NFIB Resource Guide - Small Business and 111th Congress

Small Business
Resource Guide
for the 111th Congress
Table of
Contents
The Importance of Small Business, by NFIB President and CEO Dan Danner . . . . . . . . . . . . . . . . . 2
Who is NFIB? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
NFIB Membership Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Facts About Small Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The NFIB Legislative Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Tax Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Health Care Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Labor Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The NFIB Research Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
About the Research Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Economic Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
NFIB National Small Business Polls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
NFIB Small Business Problems and Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Examples of Non-Series Research Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
BSIM-Business Size Insight Module . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
The NFIB Small Business Legal Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The NFIB Young Entrepreneur Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
NFIB Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1
NFIB Membership Profile
NFIB’s national membership spans the spectrum of business operations, ranging from
one-person cottage enterprises to firms with
hundreds of employees. While there is no
standard definition of a “small business,” the
typical NFIB member employs 10 people and
reports gross sales of about $500,000 per year.
NFIB Membership by Gross Receipts
16%
14%
12%
10%
8%
Distribution of NFIB Members by Industry
6%
25%
4%
2%
20%
0%
< $50
$51100
$101200
$201350
$351500
$5011,000
$1,0013,000
$3,001- > $10,001
10,000
Income in thousands
NFIB Membership by Number of Employees
15%
30%
25%
10%
20%
15%
5%
10%
0%
4
Services
Real Estate
Finance, Insurance
Comm. and Utilities
Transportation
Retail Trade
Wholesale Trade
Manufacturing
Construction
Agriculture, Forestry,
Fishing
5%
0%
1-2
3-5
6-9
10-14
15-19
20-40
Number of employees
41-100
101+
Facts About
Small Business
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Small business produces roughly half of the
private Gross Domestic Product and between
60 percent and 80 percent of net new jobs.
American small business is now the world’s
second largest economy (2007), trailing only
the United States as a whole, but ahead of
Japan, Germany, China and the U.K.
There are about six million businesses in the
United States that employ people other than
the owner(s). Ninety percent of them employ
fewer than 20 people. In addition, about 20
million people operate full- and part-time
firms that do not employ others.
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About one in 10 adult Americans is currently
taking identifiable steps to start a business.
More than 90 percent of adult Americans
would either approve or strongly approve of a
son or a daughter starting their own business.
Well over 625,000 new, employing businesses
open in a typical year; about 575,000 close
in the same interval. Closing and bankruptcy
are not the same thing. Normally, 15 employing businesses close for every one that goes
bankrupt.
Small businesses employ more than half of
the private-sector work force (including the
self-employed).
Small business in the United States is important because:
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It supplies goods and services that customers demand.
It is a major innovator, a laboratory for
economic experiment.
It generates about two-thirds of the net
new jobs in the country.
It stabilizes economic cycles through
relatively small employment swings.
Its owners provide neighborhood and
community leadership.
It is an important avenue of economic
opportunity.
It enhances pluralism in economic
decisionmaking.
It offers personal utility, i.e., personal
satisfaction and happiness to its owners.
Tonya Jones, Mark IV Enterprises
5
The NFIB
Legislative Team
The NFIB legislative staff in
Washington carries the message of
small business owners to Capitol
Hill. The eight lobbyists are divided
into two teams—one for the House
Small Business and Taxes
9 Things to Keep in Mind
1.Do Not Separate the Business
From the Business Owner.
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of Representatives and the other
covering the Senate. This is an
experienced, professional group
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of people who have worked in
congressional offices and political
campaigns. Their passion for small
■
business is the reason they have
chosen to be part of the NFIB team.
Legislative priorities for the 111th Congress are:
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The small business owner is connected with
their small business, both in how the business
is structured and the day-to-day operation of
the business.
Most small businesses are organized as passthrough entities—meaning the earnings from
the business pass on to the business owner
and are taxed at the individual level.
The small business owner is involved in the
day-to-day operations of the business, working along side the employees to make the
business successful.
These unique characteristics of small businesses amplify the effect that taxes have on
the business.
