Small businesses will benefit from the Small Business Jobs Act of 2010, which was signed into law on September 27, 2010 after months of wrangling among lawmakers. The law includes tax cuts, financing incentives, retirement options and loan programs.
“This bill is the just the first step in putting small businesses at the forefront of our economic recovery,” said U.S. Senator Mary L. Landrieu, D-La., who heads the committee on small business and entrepreneurship, which assembled the package of assistance.
However, some of the tax cuts and incentives are set to expire by year’s end, so be sure to take advantage of them while you still can.
Why Small Business?
Policymakers, economists and politicians agree that small business is the engine of the American economy, and its health is essential to a robust recovery.
According to government studies, small business is at the heart of the nation’s employment; 27 million small businesses pay 44% of the total American payroll and generated 65% of the new jobs created over the last 17 months. The package addresses several issues as outlined below:
1. Tax breaks for small businesses – deductibles, expenses and depreciation
2. Incentives for small business – employee health care benefits and retirement savings
Despite these incentives, small business still faces uncertainty over the impact of the national health care plan, which is being phased in over the next several years. Additionally, debate is already raging over whether small business owners will be affected by the planned end to Bush-era tax cuts, which mean big tax increases for the estimated 3% of the population earning over $200,000.
3. Access to financing
Small business continues to feel the squeeze of the credit crunch. According to a new study by the Federal Reserve Bank of New York, nearly 60% of the small businesses surveyed said they applied for credit during the first half of 2010, but only half were successful. Nearly two-thirds of companies seeking new business lines of credit—the most sought after form of financing—were rejected. The legislative package includes the following measures of relief:
4. Incentives to invest in small business
The new law makes it more profitable to invest in the stock of small business, which is now defined as an enterprise with less than $5 million in net income and under $15 million in assets.
A Global Perspective
Assistance from the Small Business Jobs Act can’t come soon enough. Recent studies have pointed to an erosion of the United States’ status as the global leader in entrepreneurship. A recent SBA study noted a slowdown in entrepreneurial activities in the U.S., but indicated that it may be due to progress from the rest of the world, who has looked to the U.S. model as an example and begun to catch up.
“The United States has long been an example for the rest of the world in terms of its capacity for innovation, creation of knowledge, and growth,” and those traits keep American at the very top of global entrepreneurship. The Small Business Jobs Act of 2010 aims to secure the United States' position as a global leader.