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 the impact of the trade wars with China on small businesses, new protections against IRS seizures and the factors that create a favorable “ecology” for entrepreneurs.
Trade Wars continue to take their toll on the small business marketplace
The marketplace for buying and selling small businesses took a hit for the third consecutive quarter. The culprit: recent trade wars with China. Small business marketplace website BizBuySell.com reports that transactions are down almost 10% compared to the same time last year and the 25% tariffs levied by both the US and China are to blame.
The Number: 183. The median amount of time a company stays on the marketplace rose 7% during the second quarter to reach 183 days.
The Quote: “Many companies struggle with whether they can pass the higher costs on to customers, while others say they have no choice but to charge more.”
Overhaul of RESPECT Act affords SBOs protection against IRS property raids
President Trump signed into law the Taxpayer First Act last week, a piece of legislation unanimously approved by Congress that aims to protect small businesses that deal in high volumes of cash from being raided by the IRS for “structuring.”
The Number: 91%. A 2017 survey found that 91% of the 278 structuring cases sampled did not actually involve funds derived from illegal activities.
The Quote: “With the Clyde-Hirsch-Sowers RESPECT Act now law, innocent entrepreneurs will no longer have to fear forfeiting their cash to the IRS, simply over how they handled their money. Seizing for structuring was one of the most abusive forms of civil forfeiture and we’re glad to see it go.”
Many different factors contribute to “entrepreneurial ecosystem” for small biz growth
As CNBC’s recent ranking of states to start a small business list shows, it takes a lot more than just good, old-fashioned tax breaks to create an environment in which small businesses flourish these days. Quality of life, proximity to colleges and university systems, strong infrastructure and a favorable regulatory climate should all factor into the decision-making process for would-be entrepreneurs.
The Number: #1. Even though tax breaks aren’t the only thing to consider, they do still matter. And Wyoming is ranked #1 on the Tax Foundation’s list of states with favorable tax structures for businesses.
The Quote: “The state of Washington, for instance, has done a nice job of marketing their assets to small and midsize businesses, saying, ’Not only do we have good universities and human capital but we have beautiful cities with access to the Pacific.”