NFIB President and CEO Dan Danner and the Federal
Public Policy staff, from left to right: (bottom row)
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6
Making healthcare more accessible
Simplifying the Internal Revenue Code
and reducing taxes
Curbing runaway federal spending
Stopping new labor mandates
Kate Bonner, Susan Eckerly, Amanda Austin, Caitlin
McDevitt, Gary Palmquist, Kristina Blair. Middle row:
Brad Close, Michelle Dimarob, Andrew Felz, Bob
Graboyes and Bill Rys. Back row: Dan Danner, Chris
Walters. Not pictured: Andrew Fimka, Chris Pitts.
2.Keep Individual Rates Low. Small
Businesses Do Not Pay Corporate Tax.
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Seventy-five percent of small business owners
pay their business tax at the individual level
because they are organized as pass-through
entities.
Reducing the corporate tax rate has no
direct benefit to the majority of small
businesses.
Raising individual rates reduces small business growth—a 5 percent increase in the
individual tax rate reduced by 10 percent
the number of business owners making new
capital investments.
3.Tax Complexity Is a Major
Problem for Small Business.
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The cost of tax compliance is 65 percent
higher for small businesses as compared to
large businesses.
Unlike a large corporation, small businesses
do not have separate finance departments
tracking tax changes and keeping the business books. Instead, the owner is generally
responsible for tax compliance.
This becomes a huge drain on the time of
business owners and takes them away from
the day-to-day operation of the business.
The burden placed on small businesses in
complying with the tax code takes away financial resources from the business. The total
cost of compliance is between $18 billion
to $19 billion. Tax paperwork is the largest
single paperwork burden placed on small
business owners at a cost of $74.24 an hour.
This complexity is why 88 percent of small
business owners rely on a paid tax preparer
to file their annual tax returns.
The more complicated the code becomes, the
greater the burdens become on small business.
4.Cash Flow Is a Concern for All Small
Businesses—Taxes Make it Worse.
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Cash flow is the money that a business earns
that is used to pay everyday expenses like
wages, benefits, and utility bills.
Cash flow is a challenge common to all
small businesses. One in five small busi-
■
nesses experience a continuing cash flow
problem and one in two face a regular cash
flow problem.
High tax rates only make the cash flow
problem worse. The more a business pays in
taxes—this includes not just federal taxes,
but state and local taxes as well—the less
money the business has to pay employees and
keep the business running.
5.Do Not Tax Labor.
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The payroll tax on employees has a negative impact on small businesses by increasing
the cost of labor and reducing the business’
regular cash flow.
No matter how unprofitable a business may
be, they must make regular (usually monthly)
payroll tax deposits. This tax eats into the
company’s regular cash flows and adds to the
everyday cost of doing business.
Keeping payroll taxes as low as possible
is important to small businesses and their
employees.
6.Expensing Puts Money Back Into the
Business and Reduces Complexity.
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Section 179 expensing allows a small business
to immediately deduct the cost of making an
investment in that business.
Expensing immediately puts money back
into the small business for the investment
that the business owner makes rather than
spreading the deductions out over a long
depreciation schedule.
Expensing also reduces tax complexity
by eliminating the paperwork and recordkeeping burdens associated with longer
depreciation periods.
7. Cash Accounting Reduces Complexity.
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Currently, businesses making less than $5
million may use the simplified cash method of
accounting rather than the more complicated
accrual method.
The cash method more accurately reflects
small business expenses and reduces the
record-keeping and paperwork burdens required under the accrual method.
7
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Expanding the sales limit from the current $5
million ceiling to $10 million would simplify
the tax code for many small businesses.
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8.Many Small Businesses Operate
from Home Offices.
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Nearly 50 percent of small businesses are
home-based, so the home office deduction is
important to many business owners.
The complexity and fear of an audit associated with the deduction keep many small
businesses from claiming it. In addition, the
record keeping and paperwork burdens associated with the tax are very high.
Providing a standard home office deduction
would encourage more small businesses to
claim the deduction, reducing their cost of
doing business and their tax burden.
