Tag Archives: National Small Business Association (NSBA)

Congress Passes NSBA-Supported JOBS Act

On Tuesday, the U.S. House of Representatives approved the Senate-amended version of Jump-Start Our Business Start-ups Act (H.R. 3606 or “JOBS” Act) by a margin of 380-41, addressing one of NSBA’s top priority issues. The bill, which will ease securities regulations on small businesses making it much easier for them to raise capital through public capital markets, will now head to the President’s desk to be signed into law.

The bill originally passed the House along a wide bipartisan basis (390-23) and was then approved with amendments by the Senate last week, also on a bipartisan basis (73-26.) Prior to passage in the Senate, however, an amendment offered by Sen. Jeff Merkley (D-Ore.) and supported by Sens. Michael Bennet (D-Colo.), Mary Landrieu (D-La.) and Scott Brown (R-Mass.), among others, was adopted 64-35, . This so-called “crowdfunding” amendment (S.Amdt. 1884), will insert the Senate’s version of crowdfunding legislation into the bill, and among other things, require crowdfunding intermediaries to register with the Securities and Exchange Commission (SEC). The original House-passed version of H.R. 3606 did not contain such language.

This bill was also supported by the administration.

This pro-growth, NSBA-supported legislation will positively transform the ability of small businesses to raise capital and help alleviate the disproportionate burden of compliance placed on small firms.

Passage of JOBS Bill a Win for Small Business

The U.S. House of Representatives today overwhelmingly approved (390:29) the Jumpstart Our Business Startups Act (JOBS Act), sending a strong message to small business: we support you. The NSBA-supported JOBS Act—which is a compilation of six bipartisan bills—will promote and facilitate entrepreneurship and new business formation by making it much easier to raise capital and get new ideas off the ground.

“The bipartisan efforts to move this bill forward are laudable, and ought to serve as an example of the kind of lawmaking we need,” stated NSBA President Todd McCracken. “We hope the Senate will move quickly and expeditiously on the measure.”

By providing certain exemptions from the more restrictive requirements of U.S. securities law, the JOBS Act will positively transform the ability of small businesses to raise capital and alleviate the disproportionate burden of compliance they face. Specifically, the legislation will create a crowdfunding exemption allowing a company to raise up to $2 million and provide greater leeway for seeking investment online through a preemption of state blue sky laws—a critical component to ensure the affordability of capital formation through crowdfunding.

The bill also substantially reduces the cost barriers posed by the initial move to being a public company and will therefore increase the access of smaller companies to the public securities market. The number of initial public offerings (IPOs) has declined considerably in recent years in large measure due to the increased costs of going and staying a public company.

“There is a direct correlation between access to capital and job growth—when capital flows more freely, small businesses add new jobs,” stated NSBA Chair Chris Holman, CEO of Michigan Business Network.com and President of The Greater Lansing Business Monthly. “The JOBS Act will make raising capital much easier for many small businesses, a win for small business and the U.S. economy.”

NSBA Survey on Small Business and Taxes

The National Small Business Association (NSBA) released the 2011 Small Business Taxation Survey. This survey provides detailed insight on how America’s small-business community is being impacted by federal taxes. In short: complexity and inconsistency with the tax code are depleting small businesses of their time and money merely so they can handle the administration of federal taxes.

“One in three small-business owners spends two full work weeks every year dealing with federal taxes, and the overwhelming majority (87 percent) are forced to pay an outside accountant or other tax return preparer,” stated Larry Nannis, CPA, NSBA chair and shareholder at Levine, Katz, Nannis + Solomon, P.C. “The federal tax code is a massive resource drain for small businesses.”

Payroll taxes were ranked the most burdensome taxes—both financially and administratively—for small businesses. Only 44 percent of small businesses report using an external payroll company, and even those that do report a significant amount of time dedicated to dealing with payroll taxes.

Given the relatively high number of small businesses that handle payroll internally, it’s no wonder that the majority (63 percent) said the new W2 reporting requirement, beginning in 2012 that will require employers to report health care spending, will have a negative impact on their business.

Compounding matters, IRS audits of small businesses and funding for enforcement activities continue to rise despite new research that shows the IRS misappropriated an undue responsibility of the tax gap upon the small-business community. Illustrating this growing fear and mistrust small-business owners have for the IRS, less than half (47 percent) of eligible small-business owners utilize the home office deduction, primarily due to concerns it will “red-flag” their return for an audit.

“The time for a serious debate on broad tax reform is now,” stated NSBA President Todd McCracken “The ever-growing patchwork of credits, deductions, tax hikes and sunset dates is a roller coaster ride without the slightest indication of what’s around the next corner. This is unsustainable and unacceptable.”

Given that 83 percent of small businesses are pass-through entities and pay business taxes at the individual income level, the majority support proposals that would reduce the corporate AND income tax rates and eliminate certain deductions, as well as sweeping reform in-line with the Fair Tax.