President Trump’s vow to lower business taxes might sound amazing as a headline. A promise to reduce the corporate tax rate to 15 per cent will certainly help many. Unfortunately, SMEs and family-run operations are unlikely to be among the beneficiaries. In fact, once those proposed changes take place, those companies could be in an even worse position.
Despite the possibilities offered by modern tech, running a successful business is already tough. Not least in the current economic climate. Achieving international profits becomes very difficult when the dollar doesn’t perform well. Meanwhile, new companies in many industries struggle in the battle against the giants of domestic and global markets. This can be true for both online and offline companies too.
So, while companies like Better Mortgage continue to expand, new entrepreneurs may fear that they have already missed the boat. The proposed tax law amendments only make matters worse. Not only because some elements work against small business owners. But also because many of the potential benefits will not stretch to those new operations.
The estate tax reduction is just one key example. Big corporations are likely to gain long-term rewards. However, very few small businesses pay this tax in 2017. In turn, that means that their savings in 2018 are set to be zilch. In truth, a similar picture can be painted in many other aspects of the modern business arena.
Another crucial factor to consider is that all tax cuts enjoyed will need to be compensated elsewhere. The harsh reality is that many of those are likely to be the areas that do directly impact the smaller family companies. Essentially, it means being punished in some aspects without really getting to feel the benefits in other areas.
Small business owners will need to get creative. New staffing ideas, such as outsourcing key jobs like security services may become a necessity. Skills trades that legally allow companies to avoid extortionate tax could also become a more popular solution. After all, it could be the key that allows business owners to navigate their way through what could become a very difficult field.
As per this report from Business Insider, the majority of Americans are against the cuts, and it’s not hard to see why. Even the hopes of creating more jobs have been heavily scrutinized. Ultimately, the economy may see some benefits, but the average man or woman might not. This especially true for those looking to find success through their own business ventures. No plan for change is ever going to be met with universal plaudits. Still, it’s not difficult to see why these tax issues have become such a hot talking point already.
Should those elements stop entrepreneurs from following their dreams and passions? Certainly not. Nonetheless, it is vital that all small businesses pay attention to the fallout of any proposed tax changes as they will make a huge impact. Unfortunately, it appears that most of those impacts could be negative. At least for the modern SME owners.