9.Small Business Owners Must
Plan for the Estate Tax.
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Because many small businesses are familyowned, they must plan for the estate tax if
they want to keep the business operating
after the death or retirement of the owner.
Beyond the tax itself, the planning costs associated with it are a drain on small business
resources. Money spent on planning means
less money for investment and job growth.
Much of the value of the so-called estate is in
the actual business itself—the land, building,
and equipment—meaning that the new owner
must sell off the business assets to pay the tax.
Protecting small businesses from the estate
tax is important to keep Main Street family
businesses operating for future generations.
Small Business and
Healthcare Issues
to Keep in Mind
Small Business Insurance Is a
State Regulated Product.
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Small business owners are limited to purchasing only the products available in their state.
Unlike a large business, they can’t purchase
products (e.g., health insurance policies)
across state lines.
State insurance commissioners and legislatures pass laws and provide the regulatory
oversight that governs insurance for small
businesses and individuals.
On the other hand, large employers are able
to develop their own benefit packages because
they are governed by ERISA.
Size Matters.
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Small business owners typically buy insurance in the small group market. In most
states, the small group market is defined as
2–50 employees.
A few states also include the self-employed in
the small group market. Otherwise, individuals who are self-employed buy their insurance
in the individual market.
Prices for insurance plans vary greatly according to the size of a business. A Commonwealth Fund report notes that small
businesses, on average, pay about 18 percent
more for health insurance in the small group
market as compared to similar plans available
in the large employer market.
Rules Vary Greatly Depending
on State and Marketplace.
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In the small group and large employer setting, all participants pay the same price for a
plan—regardless of their health history.
Likewise, there is a guaranteed offer of coverage in the employer-based system.
However, in the individual market, where
many self-employed purchase coverage, applicants for insurance can be rejected or charged
a different rate because of their health history. This practice is referred to as medical
underwriting.
From state to state, the cost of insurance, the
way the price is determined and the premium
can vary widely. The state legislature and the
insurance commissioner can greatly influence both what is covered and how much a
product costs.
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Because the state legislature can change or
add rules governing insurance, the price of
premiums can vary greatly from one year to
the next.
There Is a Direct Correlation Between
Health Insurance and Taxes.
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The tax treatment of (or lack thereof) health
insurance differs depending on the market
and business structure.
Generally, small businesses and their employees who purchase health insurance in the
employer-based system pay for their insurance with pre-tax dollars. That means the
cost of the insurance is deducted before their
tax liability is calculated.
The self-employed, along with those individuals who are not self-employed, but purchase
in the individual market, purchase their
health insurance with after-tax dollars. This
means they have already paid all their taxes
and are purchasing with remaining funds.
They do not receive the benefit of reduced tax
liability. On average, the self-employed spend
$1,500 more a year on insurance as a result
of the uneven tax treatment.
NFIB’s Small Business and
Healthcare Principles
Universal: All Americans should have access to
quality care and protection against catastrophic
costs. A government safety net should enable
the neediest to obtain coverage.
Private: To the greatest extent possible, Americans should receive their health insurance and
healthcare through the private sector. Care
must be taken to minimize the extent to which
governmental safety nets crowd out private
insurance and care.
Affordable: Healthcare costs to individuals,
providers, governments and businesses must be
reasonable, predictable and controllable.
Unbiased: Healthcare and tax laws should not
push Americans into employer-provided or
government-provided insurance programs and
hobble the market for individually purchased
policies. Small employers should be treated the
same as large employers, who can already pool
across state lines. A healthcare system built on
employer mandates or on pay-or-play taxes is
unacceptable.
Competitive: Consumers should have many
choices among insurers and providers. Policymakers must alleviate the limitations that state
boundaries and treatment mandates place on
competitiveness.
Portable: Americans should be able to move
throughout the United States and change jobs
without losing their health insurance.
Transparent: Information technology should
enable all parties to access accurate, userfriendly information on costs, quality and
outcomes. Providers must be able to obtain
relatively complete medical histories of patients.
