Rick Telberg, President and chief executive of Bay Street Group LLC, recently presented to the Maryland State Society of CPAs at their BizExpo. Rick’s presentation entitled, “Social Media: New Marketing Technologies for Accounting firms”, recognized several accountants throughout the nation who are on the forefront in using social media to advance their practices. Our own, Chad Bordeaux, participated in Rick’s research and was featured in his presentation. Telberg’s presentation is available through his website at http://cpatrendlines.com/2009/06/17/survey-results-how-accountants-use-social-media/.

Congratulations to Chad for being recognized for his leading edge use of Facebook, LinkedIn, and Twitter.

Follow our firm leaders at:

Facebook
http://www.facebook.com/CharlotteCPA (Donna)
http://www.facebook.com/cbordeaux (Chad)

LinkedIn
http://www.linkedin.com/donnabordeaux (Donna)
http://www.linkedin.com/chadbordeaux (Chad)

Twitter
http://twitter.com/CharlotteCPA (Donna)
http://twitter.com/clt_cpa (Chad)

I routinely hear the statement that small business is the lifeblood of the US economy – producing far more jobs than large businesses.    Over the past few months, I have heard “jokes” and statements to the contrary – indicating that this was not really the case and that small businesses did little to contribute to the economy as a whole.    Obviously, dealing with small businesses on a daily basis, I was skeptical of these statements and decided to do some research on my own.    The result is that small business is far more important to the economy than I could ever have imagined.  Look at the following statistics  (Source:  US Small Business Administration).

• 99.7% of all employers are small businesses,
• Small businesses employ half of all private sector employees, and pay 45% of all private sector payrolls,
• have generated 60% to 80% of all net new jobs over the last decade
• create more than half of the non-farm Gross Domestic Product
• employ 40% of all high-tech workers (scientist, engineers, and computer workers)
• produce 13 times more patents per employee than large patenting firms, and the patents are twice as likely as large firm patents to be among the one percent most cited.

The SBA’s Office of Advocacy estimates that there were a total of  27.2 million businesses in the United States in 2007.  According to data from the 2005 Census, there were 6.0 million firms with employees and 20.4 million without employees in 2005.   There were slightly more than 17,000 large businesses.  Small businesses with fewer than 500 employees represented 99.9 percent of the 27.2 million businesses (including both employers and nonemployers).

This data is important to consider considering the current state of our economy and the mountain of additional regulation being considered at by the Federal Government.    Some of the 17,000 large businesses may be able to afford to absorb the additional cost of regulation, but what about the small businesses?    An SBA study shows that small businesses may have a difficult time taking on more regulation.    On average, an employer with less than 20 employees pays 45% more per employee to comply with federal regulations than does their large business (over 500 employee) counterparts.  When segregated into the types of regulation, the results are even more skewed.  For instance, the smallest businesses (less than 20 employees) on average spent $3,296 per employee on environmental regulations while big bisinesses spent only $710 per employee.    Tax compliance was another area that resulted in a heavy burden on the smallest businesses – where their cost per employee totaled $1,304, compared with just $780 for big businesses.

Statistics like this shed a lot of light on the reasons behind why some of the largest businesses  (such as Wal-Mart) are encouraging more regulation.  It will result in very little difference for them, but will put a great burden on many of its competitors – especially smaller competitors.

Hopefully, they will actually take some time to consider the ramifications of additional regulation before they pass any more legislation that could affect small business negatively.  Small business is without a doubt the lifeblood of the American economy, and we need to do everything we can to allow entreprenuers the opportunity to be successful.    We have to remove burdens and roadblocks to success – not reinforce them.

Now that President Obama is officially in office, we want to keep you up to date on the changes that may be coming your way. Keep in mind that none of the below changes have become law yet and must be voted on by Congress. Details are not yet available; however, it is clear that if some of these items are enacted into law they will have a substantial impact on small business owners. Due to the large amount of these Policy Agenda Proposals, I will discuss them over several posts.

Increase the minimum wage: President Obama has proposed to raise the minimum wage to $9.50 per hour by 2011 and index it to inflation. I have never been a fan of the minimum wage. I think people should get paid what they are worth, not some arbitrary amount set by government. This will certainly result in an increase in cost to many businesses throughout the Country. I can only hope that it does not result in an increased number of jobs being shipped overseas where such requirements do not exist.

Making Work Pay tax cut: The details on this are very unclear. Supposedly, it would permanently cut taxes by $500 per person ($1,000 per family). I will keep you posted on this as I hear more details.

Tax cut for senior citizens: Eliminate all income taxation of seniors making less than $50,000.

Reverse certain Bush tax cuts. This proposal would reverse most of the tax cuts for the highest producing tax payers. The Obama proposal mentions the “wealthiest” taxpayers. Unfortunately, the policy makers do not understand that “wealthy” and “high income” are two totally separate things and that having a “high income” does not translate into having more cash for taxes. This will definitely have an adverse effect on many small businesses throughout the nation.

Welfare Credit Expansion. Apparantly “Change” does not mean that the government is going to stop telling the American people the truth. I wrote about this a few weeks ago, asking for then President-Elect Obama to come clean on this lie that the government has been dealing to the American people since 1975. Instead of coming clean and fixing the issue, President Obama has propose to expand the Earned Income Tax Credit (EITC, otherwise known as the Welfare Credit) so that full-time workers making minimum wage would get a benefit of more than three times what they can currently claim. Currently, the maximum benefit is $4,825. So, does this mean that they can get an additional $14,475 handed to them for doing nothing other than filing a tax return. Given the above request to increase minimum wage to $9.50, a full time employee eligible for this credit would earn $19,760 in wage, pay no income tax, and recieve a “refund” for more than $14,475 resulting in a total of $34,235. In addition, President Obama’s proposal calls for this benefit to be doubled if they are paying child support and it would also reduce the Welfare Credit (EITC) marriage penalty. As I stated in my prior post, I am not debating for or against welfare. I am simply debating against lieing to the American people about it.

This topic always gets me riled up, so I am going to stop now. I need to go blow off some steam. I will post some more on the upcoming policy agenda tomorrow – some of it good, some of it bad. In the meantime, if you have any questions about how these proposed changes may effect you – you know where to find us.