In the countdown to the nation’s fall over the edge of the fiscal cliff, small business advisors and advocates are imploring Congress and President Obama to come together.
While many small business owners remain paralyzed with uncertainty about 2013 budgeting, others are taking action. Based on the assumption that Congress will not reach an agreement in time to avoid the cliff, about half of business owners are making changes to prepare for higher tax rates next year, according to results of a survey conducted by financial information company, Sageworks.
The survey conducted between December 12-18 collected online responses from 164 Sageworks clients, who are accountants and business advisors to privately held businesses. The responses reflect what those professionals hear from those they advise:
- More than half of accountants surveyed said their business clients were making changes in their companies in response to fiscal cliff uncertainty.
- Almost 30 percent said their business clients were most worried that the uncertainty would continue.
- Another 21 percent said their clients worried about a fiscal cliff solution that would negatively affect their businesses.
- Twenty percent said their clients feared that the fiscal cliff solution wouldn’t address the longer-term issues of government spending and the national debt.
Sageworks CEO Brian Hamilton explained that the uncertainty surrounding the fiscal cliff debate adds another layer of complexity to business decisions: “Private companies operate in extremely risky environments that most of us would not accept,” Hamilton said in a statement. “Business owners already have enough to worry about, and now they’re further burdened with how new policies are going to affect their bottom line and discretionary income.”
While acknowledging that an ideal fiscal cliff solution from Congress would tackle the national debt “head on and successfully,” Hamilton conceded that any plan would be better than the current stalemate: “You can’t expect businesses to plan for their 2013 and 2014 operations when you throw new policies at them on Dec. 31.”
Other warnings came from advocates for small business and the self employed. In the days before Congress took a holiday break, representatives of the Small Business Majority participated in a series of press conferences with nine Democratic U.S. Congressmen and women and eight small business owners urging lawmakers to come to an agreement that would extend tax cuts for the middle class.
Voicing her 22 million constituents’ frustration with the inability of Congress and the Obama Administration to reach agreement, Kristie Arslan, CEO of the National Association for the Self-Employed, called on both sides to “realize the impact of their brinksmanship and political posturing on America’s small businesses.”
Arslan’s organization predicts that self-employed individuals making between $60,000 and $88,000 a year will see a tax hit of $2,700-$3,700 per year if a debt deal isn't reached, and also suffer as the economy slips back into a recession and customers lose income.
How is your business preparing for the nation's fall over the fiscal cliff? Tell us in the comments.