At the same time, patients’ privacy must be
guarded zealously. The private sector must play
a vital role in developing the new technologies.
Efficient: Healthcare policy should encourage
an appropriate level of spending on healthcare.
Laws, regulations and insurance arrangements
should direct healthcare spending to those
goods and services that will maximize health.
Adequate risk pools throughout the healthcare
system are vital to accomplishing these goals.
9
Evidence-based: The healthcare system must
encourage consumers and providers to accumulate evidence and to use that evidence to
improve health. Appropriate treatment choices
and better wellness and preventive care should
be key outcomes.
Realistic: Healthcare reform should proceed
as rapidly as possible, but not so quickly
that firms and individuals cannot adjust
prudently. It is important to assure that no
one’s quality of care suffers, as we move to
provide coverage for all Americans.
Small Business and
Labor Issues
Labor issues, like most regulations and
mandates, affect small businesses very differently than larger corporations. Small business
owners remain very concerned about efforts
to impose new labor mandates and regulations and the negative impact they would have
on the economy. In every recession, it is small
business that leads the nation’s recovery and if
our members are to lead the way again, Congress must not pass legislation that threatens
their ability to keep current employees and
hire new ones.
Support Private Ballot Elections.
One of the biggest threats to the continued
viability of small business is the so-called
Barbara Knauf, The Stitching Post
10
Employee Free Choice Act, legislation that
would end private ballot union elections and
allow unionization by “card check.” Organizing by card check initiates the unionization of
small businesses from the outside, not internally by employees themselves. A card check
campaign can be conducted so quickly that
small employers rarely have a chance to address
employees during an organizing campaign, resulting in a one-sided discussion solely between
a union representative and an employee.
Why is NFIB opposed to card check legislation?
Here are some key facts about the Employee
Free Choice Act:
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Keeps small business owners in the dark during a union organizing campaign.
Takes away the right of a small business
owner to ask for a secret ballot election.
Allows unions to hold authorization cards
for as long as it takes to collect a majority of
signed cards.
Will encourage union harassment and intimidation of employees.
Employee choices are made public—the
union, business owner and fellow employees
will all know the decision of each employee.
Mandates federally supervised, binding arbitration if owners do not agree to a contract
within 120 days.
Does not allow workers to use a card check
election to decertify a union.
Overrides state Right-to-Work protections for
employees.
Allow Small Business Owners to
Create Flexible Leave Policies.
NFIB believes that small business owners
should be free from government intervention in
deciding the appropriate wage and benefit levels
for their employees. Small businesses rely on
flexible workplace policies to shape the benefit
plan that best suits their business and their
employees. An unwarranted additional burden
like a one-size-fits-all paid leave mandate must
not be forced upon small businesses if they are
to thrive.
Small business owners already voluntarily
provide leave and paid time off for their employees. According to NFIB Small Business
Polls conducted in 2003 and 2004:
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96 percent of small business owners provide
flexible working hours for their employees.
75 percent of employers already voluntarily
offer some form of paid sick leave.
67 percent of small business owners most
recently granted family leave as paid leave.
Mandated paid leave will result in a decreased
ability of employers to offer other benefits that
employees may want more, such as muchneeded health insurance. Even if the direct
costs of a paid leave mandate were zero, it
would take a flexible, no-hassle voluntary employee benefit and turn it into a governmentregulated entitlement which business owners
would have to administer and for which they
would become liable.
Perry Sanders, Sanders’ Cookie Jar Bakery
ployment taxes or creating a new payroll tax.
Either of these will place new burdens on small
businesses, which will be forced to pay a new
payroll tax or see their unemployment taxes
increased to pay for new programs and cover
the unemployment fund shortfall.
Oppose Davis-Bacon Expansion.
NFIB believes small and minority-owned businesses are discouraged from bidding on public
projects by the complex and archaic rules set
forth by the Davis-Bacon Act.
The Davis-Bacon Act, a Depression-era wage
subsidy law, requires that each public works
contract over $2,000 contain a clause that
establishes the minimum wage to be paid.
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Prevent Wage Insurance Mandates.
