Washington Watch - May 4, 2011


Washington Watch - May 4, 2011


Editor's Note: Bin Laden, Small Biz Research, Debt Ceiling

Congress is back in session Monday after a two-week break in their home districts. They returned to the news of the death of Osama bin Laden. Expect that to dominate the news cycles this week as details on the raid continue to emerge.

Top lawmakers in the House and Senate will continue with their efforts to stick to the legislative agenda. Senate Majority Leader Harry Reid (D-Nev.) sought to end debate on a long-stalled small business bill that would provide funding to research and development, as well as educational outreach for those programs. Previously, Reid moved to vote on a number of amendments to the bill (S 493), but was unsuccessful in obtaining the needed votes.

Treasury Secretary Timothy F. Geithner announced he will work to manage federal finances this week in order to avoid the U.S. hitting its $14.3 trillion debt ceiling in May. He cautions, however, that if congressional action to raise the debt ceiling is not taken, the federal government will likely default on its obligations in early August. Vice President Joe Biden is scheduled to meet this week with congressional leaders to begin discussions around debt reduction.

Stay tuned to www.NASE.org for the latest updates on these legislative issues.

Celebrating Small Business In May

May is a particularly special month for small business. The Small Business Administration's, "National Small Business Week" takes place this year from May 16th-20th. The NASE is serving as a co-sponsor for the 10th year in a row.

Small businesses should receive recognition for the differences they make every day in the lives of themselves, their families and their surrounding communities. The NASE has spent the last several years emphasizing to lawmakers in Washington, D.C. that self-employment is the creation of a job and that job is just as important as any factory or office job that is created each year.

How can we guarantee that micro-businesses get more recognition every day? By ensuring that our public policy focuses on all small businesses, not just big business or specific industries.

The NASE has been working with federal agencies and your lawmakers in Congress to put a stop to complex tax regulations and an unfair playing field. Many business owners who work out of their home elect not to take the home office deduction, simply because the one-page required form has the phrase "See Instructions" listed in 17 different places. It is too confusing! Here is another example, sole proprietors are the only business entity that cannot deduct their health insurance premiums as a business expense. Even large corporations are permitted to deduct those costs!

Just because tax season is over does not mean that these issues go away, as many micro-businesses work to gather data for their tax forms year-round. In addition, the more thorough this research is the greater likelihood that the business owner will receive a larger tax refund. The NASE knows that many business owners often use all or part of their tax refund for their business. Thus, the larger the tax refund, the more that can be done to improve or grow the company.

The NASE is devoted to simplifying the tax code so that micro-businesses can spend more time concentrating on their companies.

Stay up-to-date on the NASE's efforts in Washington, D.C. with this newsletter and by visiting www.NASE.org .

Study: Does Bankruptcy Provide A Fresh Start For Entrepreneurs?

The SBA's Office of Advocacy recently conducted a study on the effect of declaring bankruptcy as a small business. The study found that, while the bankruptcy system has helped certain small businesses maintain operations, credit access issues after bankruptcy persist. These issues increase the probability that firms will not even seek credit after a bankruptcy.

Key highlights include:

  • At some point in the previous seven years, owners of 2.6 percent of firms filed for bankruptcy.
  • Previously bankrupt firms perform similarly to firms that have not filed for bankruptcy. They are no more burdened than other small firms by problems such as poor cash flow, high health insurance costs, or excessive taxes, and they attain similar firm sizes, as measured by employment. The firms in existence several years after bankruptcy are evidence that small firms can survive and continue beyond a bankruptcy filing.
  • A bankruptcy negatively affects a firm’s ability to obtain loans, especially at reasonable interest rates, even controlling for credit scores. These firms have about a 24 percent higher likelihood of being denied a loan and are charged interest rates that are more than 1 percentage point higher than those charged other businesses.
  • The report finds some interesting differences in credit access across minority-owned businesses. Black- and Hispanic-owned businesses are charged higher interest rates and are more likely to be denied loans, while Asian-owned businesses essentially mirror U.S. averages with respect to interest rates and denials.

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.

Courtesy of NASE.org