A proposed U.S. tax increase for individuals making over $200,000 will definitely hurt some small businesses, taking away extra cash that might otherwise be used for growth, despite attempts by supporters of the increase to downplay that impact. With financial uncertainty facing many in 2013, businesses of all sizes must find ways to cut costs and do more with less. Here are some concerns facing businesses in the U.S. and abroad, and some suggestions to prepare for financial challenges.
How much is too much? A bipartisan Joint Committee on Taxation found only three percent of the 3o million Americans who report business income on their personal returns will be taxed at the top marginal rate. But that could include almost 940,000 business owners who might otherwise have reinvested in their businesses, the same study says. ABC News
Another look at the impact. A release from a national organization representing small businesses gives another view of the impact the proposed tax increase may have upon small businesses. The report says 72 percent of all S corporation income, 61 percent of all partnership income, and 13 percent of all sole proprietorship income will be affected. National Federation of Independent Businesses
Borrowing trouble with loan expenses. In the U.K., small businesses face another challenge. While interest rates on loans under £1 million increased over the past quarter, interest rates for loans over £2 million fell over the same period, meaning costs for small business borrowing are going up while costs for big business borrowing have decreased, writes Kasey Cassells. bOnline Blog
Getting more mileage from expenses. Back here in the U.S., small businesses will catch an ever-so-slight break in standard mileage rates for travel expenses in 2013. Business owners will be able to deduct 56.5 cents per mile on business expenses in 2013 versus 55.5 cents per mile in 2012. (Hey, it adds up!) The new rate goes into effect January 1. Small Business Trends
Cut Those Costs
Low to no overhead. One solution for cutting costs in your business, no matter where you operate it, is to get rid of your brick and mortar location completely. Here Adam Gottlieb explains some of the things you may want to consider when creating a virtual business for yourself. Many services already exist to help you cut costs and leave a physical office behind. The Frugal Entrepreneur
Shape up to ship out. Another great place to shave off expenses for your business is in the area of shipping costs. As it turns out, you don’t need to look too far when seeking these savings. In a guest post on Ashley Neal’s blog, Kelli Cooper shares four simple ways to save on your expenses today. Small Biz Diamonds
Hit those sales objectives. Cutting spending isn’t the only way to combat rising costs in your business. Finding simple, inexpensive ways to boost your sales is another. And nothing could be simpler than reevaluating your marketing plan to see that it meets your sales and marketing objectives. Susan Oakes gives some tips on a marketing plan review that will make you the money your business needs. M4B Marketing
Great article. No doubt your point of cutting costs plays into offsetting the tax increases. One component I have also discovered is the issue of employees receiving an incentive reward in one hand and a tax bill in another. Our team has come up with a solution.