NFIB believes that new programs to provide
wage insurance to laid-off or displaced workers
are unnecessary. These plans would typically
guarantee a portion of a worker’s previous
salary—a guarantee that would be paid out of
the U.S. Treasury. While the emotional appeal
of wage insurance is strong, placing new burdens on small businesses during a recession will
only lead to more job losses.
To pay for new wage insurance programs, supporters offer two methods—diverting unem-
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The Davis-Bacon Act essentially prevents
small business owners from competing for
contracts because they are required to pay the
“prevailing wage,” the wage being paid by
local labor unions.
These wages rarely resemble local market
conditions because they are based on union
recommendations.
The Davis-Bacon wage scale has overwhelmingly favored large, urban and unionized
contractors.
The inflated wage scale requirements and
significant paperwork burdens of the DavisBacon Act shut small employers out of the
federal construction market.
11
Amber MacRae, DBA Bentley’s Bagels
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According to the Congressional Budget
Office, the Davis-Bacon Act raises government construction costs $1 billion each year.
Oppose minimum wage requirements.
NFIB opposes any increase in the current
federal minimum wage. Mandatory wage increases hurt not only small businesses, but their
employees as well.
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Small businesses offer most of the minimum
wage jobs—to younger, less experienced
workers.
The overwhelming majority of economists
continue to affirm the job-killing nature of
mandatory wage increases.
The minimum wage is already scheduled
to increase again to $7.25 per hour on July
24, 2009, and in this uncertain economy,
mandating that small businesses must pay
even higher wages is a sure path to increased
unemployment.
with fewer than 50 employees—an exemption
solidified in current law.
Studies show that mandated leave will result in
a decreased ability of employers to offer other
benefits that employees may want more, such
as health insurance. A sledgehammer approach
to apply FMLA mandates to businesses with
less than 50 employees is inappropriate and
unnecessary.
NFIB’s opposition to FMLA expansion can be
broken down into five principle arguments:
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Maintain the Small Business
Exemption Under the Family
and Medical Leave Act.
For the last three decades, NFIB has fought
inflexible FMLA requirements on small businesses and underscored the importance that
mandated leave laws not apply to employers
12
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Legislation that mandates leave with no flexibility fails to account for the unique nature
of each specific business.
Expanded FMLA mandates would invite excessive litigation and impose significant legal
costs on small businesses.
Requiring small businesses to comply with
FMLA mandates would actually undermine
existing paid leave programs already in place.
Nearly 50 percent of all FMLA leave is not
scheduled in advance and hinders productivity, particularly in small businesses.
FMLA mandates on small business would
hurt conscientious employees.
The NFIB
Research Foundation
The NFIB Research Foundation
is one of the leading sources of
information about small business in
the United States. The foundation
conducts research about policyrelated issues as well as the business
practices and economic impact
of small firms. The empirically
based information about small
business, the product of more than
30 years of research, is available to
policymakers, small business owners,
scholars and the public.
William C. Dunkelberg—Chief Economist
Dunkelberg has been chief economist for
NFIB since 1971. He is currently professor
of Economics at the School of Business and
Management, Temple University, and served as
dean from 1987 through 1994. He was director of the Center for the Advancement and
Study of Entrepreneurship from 1991 through
1994. Dunkelberg is a nationally recognized
authority on small business, entrepreneurship,
consumer behavior and consumer credit policy.
He has been an advisor to cabinet officers, a
member of the Consumer Advisory Council of
the Federal Reserve System and is a past president of the National Association of Business
Economists. He has chaired the Census Advisory Committee and is an elected member of
the Conference of Business Economists and the
National Economic Issues Council. He is also
a frequent contributor to broadcast and cable
news programs and is often quoted in leading
newspapers and magazines.
