NSBA Small Business Tax Survey Results

With the prospect of potential federal tax reform looming, the National Small Business Association (NSBA) conducted an online survey recently of more than 950 small business owners to gauge their thoughts on the U.S. tax code and the policies surrounding it.

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    Listed below are some of the key takeaways from the NSBA’s 2017 Small Business Taxation Survey, which provides a glimpse into how taxes are impacting America’s small business community. You can view the full report by clicking HERE 

    Survey results

    Entrepreneurs indicated in the survey that they spend a lot of time dealing with tax-related issues. In fact, one in three small businesses reported spending more than 80 hours—more than two full work weeks’ worth—each year on federal taxes.

    Some other insight into the small business tax burden includes:

    • Nearly one-third (30%) of respondents said they spend between $1,001 and $5,000 each year on the administration of federal taxes not including their own owed taxes.
    • One in five small businesses (20%) said they spend 120-plus hours each year dealing with federal taxes (including calculating payroll, working with their accountant, filing paperwork, etc.)
    • Further, 58% said the administrative burden continues to be a bigger problem than the actual financial cost of federal taxes (38%).
    • Almost two-thirds, (65%) of small business owners said federal taxes represent a significant or moderate impact on the day-to-day operation of their business.
    • Regarding payroll, one-in-three entrepreneurs said they spend more than $500 monthly on payroll services; one-in-four said they spend more than six hours each month handling taxes internally.
    • About 44% of those surveyed said they spend between one hour and 10-plus hours per month dealing with sales taxes.
    • The biggest tax concern identified by small business owners is the possible elimination of deductions and credits without an offsetting reduction in tax rates.
    • A divided government was cited by nearly half of respondents (49%) as being the primary obstacle to enacting comprehensive tax reform.

    Now that you’ve read through these results, think about how the attitudes of your fellow entrepreneurs align with your own. We’d love to hear your thoughts on how these policies impact you and your business. Please email us at advocacy@gcpartnership.com to share your perspective. 


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    Next up: NSBA’s First Regulatory Survey Unveiled

    NSBA’s First Regulatory Survey Unveiled

    The National Small Business Association (NSBA) is the country’s first small business advocacy organization and is celebrating its 80th anniversary. Focused on federal advocacy and operating on a non-partisan basis, NSBA serves as a resource for America’s small business community in Washington, D.C.

    The National Small Business Association (NSBA) is the country’s first small business advocacy organization and is celebrating its 80th anniversary. Focused on federal advocacy and operating on a non-partisan basis, NSBA serves as a resource for America’s small business community in Washington, D.C.

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    Throughout the year, NSBA conducts a series of surveys, including two Economic Reports and a series of issue-based surveys. Now, for the first time, NSBA has conducted a comprehensive survey on regulations and how they impact America’s small businesses.  Click here for results of the survey.

    The 2017 NSBA Small Business Regulations Survey provides quantitative support for the need to reduce regulatory complexity, streamline the web of regulations, and adhere to plain language statutes. Both the need for regulatory relief—as well as a road-map to achieve it—are included in the survey packet.

    NSBA is currently conducting their year-end economic survey. If you haven't yet completed this survey, we encourage you to take a few moments today to do so. Click here to take the survey.

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    Next up: Ohio Bureau of Workers' Compensation Announces Another Billion Back

    Ohio Bureau of Workers' Compensation Announces Another Billion Back

    Today, Governor John Kasich alongside Ohio Bureau of Workers’ Compensation (BWC) Administrator / CEO Steve Buehrer, announced a $1 billion rebate to Ohio’s private and public sector workers’ compensation customers in addition to the $1 billion in rebate announced last year.

    Today, Governor John Kasich alongside Ohio Bureau of Workers’ Compensation (BWC) Administrator / CEO Steve Buehrer, announced a $1 billion rebate to Ohio’s private and public sector workers’ compensation customers in addition to the $1 billion in rebate announced last year.

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    The proposal:

    • Provides a one-time rebate of $1 billion for private employers and public-taxing districts.
    • Increases BWC’s commitment to safety by up to $35 million over the next two years.
    • Creates several new safety initiatives that leverage BWC’s occupational health and safety expertise to create innovative solutions for improving the safety, health and wellness of Ohio’s workforce.

    For more information on the BWC’s announcement: Another Billion Back

    Please call 216.592.2351 or send us an email at workerscomp@cose.org if you have questions or would like more information about our program.  


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    Next up: Ohio Looks to Reduce State Business Filing Fee

    Ohio Looks to Reduce State Business Filing Fee

    The Council of Smaller Enterprises (COSE) and Greater Cleveland Partnership (GCP) supported companion legislation, House Bill 3 (HB 3) and Senate Bill 26 (SB 26), that will reduce the business filing fee collected by the Office of the Secretary of State in Ohio by 21 percent. While reducing the business filing fee from $125 to $99 serves as a small step toward eliminating barriers for business – both large and small – it also sends a message about the importance of Ohio’s business community. The legislation also provides any Ohio-based company, in good standing with the state, with access to all features of the OhioMeansJobs website.  

