We look at how the littlest businesses are faring and what it means for the larger economy, the lingering confusion around last year’s new tax code, and the state of small business in America’s Heartland.
Welcome to the Small Business Run Down. Each day, we bring you stories and trends that impact small business owners and their workforce.
Today, we look at how the littlest businesses are faring and what it means for the larger economy, the lingering confusion around last year’s new tax code, and the state of small business in America’s Heartland.
Canary in the mine: smallest businesses shed jobs signaling possible trouble ahead
Data from the latest jobs report might have showed gains overall, but the nation’s smallest businesses are still feeling a pinch that has some economists concerned. For three months running, small businesses have lost jobs and borne the brunt of an economic slow down, a tight labor market and a shift away from brick-and-mortar retail to e-commerce. While the total number of jobs lost might not seem significant, it’s interesting to note that 18% of Americans work for companies with fewer than 20 employees.
The Number: 105,000. Over the past three months, businesses with fewer than 20 employees have lost a total of 105,000 jobs.
The Quote: “Small businesses are the first to feel a slowdown. We’re the harbinger.”
Uncertainty still surrounds new 20% tax break for SBOs
April 15 has come and gone and CPAs are still trying to make sense of which small businesses qualify for the 20% tax deduction from 2018’s Tax Cuts and Jobs Act. The guidelines for the tax break include a $157,000/$315,000 limit for those filing singly/jointly and rules about being employed in a special trade or service.
Meanwhile, the IRS announced a new tool for calculating income tax that’s designed to make it easier for people to figure out how much money they need withhold from their paycheck for taxes each month.
The Number: 14 million. According to the IRS, 14 million filers have taken advantage of the new tax break so far.
The Quote: “With it being the first year, I think everyone is still trying to figure it out.”
Small businesses going strong in America’s heartland
If you’ve been thinking about leaving behind the big city lights to return home and take over the family business, consider this: according to new data from SCORE, rural entrepreneurs report higher profit margins and better quality of life than their urban counterparts. While the report shows some downsides to operating a business in the Heartland, 80% of rural SBOs believe the grass is definitely greener on their side of the fence.
The Number: 80%. A full 20% of rural small businesses generate 80% or more of their revenue from online sales.
The Quote: “What this means is that rural entrepreneurs have the advantage of keeping more of their business revenue, which makes it possible for them to provide a higher quality of life for themselves and their families.”