William J. Dennis—Senior Research Fellow
Dennis, with more than 30 years at NFIB,
directs the research programs of the foundation. He writes and speaks frequently in the
United States and throughout the world on
policy-related small business topics. Dennis is
past president of the International Council for
Small Business. He is also a fellow of ICSB as
well as a fellow of the United States Association
for Small Business and Entrepreneurship. The
Small Business Administration honored Dennis
with its Special Advocacy Award, recognizing
him as “one of small business’ most committed
advocates, with considerable expertise in small
business research.” The Academy of Management also honored him with an Advocate
Award for “outstanding contributions to the
field of entrepreneurship.”
13
The NFIB Research Foundation publication
Small Business Indicators of Macroeconomic
Activity is a detailed assessment of the performance of the small business economic data
forecast.
Earnings, Actual Last Three Months, January Quarter 1974 to January Quarter 2009 (Seasonally Adjusted)
Net Percent
-5
-15
-25
-35
-45
74
76
78
80
82
84
86
88
90
92
94
96
98
0
02
04
06
08
Year
Employment, Current Job Openings, January Quarter 1974 to January Quarter 2009 (Seasonally Adjusted)
40
Percent
30
20
10
0
-10
74
76
78
80
82
84
86
88
90
92
94
96
98
0
02
04
06
08
02
04
06
08
Year
Sales, Actual (Prior Three Months) Sales, January 1986 to October 2008 (Seasonally Adjusted)
40
Net Percent
30
20
10
0
-10
-20
-30
74
76
78
80
82
84
86
88
90
92
94
96
98
0
Year
15
NFIB National
Small Business Poll
The National Small Business Poll is a series of
64 reports based on survey data collected from
national samples of small business employers.
Each survey examines a different subject. The
subjects are selected to address small businessoriented topics about which little is typically
known, but interest is high. Past issue topics
include: Purchasing Health Insurance, Access to
Credit, Job Openings and IT Issues.
These surveys are accessible at 411SmallBusinessFacts.com (or 411sbfacts.com). The Web
site provides a free, searchable database of
over 2,000 facts compiled from the National
Small Business Poll series data. For hard copies
of these reports, please contact the Research
Foundation at 800-552-6342.
The following is a complete list of poll reports
(2001–2008):
16
Title
Volume/Issue
The Changing Search for Employees .
The Use and Value of Web Sites . . .
The Cash Flow Problem . . . . . . . .
Adjusting to Cost Increases. . . . . .
Coping With Regulation. . . . . . . .
Success, Satisfaction and Growth . .
Getting Paid . . . . . . . . . . . . . .
Privacy . . . . . . . . . . . . . . . . .
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Workplace Safety . . . . . .
Liability. . . . . . . . . . . .
Postal Rates . . . . . . . . .
Administering the Sales Tax
Advice and Advisors. . . . .
Families in Business . . . . .
Business Insurance . . . . .
Pre-ownership Experience .
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2, 1
2, 2
2, 3
2, 4
2, 5
2, 6
2, 7
2, 8
Contacting Government . . .
Compensating Employees. .
Reinvesting in the Business.
Health Insurance . . . . . .
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3, 1
3, 2
3, 3
3, 4
Title
Volume/Issue
Paperwork and Record-Keeping . . . .
Membership in Business Organizations
Road Transportation. . . . . . . . . . .
Competition . . . . . . . . . . . . . . .
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3, 5
3, 6
3, 7
3, 8
International Trade . . . . . . . . . . . . . . . . . . 4, 1
Family and Medical Leave . . . . . . . . . . . . . . 4, 2
Training Employees . . .
The Use of Lawyers . . .
Retirement . . . . . . . .
Political Participation . .
The State of Technology
Innovation . . . . . . . .
Evaluating Banks . . . .
Bank Competition . . . .
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5, 1
5, 2
5, 3
5, 4
5, 5
5, 6
5, 7
5, 8
Payroll . . . . . . . . . . . . . .
Local Business Climate . . . . .
Energy Consumption . . . . . .
Expense . . . . . . . . . . . . .
Small Business Administration .
Tax Complexity and the IRS . . .
Promotion and Advertising . . .
Marketing Perspectives . . . . .
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6, 1
6, 2
6, 3
6, 4
6, 5
6, 6
6, 7
6, 8
Unemployment Compensation . .
