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Effective Federal Income Tax Rate Faced By Small Businesses Varies By Legal Form Of Organization

April 19, 2009 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

4/2/2009 SBA Office of Advocacy Press Release:

Sole Proprietorships Face Lowest Rates, S Corporations Highest

WASHINGTON, D.C. – The effective federal income tax rate faced by small businesses varies by the legal form of organization, according to a report issued today by the Office of Advocacy of the U.S. Small Business Administration. Average rates range from 13.3 percent for sole proprietorships to 26.9 percent for S corporations. The effective federal income tax rate is the actual amount of taxes paid by a firm as a percent of its net income.

Exceptions to the normal statutory tax rates, such as deductions, exclusions, and credits, have the effect of lowering the tax rates paid by firms. The result is a difference between the statutory rate and the actual or effective rate paid by the business or its owners.

Overall, small businesses of all types pay an estimated average effective tax rate of 19.8 percent. Sole proprietorships face a 13.3 percent rate, small partnerships face 23.6 percent, and small S corporations face 26.9 percent. While not directly comparable, the rate faced by small C corporations is 17.5 percent.

The progressivity of the tax code also affects effective rate calculations, as firms with less income face a lower statutory rate. Nearly 60 percent of small sole proprietorships have a net income of less than $10,000, while only 3.1 percent have a net income of at least $100,000. On the other hand, more than 18 percent of small S corporations have a net income of at least $100,000.

Quantria Strategies wrote Effective Federal Income Tax Rates Faced by Small Businesses in the United States, with funding from the Office of Advocacy. The authors primarily used data from the Internal Revenue Service Individual Statistics of Income Public Use File, 2004, as the basis for the study. For the purpose of this study, the authors define a small business as a firm with less than $10 million in gross receipts.

For more information and a complete copy of the report, visit the Office of Advocacy web site at www.sba.gov/advo.

The Office of Advocacy, the “small business watchdog” of the federal government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues.

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The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers. For more information, visit www.sba.gov/advo, or call (202) 205-6533.

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Self-Employed Women Balance Work, Family Life

February 28, 2009 By Paul (Founder, WorkAtHomeTruth) 1 Comment

2/26/2009 Office of Advocacy Press Release:

Study Compares Self-Employed Women To Wage-And-Salary Earners

WASHINGTON, D.C. – Self-employed women are able to spend more time with their children and families, compared to their wage-and-salary earning counterparts, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration. The study finds that self-employed women spend about 3.5 more hours per week in household activities than wage-and-salary earning women do, and six more hours than men do.

“Previous studies have established that women enter self-employment for reasons other than potential earnings and that life-style factors heavily influence their decision,” said Shawne McGibbon, Acting Chief Counsel for Advocacy. “This study documents that self-employed women’s time-use patterns are in fact different from those of wage-and-salary earning women. Self-employed women spend less time on work-related activities and more time on household activities and child care.”

Advocacy released Self-Employed Women and Time Use, written by Tami Gurley-Calvez, Katherine Harper, and Amelia Biehl, at the National Women’s Business Council’s 2009 Women’s Business Summit in Washington, DC. The report used data from the American Time Use Survey (2003-2006), sponsored by the Bureau of Labor Statistics, and conducted by the U.S. Census Bureau.

The authors found that the largest differences in time use between self-employed women and men were in the area of secondary childcare, where a parent is at the same location as the child but is primarily engaged in some other activity such as work or household chores. Moreover, they found that self-employed women also work about 10 fewer hours per week than self-employed men do. Interestingly, the authors also found that relative to men, higher-earning women are slightly more likely to enter self-employment than their lower earning peers are.

The Office of Advocacy, the “small business watchdog” of the federal government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues.

For more information and a complete copy of the report, visit the Office of Advocacy website at www.sba.gov/advo.

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The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers. For more information, visit www.sba.gov/advo, or call (202) 205-6533.

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Small Business Gains When The Regulatory Flexibility Act Is Followed

February 1, 2009 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

1/29/2009 SBA Office of Advocacy Press Release:

Oversight Of RFA Saves Small Business $10.7 Billion in FY 2008

WASHINGTON, D.C. – The Office of Advocacy of the U.S. Small Business Administration saved American small businesses $10.7 billion in foregone regulatory costs in fiscal year 2008, by helping federal agencies comply with the Regulatory Flexibility Act. The RFA requires agencies to analyze the economic impact of proposed regulations on small entities and consider less burdensome alternatives that still reach the agencies’ regulatory goals.

“Small businesses gain when their voice is heard during the regulatory process,” said Shawne McGibbon, Acting Chief Counsel for Advocacy. “When small business is involved in regulatory decision making, more effective and efficient regulations are the result. The Office of Advocacy is proud to bring small businesses’ concerns to the attention of regulators in Washington, and we are especially proud of the $10.7 billion in savings that resulted from our efforts.”

Report on the Regulatory Flexibility Act, FY 2008 outlines federal agency compliance with the RFA, describes agency adherence to Executive Order 13272 that strengthens the RFA, and documents the results of Advocacy’s Regulatory Review and Reform (r3) and Small Business Regulatory Flexibility Model Legislation initiatives.

Other highlights of Advocacy’s efforts include:

    Ø Submitting 33 public comment letters to federal agencies on regulatory proposals,
    Ø     Convening 28 roundtables to solicit opinions and concerns of small business stakeholders,
    Ø     Delivering the 2008 r3 Top 10 Rules for Review and Reform to agencies for their action, and
    Ø     Working with stakeholders in five states to pass regulatory flexibility legislation.

The Office of Advocacy, the “small business watchdog” of the federal government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats, and it funds research into small business issues.

For more information and a complete copy of Report on the Regulatory Flexibility Act, FY 2008, visit the Office of Advocacy website at www.sba.gov/advo.

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The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers. For more information, visit www.sba.gov/advo, or call (202) 205-6533.

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