I went to a small liberal arts school in college and, as a result, I have a lot of friends that are very interested in politics. When I scroll through my Twitter feed or my Facebook timeline, there is no shortage of opinions on everything from taxes to immigration to funding for the local library. I have never been heavily active in politics, meaning I have done the bare minimum in keeping myself up to date from whatever Matt Lauer says in the first 10 minutes of the Today show in the mornings. But, in my career both as a CPA advising clients and as a small business owner, I have found myself paying more attention not to what elected officials are saying, but to how new laws could affect businesses, both mine and my client's.
I heard a speaker a few weeks ago tell a story about a state legislator here in Arkansas. The legislator said that all it took was 10 people from his district to voice an opinion on a matter to cause him to vote one way or another. Legislators are meant to be guided by the people that they represent, which is the exact reason why business owners should stay on top of legislative issues, both at the Federal level and in their local communities.
At the Federal level, the biggest issue I have is the delay in extending tax law. Because I serve many small business clients, I am a huge proponent of Section 179 and Bonus depreciation. In 2014, they passed this extender in late December. What was the business supposed to do? I'm not a huge fan of saying "I don't know" to a client (unless I really don't know), but last October and November I had to say that a lot when clients asked if they should buy their new truck/x-ray machine/tractor. I could not advise them one way or another because I did not know what the depreciation benefit would be.
States also have a tricky way of garnering more tax revenue through a well known method called sales tax. Here's a good example: the sales tax rate in Little Rock is a cumulative 9% (6.5% state, 1.5% city, 1% county). The sales tax in Bryant, which is a whopping 10 miles down the road is 9.5% (6.5% state, 3% city, 0% county). That means that buying a product in Bryant will cost 0.5% more than buying a product in Little Rock. If you're a business owner trying to decide where to open your next store, isn't Little Rock the more attractive option?
As a business owner, it is important to stay up to date on what your Federal and local legislators are up to. A sudden change in Federal tax law or an incremental increase in a sales tax rate could have a big impact on the business's bottom line. Keep up with changes that are in the works and write to your legislators. They have a responsibility to vote with the voice of the people, so let your voice be heard.