How Will Obama’s New Budget Plan Affect Your Business?
On April 10th, 2013, President Obama released a $3.8 trillion budget plan for 2014. Though it has yet to be voted on, it sets a solid example on how it could affect small businesses, and small business owners (SBOs). Much like the debate over ObamaCare’s impact on small businesses (based on the resulting changes to insurance regulations), the proposed budget forces SBOs to start thinking about how to prepare for what the budget could bring.
Obama’s new budget plan seems to directly help the Small Business Administration (SBA), which in turn, directly helps SBOs. With proposed ideas such as streamlining paperwork, cutting fees on even the smallest SBA loans, and giving money to directly stimulate small-business growth, it seems like the SBA can only win in this situation. Learn more here.
The biggest benefit to small businesses would be the proposed tax credit, designed specifically for small business owners. Simply stated, the credit would apply to companies that paid less than $20 million in wages in 2012, and work as an incentive for companies to higher more employees. Companies would get a one-time credit of 10% of the amount paid to new workers. The credit would also apply to raises given to current workers, with a $5 million cap. Click here for details.
Different proposals include increasing minimum wage to $9/hour (a $1.75 increase), and decreasing the overall SBA budget (a 12% decrease from last year). Both measures will hurt small business owners, who employ the highest amount of minimum-wage employees, yet often don’t have enough capital reserve to absorb such a high increase in labor costs. A smaller SBA budget is most definitely a negative effect, but if distributed and used properly, or as Obama suggests (creating a mentor program for new businesses, cutting down on heavy paperwork, etc.), the money cut could go unnoticed.
Though none of these proposals would take place anytime soon, it does force SBOs to think about how to be prepared in the future.