Profit Minded

Incorporation models, taxation, bookkeeping, credit: Small Business Reading.

As the long run in to November's election comes to a close the media is finally starting to notice that there has been a disconnect between what the candidates say about small business, what they seem prepared to do, what small businesses actually want and even what a small business really is. The last point is a good place to start. We wrote about the SBA's decision to change its criteria for what a small business is about a month ago. It came up again this week since the date for implementing the new size limits was October 24th. It takes a lot of digging but the bottom line is that for most small businesses the upper limit to be considered small is 500 except for a number of manufacturing industries and a few other exceptions where it goes up to 750, or 1,000 or even 1,500 in some rare cases (aircraft manufacturing for example). The upper end of these standards represents a big disconnect from most small business owners since 80% of all small businesses are 2 people or fewer. But it's big business to be called a small business since there are a large number of federal contracts and subsidies that are only available to officially designated small businesses.

This split - between what most people think is a small business (let's say under 100 employees) compared to what government and politicians think is a small business - explains a lot of the rhetoric at the debates.

It also explains a recent survey showing that most small businesses think the rich should pay higher taxes.

The bottom line is that there has been no discussion about the issues that small businesses themselves say that really matter to them.

Another of the confusing issues that has arisen during the election cycle is around how taxation works for small businesses - in particular those using one of the forms of 'pass-through' taxation (basically available to LLCs and S-Corporations). At issue is how much pass-through taxation allows a relatively profitable small-business to avoid (or not avoid) tax liability using this model. We've added a couple of articles to our roundup this week that cover the basics of incorporation structure just to help clarify.

On the practical side of things we took a look at some basic bookkeeping mistakes and also the often-overlooked topic of emergency planning.

On the lighter side we also ran a great article on making the most of the hidden perks that your credit card offers.

If you haven't taken the plunge yet, hopefully some of these articles give you the impetus to start your own business — and if you do, we have tools to help. Besides our domain name, web hosting and ecommerce products, we also have just added an innovative marketing dashboard that you can try for free even if you don't use our other products.

Some other great small business articles form around the web this week.

More on the SBA redefining 'small' business.

The top 10 questions about small business incorporation.

The basics of business structure for emerging entrepreneurs.

Fail fast: Five weeks and $52 later. (an interesting look at the new 'fail fast' approach)

A pizzeria owner learns the value of watching the books.

Three ways to boost your business beyond order-taking (this is a very solid article on increasing sales)

6 scary mistakes small businesses make. (Halloween is coming after all)

Have a great week, watch the bottom line and let us know in the comments if any of this was especially useful or if you have any advice you'd like to share. Follow us on Twitter and Facebook!

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