Top 10 Concerns For Small Business Owners

YOUR FEDERAL INCOME TAX: article from Kansas C...
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Business Plans

Thing are changing on a daily basis these days. Small businesses are working to keep their heads above water. This is a list of the top concerns that our small business (and large business) owners.
1. The Cost of Health Insurance – There are two areas that come into play. First coverage for the owners and coverage for the employees. With the new regulations things have become even more uncertain. The cost of providing coverage is uncertain. Who is going to have to be covered is not known. This adds to the concerns that existed prior to all of the new changes. How are small businesses going to compete unless they provide some type of coverage for their employees? How can they afford to add costs when the economy is at best in a standstill and at worse declining? What happens to a business owner who closes their doors and has no coverage because the group is gone, they have health issues and can’t afford the coverage. These are issues that are affecting businesses all over the country. There are staffing groups that you can become a part of that will help provide group health insurance. You still retain the ability to hire, fire and manage your employees. You are simply leasing an administrative relationship. You can also join industry groups that will also help provide group benefits for its members.
2. Federal Business Income Taxes – Federal income taxes are scheduled to go back to levels prior to the Bush Taxes. This is an issue for most business owners since this will reduce operating capital at a time when incomes are down. This is an area that requires involvement in the process. The only thing you can do is contact your elected officials. Let them know how you feel. Explain that reductions in your net income will reduce your ability to hire employees and invest in assets to grow your business.
3. Finding qualified employees – There are plenty of people out there who are looking for work. The problem is that these employees may not have the skills necessary to make a contribution to your business. You have to really take the time to make sure they fit your organization. Look first internally to fill positions. If you have no one within your company ask current employees for referrals. They know your culture and what is required for the positions. Spend money on ways to retain valuable employees and on training.
4. Government Regulations – While business owners understand that regulations are necessary they want to be able to operate. There are so many regulations that most people don’t even really understand the impact. These regulations create a compliance problem for small businesses. They do not have the man power to stay on top of all the changes. The solution is to stay involved. You have to support groups and candidates who understand and support your positions.
5. Social Security Taxes – First, there’s the fundamental issue of whether the money younger generations of Americans pay into social security is a good investment. Millions of small business owners fit in the “younger” category, and they see the productivity of funds put in their businesses and other real investments. Second, the maximum level of annual earned income subject to social security tax just went over $80K. Third, employees only pay half of their withholding tax, with the other half paid by the employer. Social security is one of the withholding items someone appropriately termed payroll “burden.” Every time payroll levels go up for a small business due to minimum wage increases, competitive wage pressures, etc., an additional 6.75% of that number must be added on, and sent to the government. There is currently no abatement from social security taxes. However, there are new proposals being made by certain candidates. Listen to the debates, and decide which proposal fits your attitude about where we should be going with social security, then vote for that person. Welfare is dying, anyone who wants a job today can get one, and 50% of Americans are invested in the stock market. What to do with social security is the last great debate between liberals and conservatives. Get involved in the debate.
6. State Taxes On Business Income – Some states are worse than others, but any tax on a small business, state, federal, local, or inflation, is a threat to survival because it sucks valuable capital out, often at a time when that capital is most needed. Hold state and local politicians responsible for their actions with regard to raising taxes and spending money.
7. Worker’s Compensation Costs – Like state income tax, the level of this problem varies from state to state, and like a tax, the expense increases as payroll increases. This problem is also like the employee health insurance issue, in those small companies going it alone pay higher unit rates than those who buy for a large group. The employee leasing alternative is a good way to hold down worker’s compensation insurance costs. I’ll say it again, THIS WORKS!
8. Federal Paperwork – This issue is very closely related to problem #4, unreasonable government regulations. Somebody has to do the paperwork, and small businesses need that somebody to be buying, selling, creating, building, planning, etc. – not doing government paperwork. Same as the solution to #2 and #4.
9. Energy Costs – For a long time now, we’ve been the beneficiaries of relatively low energy costs, especially petroleum. But in a very short period, crude oil has gone from around $10 a barrel to over $30. This is nuclear inflation, resulting in a nuclear de facto tax. Many small businesses have significant direct energy expenses, plus pay freight charges from suppliers. When gasoline prices increase 50% in less than a year it affects everyone, but small companies in certain industries are put in great jeopardy. And yes, big companies have the same problem. But recent increases in fuel costs cut deeper into the profits, and therefore the viability, of small businesses than it does the big guys. This is a good time to take a look at your processes to make sure you eliminate wasteful activity, and wring as much efficiency out of your operation as possible. Let adversity create opportunity.
10. Frequent Changes In Federal Tax Laws – In 1919, the 1040 form was two pages long and had two pages of instructions. Today, the simplest 1040 form has 33 pages of instruction, and the entire IRS tax code has 5.5 million words. If a small business owner does his or her own taxes, new changes are new things to learn, taking away time from selling, planning, and creating. If the work is hired out to a CPA firm, changes and new forms mean more expense. Also, it’s difficult to conduct effective tax planning when the target keeps moving. Same as the solution to #2, #4, and #8. It’s your money, get involved in the process.
There will always be a list of Top 10 Problems in the world of small business, but notice that six out of the top ten problems identified today are related to government. Solving market challenges are often productive exercises. Solving a problem created by government is almost always regressive, unproductive, and expensive.

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Originally posted 2016-02-05 13:16:15.