    The Council of Smaller Enterprises (COSE) and Greater Cleveland Partnership (GCP) supported companion legislation, House Bill 3 (HB 3) and Senate Bill 26 (SB 26), that will reduce the business filing fee collected by the Office of the Secretary of State in Ohio by 21 percent. While reducing the business filing fee from $125 to $99 serves as a small step toward eliminating barriers for business – both large and small – it also sends a message about the importance of Ohio’s business community.  The legislation also provides any Ohio-based company, in good standing with the state, with access to all features of the OhioMeansJobs website. 

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    This initiative, championed by Secretary of State Jon Husted (R), quickly garnered bi-partisan support in the Ohio General Assembly. In addition to COSE and GCP, business organizations from across Ohio have signed on to support this example of a priority issue for leadership in the legislature.  

    “Small steps toward progress get us closer to our goal,” said State Representative Kent Smith (D - Euclid) when he discussed the merits of HB 3 on the floor of the Ohio House of Representatives.  “And, the Council of Smaller Enterprises agrees,” he went to say as he read an excerpt from COSE’s position on the legislation. 

    Both bills have passed their respective chambers and will be vetted to approve a single bill to be signed into law by the Governor. 

    For more information, view letters of support COSE submitted to the House Economic & Workforce Development and Senate State & Local Government Committee or contact us at advocacy@cose.org.


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    Next up: Ohio Senate Budget Proposal Released; Small Business Tax Relief Still a Priority

    Ohio Senate Budget Proposal Released; Small Business Tax Relief Still a Priority

    The Senate unveiled its version of the state budget this week and small business tax relief has remained a priority throughout the debate. In short, the Senate’s budget proposes an income tax cut without raising or expanding the sales tax base or increasing the sales tax or commercial activity tax (CAT) rate. As part of the tax relief package, the Senate plan would eliminate taxes on the first $250,000 of net income for small businesses and establish a 3% flat tax rate on income above that amount.

    The Senate unveiled its version of the state budget this week and small business tax relief has remained a priority throughout the debate.  In short, the Senate’s budget proposes an income tax cut without raising or expanding the sales tax base or increasing the sales tax or commercial activity tax (CAT) rate.  As part of the tax relief package, the Senate plan would eliminate taxes on the first $250,000 of net income for small businesses and establish a 3% flat tax rate on income above that amount.

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    Here’s how the proposed tax plans compare on the issues that would impact small businesses the most:

    Current
    Law

    Governor’s Proposal

    House 
    Proposal

    Senate 
    Proposal

    Small Business Owner 
    Deduction of Income on Individual Tax Returns

    Business owners can deduct up to 50% of $250,000 of income on their individual returns – meaning up to $125,000 can be deducted.

    If an owner files their individual tax return separately from their spouse then that owner can deduct up to 50% of the $125,000 – meaning up to $62,500 can be deducted.

    If the business has multiple owners, each is eligible to claim the deduction to the extent of their own income from the business. 

    100% exemption of business income from businesses w/ annual gross receipts of $2 million or less for the taxable year, with no cap on exemption.

    For those businesses with more than $2 million in annual gross receipts, the Governor’s budget would maintain Ohio’s 50% deduction on the owner’s first $250,000 of net business income – meaning up to $125,000 could be deducted or up to $62,500 for owners filing separate individual returns from their spouse.

    Replaces the Governor’s provision and business owners could deduct up to 75% of $250,000 of income on their individual returns – meaning up to $187,500 could be deducted for taxable years beginning in 2015 and thereafter.

    If an owner files their individual tax return separately from their spouse, the owner could deduct up to 50% of the $187,500 – meaning up to $93,750 could be deducted.

    Business owners could deduct 100% of $250,000 of income on their individual returns – meaning up to $250,000 could be deducted.

    If an owner files their individual tax return separately from their spouse, the owner could deduct up to 50% of the $250,000 – meaning up to $125,000 could be deducted.

    The plan also imposes a flat 3% tax on all business income in excess of these amounts.

    Personal Income 
    Tax Rate

    Click here for current Ohio personal income tax rate information.

    Reduces income tax rates for all brackets by 15% for the 2015 taxable year and by 23% from 2014 rates for the 2016 taxable year and thereafter.

    Replaces the Governor’s provision with an income tax rate reduction for all income tax brackets by 6.3% for taxable years beginning in 2015 and thereafter.

    Same as the House proposal.

    Sales Tax

    The state sales and use tax rate is 5.75% today.

    Services that are subject to sales and use taxation today can be found under category 630 here.

    Increases the rate of the state sales and use tax from 5.75% to 6.25% beginning October 1, 2015.

    Subjects the following services to sales and use taxation beginning October 1, 2015: 

     (1) cable television services;

    (2) transfer of bad debt;

    (3) travel services; 

    (4) research and public opinion polling services;

    (5) public relations services;

    (6) lobbying services;

    (7) management consulting services;

    (8) parking services;

    (9) debt collection services; and

    (10) repossession services.

