Just heard something on the news, verify?
 

A reporter assert that:

1. Most new jobs are started by small businesses
2. Most small business owners are in the $250K range

Are these 2 asserts accurate? Link?

B

Depends how you define "small business owner".

I rather doubt most small business owners are clearing $250k profit a year income. If they are, then their doing quite well.

Question is, how much are these new jobs paying in wages and benefits? If it's minimum wage without any medical benefits, then the new jobs are next to worthless for the people filling them. But that appears to be what our economy has trended towards.

IIRC he didn't say, "Profit." I believe he said said income.

If so, then after paying overhead, supplies, inventory, insurance, and employees, wouldn't be much profit before or after after taxes.

Poverty level job creation isn't worth squat to anyone trying to earn a living. Sounds alot like our current economy, no wonder so many people are on food stamps and such.

On a small business, profit is usually taken as income.

Basically same thing, different words.

Even if you incorporate, you cannot just let it lie in the corporation's accounts past Dec 31. If you do, it becomes subject to the same corporate income taxes charged to large businesses, meaning you will pay double taxation on it, once as corporate income, next as personal income. Small businesses are pretty much forced to remove all profit as it occurs, or immediately spend it on capital or expense items.

IMO, most small businesses are probably generating about $200k per partner per year. The vast majority of them are professional practices of some sort.

Figures I & J. Report pgs 19 & 20

http://www.irs.gov/pub/irs-soi/05petska.pdf


edit: http://www.bls.gov/news.release/pdf/cewbd.pdf

Any help?

Small businesses on or about the $250k mark actually have a great deal of leverage to avoid the tax, they simply shift more of their own expenses onto the corporation. It is as a floor value that will include all of the very wealthy that really concerns The Party of The Very Wealthy.

"Small Business" covers a rather wide range. The SBA definition: "A business that is independently owned and operated that is not dominant in its field of operation, provided it has annual receipts not in excess of $500,000 and has fewer than 500 employees."

500 employees is a good size company compared to us at 26. We did our little part by hiring 3 new salespeople this year.

If you're a restaurant, you are "small" if you do up to maybe $600k, maybe $800k a year. If you're a farmer you're still small if you do $5 million. OTOH if you're a personal chef, you're big if you manage to bill $80k.

In my experience, item 1 is accurate. Over 90% of all business in the USA are considered small business. It follows that that class is going to do the most hiring. I'm looking at adding 2 employees myself.

As to income, the amount reported is at least on par with several of those I work for..

That’s why I previously suggested you look into investing in one.....

Man, that is some data-rich food for thought right there. It looks like the data supports the notion that businesses with a few dozen employees are about the only businesses left (as of the second doc) that are still at break-even to slightly ahead hiring vs laying-off.

What happens if you raise the taxes on the S corp owners who are currently being squeezed by recession?

I knew where you were going with this right from the beginning. As to your question, that's a good one. Who knows? On the flip side, what happens when you give them a tax cut? Will they automatically hire more people even if they don't need them? I don't think so. On the other hand, will they automatically lay off valuable people because now they have to pay slightly more tax? I don't think so either. More likely they'll just get rid off some dead weight. It's also worth considering that any tax increase on individuals making over $250K will likely be accompanied by tax breaks for small businesses, including credit for hiring additional workers, so for a small business owner the whole thing may well be tax-neutral.

If the small business definition in use is that promoted by the U.S. Small Business Administration, the definition encompasses far more businesses than you may realize: http://www.sba.gov/contractingopportunities/officials/size/SUMM_SIZE_STANDARDS_INDUSTRY.html