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Mind Your Business

Mind Your Business Week of September 3, 2014

Americans have long revered small businesses for not only building the economy but also bolstering democracy. For more than a century, the United States has implemented laws aimed at preventing big business from competing unfairly with small businesses. Whether small businesses create a disproportionate number of jobs is not clear but they have influenced big businesses, which have adopted the flexible practices of smaller companies. A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. A 'small business' is a separate and distinct business entity, including cooperative enterprises and non-governmental organizations, managed by one or more owners and predominantly carries on business in any sector or sub-sector of the economy. Businesses had no choice but to be small in America’s early days. Transportation was slow and inefficient, keeping markets too fragmented to support large-scale enterprise. Also, financial institutions were too small to support big business. And, productive capacity was limited because wind, water, and animal power were the only sources of energy. Whatever the reason, businesses were small and Americans liked it that way. Small business, they believed, cultivates character and strengthens democracy. The American belief in small business was put to the test beginning in the late 1800s. Railroads, the telegraph, the development of steam engines, and rapid population growth all created conditions in which some businesses especially capital-intensive ones such as primary metals, food processing, machinery-making, and chemicals could become bigger and, in the process, more efficient. Many people celebrated the higher wages and lower prices that came with large-scale enterprise but others worried that the qualities Jefferson extolled might be lost in the process. In 2010, small businesses are still needed in America. President Barack Obama, in September 2010, signed the Small Business Jobs Act into law, calling it “the most significant step on behalf of our small businesses in more than a decade.” But, the legislation is likely the last legislative victory the president will see for a while. Congress is limping home at the end of this week, putting off any more big decisions until after the November 2 congressional elections contests that could shift control of at least one side of Capitol Hill to Republicans. In order to grow the economy, Obama said it “was critical that we cut taxes and make more loans available to entrepreneurs.” Today, he said, “After a long and tough fight, I am signing a small-business jobs bill that does just that.” The self-employed will finally achieve, for one year at least, their long-sought goal of parity with other businesses when it comes to health insurance. They will be allowed to deduct the cost of health premiums as a business expense when they calculate their 2010 self-employment tax. The inability to deduct these costs meant the self-employed paid a 15.3 percent tax on money spent on health insurance premiums. The legislation allows small businesses to write off $500,000 of capital expenditures in 2010 and 2011 as well. This year's Section 179 expensing limit had been $250,000 and it’s scheduled to drop to $25,000 next year. Additionally, the bill allows businesses of any size to write off 50 percent of the cost of capital expenditures in 2010, extending a bonus depreciation break that had been in effect in 2008 and 2009. The legislation also includes an incentive for investors to buy stock in small C corporations, those with assets of $50 million or under by eliminating capital-gains taxes on these investments if they’re held for at least five years. The window for this tax break is small, however; the break only applies to stock acquired by December 31. Both the U.S. Chamber of Commerce and the National Federation of Independent Business supported the bill but they think the president exaggerated its importance. In 2007, the Ohio Department of Development created the Entrepreneurship and Small Business Division to provide assistance to business owners and entrepreneurs in order to encourage both the creation and the expansion of small businesses throughout the State of Ohio.

After Labor Day summer is coming to a close so I hope you had fun but always remember to mind your business.

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