Waste and Hazardous Materials .
Purchasing Health Insurance . . .
The Budget. . . . . . . . . . . . .
IT Issues . . . . . . . . . . . . . .
Media as an Information Source .
Finance Questions. . . . . . . . .
Job Vacancies . . . . . . . . . . .
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7, 1
7, 2
7, 3
7, 4
7, 5
7, 6
7, 7
7, 8
Economic Downturn . . . . . .
Hiring Immigrants . . . . . . .
Credit Cards . . . . . . . . . .
Business Activity in the Home
Crime. . . . . . . . . . . . . .
Independent Contractors . . .
Access to Credit . . . . . . . .
Owners and Managers . . . .
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8, 1
8, 2
8, 3
8, 4
8, 5
8, 6
8, 7
8, 8
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Selected Findings from the
National Small Business Polls
Small business owners are heavily invested in
real estate. Ninety-six (96) percent own their
personal residence, 49 percent own all or part
of the building and/or land on which their business sits (excluding the one-quarter who operate primarily from the home), and 41 percent
own investment real estate, excluding their
residence and business.
—Access to Credit
Volume 8, Issue 7
Half (49%) of small businesses accept credit
and/or debit cards as a form of payment and
half (51%) do not. Credit cards pay for about
five times as many small business goods and
services as do debit cards.
—Credit Cards
Vol. 8, Issue 3
Forty-four (44) percent of small employers are
spending more time at their business today
than six months ago, 27 percent a lot more
time. Forty-one (41) percent of those spending more time are doing so because the slowing economy means more matters to watch or
attend to. Ten (10) percent are spending less
time. Of the group spending less time, onethird blame a slowing economy, saying they
now have less to do.
—Economic Downturn
Volume 8, Issue 1
The most common form of recruiting to fill a
small business position is spreading notice of
the opening by word-of-mouth (79%). Almost as frequently used are requests of current
employees to help locate an employee(s) (65%).
Twenty (20) percent place a job listing on the
Internet.
—Job Vacancies
Volume 7, Issue 8
17
Eight percent of small employers have been a
victim of identity theft in the last three years.
More than one in eight (14%) have encountered
the problem directly when including those who
think that they have been subject to a serious,
but unsuccessful, identity theft attempt.
Sixty-one (61) percent of small-employer
taxpayers typically consult a tax professional
prior to making a major financial decision for
the business.
—Tax Complexity and the IRS
Vol. 6, Issue 6
—Finance Questions
Vol. 7, Issue 7
Fifty-seven (57) percent of small employers
who have a stand-alone computer(s) or a computer connected to a network system or have
access to a computer at home that they use for
business purposes have a business Web site.
—IT Issues
Vol. 7, Issue 5
Seventy-eight (78) percent have an ongoing
relationship with a lawyer or law firm. Those
relationships appear reasonably stable over
time. Just 13 percent changed their primary
lawyer/law firm in the last three years. The
most frequently cited reason for changing is the
need for expertise followed by a lack of legal
competence.
—Use of Lawyers
Vol. 5, Issue 2
Forty-five (45) percent of small businesses
recycle both paper products and metal (cans).
Thirty-five (35) percent recycle plastics and
27 percent glass. Twenty (20) percent recycle
all four product categories. Thirty-seven (37)
percent recycle none of them.
—Waste and Hazardous Materials
Vol. 7, Issue 2
Seventy-one (71) percent offering employee health
insurance purchased it most recently through an
insurance agent or broker, 11 percent directly from
an insurer (not over the Internet), 8 percent through
a business organization, 5 percent directly from a
network of providers, 2 percent through or from
government, and 1 percent directly from an insurer
over the Internet.
—Purchasing Health Insurance
Vol. 7, Issue 3
18
Examples of Non-Series
Research Publications
Health Insurance Reform in an
Experimental Market
Rising Costs for Healthcare:
Implications for Public Policy
NFIB Small Business Impact Study:
Small Business Effects of a National
Employer Healthcare Mandate
Laissez Les Bon Temps Rouler
2008: The Continued Rise in
State Spending and Deficits
new regulations. Projections can be extended
for 30 years.
