on hiring workers in 2010, with the majority indicating that they were not hiring because they were unable to pay the salary of or offer benefits to an additional worker. Of the twenty-three percent of respondents planning to hire workers this year, only 31 percent were planning to hire full-time workers.

“The current economic slowdown is causing many challenges for micro-businesses,” commented NASE’s Executive Director, Kristie Arslan. “Self-employed business owners are being faced with difficult choices just to stay afloat in this current economic climate.”


When asked about various proposals put forth by Congress and the Administration to spur jobs, an overwhelming majority of respondents felt that none of the current recommendations would encourage them to hire additional workers.


To see the full results of the survey, visit NASE’s Research & Statistics Web page.



New Federal Budget A Mixed Bag For Self-Employed President Obama released his new budget and here were a few items that the NASE noticed: 


  • One year extension of the Making Work Pay Credit - The NASE supports the decision to extend this credit through December 31, 2011.
  • Extension of Section 179 expensing - The NASE also supports the Obama Administration's plan to allow small business to write off up to $250,000 of qualified investment 
  • Increased information reporting and changes to worker classification regulations - The NASE is significantly concerned about various budget proposals that would increase reporting requirements on the self-employed and also modify regulations surrounding independent contractors, making it more difficult for those entering into self-employment. 

Read more detailed explanations in this helpful document from the U.S. Treasury.

Visit NASE Advocacy online to keep up-to-date on this issue.


Poll: Are You An Independent Contractor Or Do You Hire Them?


The Obama Administration recently released their FY2011 Budget which included new regulations on independent contractors. Since so many self-employed businesses are contractors and many micro-businesses utilize contractors for various services, we want to know what you think on these new proposals.


Please take this short survey regarding worker classification to let us know what you think.


White House: Small Business Tax Credits To Increase Hiring


The following article was excerpted from the White House blog. It was a post by SBA Administrator Karen Mills on encouraging hiring through small business tax credits:


The President went to a small business in Baltimore to announce the Small Business Jobs and Wages Tax Cut, which will provide a $5,000 tax credit to over a million small businesses for every net new employee they hire, with other tax incentives for increasing wages. As the President emphasized in his State of the Union address, we still have much work to do to help small businesses create more jobs in 2010, and this is a major first step.

The President has also announced plans to eliminate capital gains taxes on small business investments, to provide tax incentives for small businesses that invest in new plants and equipment, and to use $30 billion of the money Wall Street banks repaid to help community banks offer small business loans.

But it’s also worth noting that small business, and their role in our recovery, has been a top priority for the President since his first day in office. That’s why I was pleased to provide this brief report on what we accomplished at the U.S. Small Business Administration in 2009 with the help of the Recovery Act.

We know that if we give small businesses the tools they need, they will create the jobs Americans need. This tax cut is one of several tools the President has proposed that help small businesses continue to drive our nation’s economic recovery. And, all of us here at the SBA are proud to be helping them do just that.


Visit the White House Blog for the complete post and video of Administrator Mills recapping small business achievements made thus far.



IRS: Haiti Relief Donations Reportable On 2009 Taxes
People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.


Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.

Taxpayers should be sure their contributions go to qualified charities. Most organizations eligible to receive tax-deductible donations are listed in a searchable onlinedatabase available on IRS.gov under Search for Charities. Some organizations, such as churches or governments, may be qualified even though they are not listed on IRS.gov. Donors can find out more about organizations helping Haitian earthquake victims from agencies such as USAID.

Federal law requires that taxpayers keep a record of any deductible donations they make. For donations by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution. Publication 526 has further details on the recordkeeping rules for cash contributions

This year’s special Haiti relief provision is modeled on a 2005 law that, in the wake of the Dec. 26, 2004, Indian Ocean tsunami, allowed taxpayers to deduct donations they made during January 2005 as if they made the donations in 2004.

For more information,click here.


Washington Watch Online
Visit NASE Advocacy to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.