Five ways the new jobs plan could impact your business
Studies show that over 65 percent of all new jobs created come from the startup business owner.
So you’d think that the impact of the new White House jobs plan would be most significant on small business owners. And to a large extent, if you thought that, you’d be right.
“We have an employment problem, and small businesses create 65 percent of all new jobs,” notes John Arensmeyer, CEO, Small Business Majority, a trade association group. “Spotlighting small business will help create a cycle of prosperity that directly benefits the economy by putting America back to work.”
President Obama said as much last week, in announcing his new jobs agenda. In his speech before Congress on September 9, the President said that if small businesses aren’t on board, then any jobs program is doomed before it starts.
"Everyone here knows that small businesses are where most new jobs begin," President Obama said. "For everyone who speaks so passionately about making life easier for 'job creators,' this plan is for you."
Entrepreneurs may take a “wait and see” approach to that last line, but there could be a lot to like from the first read of the new American Jobs Act. In fact, right off the bat, five keys to the plan rest squarely on the backs of small business owners. Let’s take a look:
Payroll taxes would be cut in half – As part of the new jobs bill, small business owners would see an immediate earnings boost from the new payroll tax cuts for employees. The President is asking for a full-blown payroll tax holiday, as employers would pay 3.1 percent – and not the current rate of 6.2 percent – on the first $5 million paid out in wages. According to the White House, if you have 50 employees making an average salary, you’re looking at an $80,000 tax cut.
Payroll taxes cut for employers, too – Piggy-backing the employee payroll tax cut is a similar initiative that would temporarily (through 2012) cut the 6.2 percent employer tax to zero, up to $50 million.
Continuation of the new equipment tax write-off – Companies can still write off 100 percent of new equipment purchases during 2012, an obvious strategy to get you, the small business owner, spending some cash to get the economy rolling.
A $4,000 tax credit for hiring new workers – The White House plan has a wrinkle that addresses the long-term unemployed. Specifically, business owners who hire a new employee who’s been out of work for a year would earn a $4,000 tax credit.
Faster payments from Uncle Sam – Any healthcare entrepreneur who has ever tried to get paid by the federal government in a reasonable amount of time might appreciate this proposal: A new system to speed up payments from the federal government that could include an online portal for connecting business owners to federal payroll and accounts receivable departments.
Obviously, there is more to flesh out on the new jobs plan. But for small business owners, there is definitely some meat on the bone with the new American Jobs Act.
Of course, Congress will have a lot to say about the final draft – one that could look a lot different than the version we’re seeing now.