Photo from agweb.com
By Jillian Weynand
About 30 people, spurred by a new tax deduction to help small businesses, attended a start-up workshop at Sachem Public Library on Saturday.
A tax reform signed into law by President Trump now grants a deduction for qualified business income. Small business owners are able to receive a 20 percent tax deduction on their yearly business income.
The Small Business Administration describes small businesses as having a staff of up to 500 employees and $7 million in revenue. This deduction would benefit business owners by helping them to deduct 20 percent of the business income on their individual tax return.
“As of January 1, the first $100,000 small business owners make in one year is tax free,” Barry Klein, a business consultant from SCORE, a small business consultant and mentoring group, said.
At the Saturday morning workshop, a group of 30 people attended the first event in a five-week series of workshops sponsored by SCORE. The prospective business owners listened in on what type of corporations and business licenses would work best for them and why they would be able to benefit from this kind of tax break.
“You need $50,000 to start a business. That doesn’t count what you need for first and last month’s rent, operation fees or payroll for employees,” Stephen Gans, a finance consultant from SCORE, said. “Most people think they need just the $50,000 and they can start, but they need to be ready and should know that they aren’t going to break even until month six and won’t be profitable until month 12.”
The workshop came full circle, both starting and ending with the discussion of the new tax law lessening the burden on business owners. Both Gans and Klein urged attendees to consider the reasons they want to go into business and that it shouldn’t be for the sole purpose of the tax break.
“The skill set of running a business is much different than the skill set for an employee within a business,” Gans said.
Long Island is the home to many small businesses, in particular, franchises. Small businesses comprise almost 90 percent of commercial enterprises on Long Island, according to the Long Island Association.
About half of all new businesses make it to the four and five year marks, according to the Washington Post.
Both Klein and Gans warned that the concept of running a business is not as obvious as it sounds. They stressed that the more experience you have within your industry and in management, the greater the relationship is to success is in business.
“The whole basis for franchising is for people who don’t have any experience in business at all,” Klein said. “The franchise model allows for that.”
Franchises grant people the opportunity to own their all small business in a profitable area while staying within the guidelines of the parent company to stay relevant. Relevancy doesn’t always last though. Franchises are often a trending moment and are vulnerable to the next industry that comes along.
“Be wary, just because an industry is doing well and shows great numbers doesn’t mean that when you enter the market, you will see the same result,” Klein said.