Small businesses in the U.S. make a significant contribution to the country’s economy. The Small Business Administration (SBA) reports that there are now an estimated 28 million small sized businesses in America which account for more than half or 54 percent of all sales in the U.S. They have also been providing 55 percent of all jobs and 66 percent of all new jobs in the country since the 1970s. Since 1982, their number has grown by 49 percent while in 1990, these small businesses provided 8 million new jobs.
With Donald Trump now as the new U.S. president, many business owners are optimistic of their future. Being a businessman himself, Trump is seen as a business-friendly president who can help improve their enterprises and the country’s economy in general.
While optimism is increasing at the moment, major players in the small business industry want Trump to focus on two most important issues which pertain to healthcare and access to capital. Some are also expecting new legislations to be passed in the future to clarify the employee-contractor distinction.
Positive Development
One area in the U.S. now experiencing positive growth among small businesses is Detroit. Business owner Joe Spencer revealed his restaurant achieved $1.2 million in sales last year prompting him to open a second branch. He expressed optimism over this development and remains hopeful that more investors will put their money in the country to generate more employment.
Another positive outcome of Trump’s presidency is the creation of new or startup companies. The Detroit metro area, in particular, saw 73 percent new entrepreneurs start companies in 2016 because of the opportunity available in the marketplace.
Business confidence is high in this area as well as in other parts of the U.S. and entrepreneurs are hopeful that the Trump administration will implement more reforms, invest in infrastructure and eventually make the country’s economy stronger.
A former head of the Small Business Administration (SBA) and senior fellow at the Harvard Business School, Karen Mills, also said the Federal government should create tax requirements to be able to source more from small supply chain companies based in the U.S. She added that Trump should use incentives to encourage companies to pay these suppliers faster than usual and invest in them as well by providing technology and skills training. The bigger companies, for their part, must treat their small business suppliers as partners.
Tax Reforms
When it comes to taxes, Trump should pursue his plan of reducing the business tax rate from the current 35 percent to 15 percent. This should be done along with the elimination of the corporate alternative minimum tax as what he earlier proposed during the campaign period. Right now, the U.S. has one of the world’s highest corporate tax rates but with the proposed cut, the American economy is sure to grow and people will enjoy higher personal income.
The Trump administration is currently discussing two major comprehensive tax reform plans. One is the President’s own plan and the other is the so-called “Blueprint” created by the House Ways and Means Committee. Both are similar in many ways but differ in certain provisions.
These two tax reforms call for three tax brackets – 12, 25 and 33 percent but they differ on when each will apply. Also, they seek to scrap the Net Investment Income Tax (NIIT) which means that small business owners could eventually save up to 10.4 percent in their maximum tax rate.
Banking Regulations
President Donald Trump has earlier expressed his interest in making banking regulations lighter across the industries. The Wall St. Journal noted that he was even critical of the signing into law by President Obama of the Dodd-Frank regulatory amendments in 2010 saying that smaller banks were adversely affected by it.
If bank regulations are reduced, on the other hand, there’s a greater chance that banks including the smaller ones can approve business loans freely. This will then benefit entrepreneurs as they can easily obtain laws to expand and grow their businesses.
