Steps to determine the impact the soaring national deficit will have on your business

Written By Steps To Faculty Published August 13th, 2010

Small business is the engine that drives economic recovery. Nearly 2/3 of the US economy is based upon small business. President Obama has noted that any new job creation in 2010 will have to come from small business and the private sector. But with an increasing national debt and commercial banks being unable to give out small business loans, which is the lifeline for nearly all businesses, the US economy at the time of this writing is at a standstill. While there is no easy solution to reverse this economic trend, for right now you need to be aware of the implications a growing deficit will have on your business. Let’s take a look.

Step 1 Plan for less customers

Unemployment is growing and many consumers have become pessimistic about their future and have ceased to spend. While this may seem obvious, did you know that your are accountable for taxation even though your business may go under? That is right. You will still have to find money for the increased taxation and cannot claim a loss for home based businesses. Thus you need to have some money set aside for that as getting a loan may be out of the question right now.

Step 2 Keep cash flowing

With the onset of a period of delation later this year, cash will be essential. Keep a track of your credit management and accounts receivables. Also cut any unecessary cost if possible. Even though loans are scarce, a flow of cash, however small, can make the difference between closure or success of a business.

Step 3 Watch your tax increases

You may have already heard the news. In an effort to eliminate a $290 billion difference in what the Internal Revenue Service collects in taxes and what is actually paid small business will take the hit. Various legislation has already been put in place to increase the requirements for small business reporting including third party reporting. In short, you will have added costs of reporting taxes and filing and need to prepare.

Step 4 Comply

Another measure that was recently added was that of compliance with the Treasury Department regarding the filing of 1099. Traditionally 1099 form are used for contractors or other help that makes under $600 annually in your firm. To date small business have been exempt from filing these forms, but now that has changed. Small businesses will not only have to file for all 1099s used, but also must file the 1099s used as payments to other corporations as well. These added costs will increase your tax bill. Typical compliance costs can run an extra $2,000 and add 120 hours more time to process.

Step 5 Use the company credit card wisely

The final new rule that small businesses must contend with is that of credit card reporting. Credit card companies are now required to report all sales from merchant credit cards. This is then matched with reported income at the IRS. Should a discrepancy arise between reported income and sale receipts, then you will have the added burden of handling these costs.

You already spend a great deal of money and time running your business, but prepared for some changes. Please visit stepsto.com for more great business advice.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.