    The state sales and use tax rate, the services subject to sales and use tax, and the vendor discount for timely filing of sales or use tax would remain the same as today.

    Same as the House proposal.

    Commercial Activity
    Tax (CAT)

    Businesses with taxable gross receipts of more than $150,000 and less than $1 million pay an annual minimum tax of $150 and no additional commercial activity tax is due. 

    Businesses with taxable gross receipts above $1 million but less than or equal to $2 million pay an annual minimum tax of $800 and the CAT rate is 0.26%.

    Businesses with taxable gross receipts above $2 million but less than or equal to $4 million pay an annual  minimum tax of $2,100 and the CAT rate is 0.26%.

    Businesses with taxable gross receipts above $4 million pay an annual minimum tax of $2,600 and the CAT rate is 0.26%.

    The proposal would increase the CAT rate from 0.26% to 0.32%.

    And, the annual minimum tax would decrease from $800 to $150 for those small businesses with gross receipts of $2 million or less.

    Same as current law.

    Same as current law.

    Cigarette Tax

    The state cigarette tax is currently $1.25 per pack.

    Would increase the state cigarette tax by $1.00 to $2.25 per pack.

    Levies a tax on vapor products; the tax would be measured in milliliters or grams if the products are sold in solid form.

    Same as current law.

    Would increase the state cigarette tax by 40 cents to $1.65 per pack.

    Severance Tax

    Ohio’s current severance tax is 20 cents on a barrel of oil and 3 cents on an MCF (thousand cubic foot) unit of natural gas.

    Proposes fixed rates for crude oil and natural gas of 6.5 percent when sold at the wellhead, and a lower rate of 4.5 percent for natural gas and natural gas liquids when sold downstream.

    Same as current law.

    Negotiating a rate w/ the Governor and House; details expected to be released next week.

    Tax Expenditure
    Review Committee

    N/A

    Would create a nine-member Committee to review most existing tax expenditures (tax credits or deductions) and make recommendations on whether to continue or modify those expenditures.

    Same as current law.

    Same as current law.

    2020 Tax Policy Study Commission



     N/A


     N/A


    Would create an Ohio 2020 Tax Policy Study Commission composed of House and Senate members, the state tax director and state budget director to further investigate tax changes and make recommendations on taxes currently levied (sales tax, CAT, etc.) and whether Ohio should move further towards a tax system based on consumption.


    Same as House, but makes specific requirement for the Commission to make a recommendation on comprehensive severance tax reform in 2015.



    From the beginning, COSE has consistently used our Public Policy Agenda to advocate on behalf of small business owners throughout the process.  And, we continue to recognize the unique nature of most small business owners as pass-through entities. COSE is placing an emphasis not only on the reform of business taxes, but also the implications for personal income tax and its relationship to a small business owner’s total tax burden.  COSE supports a transparent, balanced state tax environment for small businesses that maintains or lowers the current state personal income tax and commercial activity tax (CAT) rates and is not funded by a decrease to the current CAT exemption level for small businesses.   

    Once the Ohio Senate passes their version of the budget, the legislature will conference and work through the differing proposals before sending a budget bill to the Governor’s desk by the end of the month. 


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    Next up: Ohio Senate President Keith Faber, Ohio Rep Barbara Sears Receive Awards

    Ohio Senate President Keith Faber, Ohio Rep Barbara Sears Receive Awards

    CLEVELAND, April 26 – Members of the Council of Smaller Enterprises (COSE) selected two Ohio legislators to receive Advocate of the Year Awards.

    CLEVELAND, April 26 – Members of the Council of Smaller Enterprises (COSE) selected two Ohio legislators to receive Advocate of the Year Awards.

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    Ohio Senate President Keith Faber and State Representative Barbara Sears are being lauded by COSE for their successful efforts to help small businesses in Ohio.

    Sen. Faber successfully opposed state operating budget recommendations last year to increase the commercial activity tax (CAT) and to expand the sales and use tax to a broader array of private businesses in Ohio.  To his credit, Sen. Faber understood that such measures would have been detrimental to many small businesses in Ohio.

    Last year, Rep. Sears successfully introduced an amendment to legislation to protect Ohio entrepreneurs by helping to ensure that they would not be penalized with increased workers’ compensation rates, outstanding balances or uncovered claims for occupying work space that was previously used by a separate business with negative claims experience.

    The awards were presented this week in Columbus during COSE Day at the Capitol.

    Rep. Sears said she was very pleased to receive the award.

    “Small businesses are the backbone of not only Ohio's economy, but of the United States,” said Rep. Sears.  Working on legislation that improves the opportunities of success for all small business is a goal that every Representative should be singular focused on each day at the Statehouse.  As a small business owner myself I have great respect for the men and women who put their personal capital and talents to work to provide not only for their families but to improve the entire state of Ohio.”

    Sen. Faber said he, too, was honored to be given the award by COSE.

    “I am honored to receive this award from COSE,” said Sen. Faber. "The entrepreneurial spirit of small business is at the heart of Ohio’s progress, and I will continue to work to ensure our state provides opportunities for our small businesses to grow and prosper.”

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