SMALL BUSINESS HEARINGS
The House Small Business Committee holds two hearings this week on critical issues for company owners: Small Business Administration loans and getting contracts with the government.
SBA head Karen Mills testifies before the full Small Business Committee on Wednesday about the management of the agency's capital access programs. Those programs include the SBA's loans to small businesses. Mills is expected to talk about the SBA's progress in meeting the recommendations of audits by the Government Accountability Office and the SBA's inspector general. The audits raised questions about the SBA's loan underwriting process and said there wasn't enough oversight at the agency of risk management – in other words, ensuring that risky loans weren't being granted.
The Subcommittee on Contracting and Workforce holds a hearing Thursday about the opportunities and issues for small businesses that want to get contracts through the General Services Administration's Multiple Award Schedule Program. Under the program, the GSA awards long-term contracts to buy products and services at a volume discount. For more information about the program, visit www.gsa.gov/portal/category/100611 .
ESTATE TAX CONCERNS
Next year the estate tax is set to rise. If Congress doesn't step in before January that could lead to tax bills so large that critics argue that it may be difficult for people to keep the businesses that they inherit operating.
Starting Jan. 1, the amount of an estate that will be exempt from the tax will fall to $1 million from the current level of $5 million, and the tax rate will rise to 55 percent from 35 percent. If there is no available cash to pay the taxes on an estate, then assets – including the business – may have to be sold.
“If something happened to my dad and we were left with a large estate tax bill, we would literally have to sell parts of the company in order to pay it,” said Karen Madonia, a witness at a hearing held last week by the House Small Business Subcommittee on Economic Growth, Tax and Capital Access. Her father owns Illco Inc., an Aurora, Ill.-based, ventilation and air conditioning parts distributor, which has $40 million in revenue, eight branches in three states and 92 employees. If the tax isn't changed, Madonia, who serves as the company's chief financial officer, predicts that some of the workers would have to be laid off.
Another challenge is that estate taxes must be paid within nine months of a death, said another witness, tax attorney Neil Katz, of Syosset, N.Y. Unless the business or an owner's heirs have adequate cash reserves, or they are able to get an extension under the tax laws, they may be hard-pressed to come up with the money, Katz said. He said it can cost $5,000 to $50,000 to set up a plan to avoid the tax.
However, one witness, Thala Taperman Rolnick, a certified public accountant in Phoenix who specializes in estate, trust and gift taxes, said that “at its current level the estate tax affects very few individuals.” But she added that if Congress allows the exclusion to revert back to $1 million, it would affect enough small companies that it would become “a major small business issue.”
President Barack Obama's budget proposal for 2013 calls for a $3.5 million exemption and a 45 percent tax rate.
WORKSHOPS FOR NATIVE AMERICANS
The Small Business Administration and the Federal Reserve Banks of San Francisco and Minneapolis plan a series of workshops about commercial law for Native Americans. The workshops will explain the Uniform Commercial Code, a set of laws about commercial transactions used nationwide. Native American tribes have their own commercial codes, so their laws can vary widely. The workshops are intended to show how using the uniform code will give Native American company owners more business opportunities. For more information about the workshops, visit http://content.govdelivery.com/bulletins/gd/USSBA-42e600
IT'S HURRICANE SEASON
The arrival of June brings with it hurricane season, but many small businesses aren't prepared for a disaster, according to insurance company Travelers Cos. Travelers questioned small business owners at a conference in Washington last week, and found that 52 percent don't have a written disaster plan. Fifty-seven percent said they feel somewhat or not very confident that they have appropriate insurance coverage to prevent their companies from suffering heavy financial losses or even failure due to a disaster.
Owners who want to learn more about disaster planning can find information online about protecting their employees, records and important information and their physical premises. The Small Business Administration's website has a section on disaster preparedness at www.sba.gov/prepare
MARK YOUR CALENDAR:
Do you know how you'd keep your company running during a disaster such as a wildfire or hurricane? The Small Business Administration is sponsoring an online discussion with former Federal Emergency Management Agency head David Paulison about how business owners can be resilient leaders during a crisis. The discussion will be held Tuesday, June 12, at 2 p.m. ET. To register go to: www1.gotomeeting.com/register/387442145
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Joyce Rosenberg can be reached at http://twitter.com/JoyceMRosenberg