BSIM was initially developed four years ago
to assess the small business impacts, including
disproportionate impacts, of various regulatory
and legislative proposals. That remains BSIM’s
primary function. Simulations can be run for
small business impacts in the nation as a whole
and in several of the larger states.
Job Losses by Firm Size
50%
45%
40%
35%
Small Business Indicators of
Macroeconomic Activity
30%
25%
Legislative Guide to Unemployment
Insurance Reform in the States
20%
15%
Legislative Guide to Workers’ Compensation
Insurance Reform in the States
Legislative Guide to Competitive Sourcing
in the States (and Elsewhere)
10%
5%
0%
1-4
Price Sensitivity in Healthcare:
Implications for Healthcare Policy
5-9
10-19
20-99
100-499
500+
Number of Employees
% of All Jobs
% of Jobs Lost
The Public Reviews Small Business
BSIM-Business Size
Insight Module
Jointly developed by the NFIB Research Foundation and Regional Economic Models Inc. of
Amherst, Massachusetts, the BSIM is a simulation interface that measures direct and indirect
regulatory effects by firm size. Regulatory costs
or compliance information can be inserted by
firm size into the model and macroeconomic
effects will be produced by firm size as model
outputs. The effects include employment, sales,
income, payroll and price changes, as well as
productivity shifts resulting from proposed
20
BSIM has been used to measure the effects of
proposed healthcare “pay or play” proposals on
small business owners in various states, such as
CA, IL, NY, OH and WI. It has also been used
to measure the cost of other proposed employee
benefit changes, such as proposed paid sick leave
programs. Earlier uses of BSIM included measuring proposed effects on various labor laws
such as proposed expansions to the Family and
Medical Leave Act, and proposed expansions of
the Americans with Disabilities Act, and mental
health parity bills, among others.
To obtain more information on the BSIM
model or copies of past simulations, contact the
NFIB Research Foundation at 202-554-9000 or
[email protected].
The NFIB Small Business
Legal Center
The NFIB Small Business Legal
Center is the voice for small business
in the nation’s courts and the legal
resource for small business owners
nationwide. Founded in 2000, the
Legal Center has become a critical
component of NFIB’s influence.
Enactment of the Small Business Regulatory
Enforcement Fairness Act in 1996 opened the
door for judicial review of agency decisions
and regulations that affect small businesses.
Using this act, the Legal Center has challenged
government agencies that have not adequately
considered the impact that a new regulation has
on small business.
The Legal Center also files amicus (“friend-ofthe-court”) briefs in precedent-setting cases—
cases that will affect large numbers of small
business owners. By acting as the voice of small
business in the courtroom, the Legal Center
shapes key legal decisions by providing a small
business perspective in those cases that affect
the broader employer community. The Legal
Center has participated in more than 100 cases
in state and federal courts throughout the country on issues ranging from healthcare to legal
reform to employment and labor.
Karen R. Harned—Executive Director
Prior to becoming Executive Director of the
Legal Center, Karen Harned was an attorney
at a private law firm, where she specialized
in food and drug law and represented several
small businesses and their trade associations
before Congress and federal agencies. Harned
served as Deputy Press Secretary for U.S. Sen.
Don Nickles. She has testified before Congress
and her opinion editorials and articles regarding lawsuit abuse and other issues important to
small business have been published in newspapers and other publications nationwide.
Elizabeth Milito—Senior Executive Counsel
Milito came to NFIB from the U.S. Department of Veterans Affairs. She has an extensive
background in tort, healthcare, and labor
and employment law. Milito is responsible for
managing the Legal Center’s cases and legal
work. She frequently speaks and publishes on
labor and employment topics that affect small
business.
Legal Compliance Resources
There are more than 75,000 pages of federal
regulations—many of which small business
owners do not know or understand. This lack
of information can expose small firms to crippling lawsuits. To help, the Legal Center has
produced a library of resources that provide
guidance about laws important to small firms:
The Federal Employment Law
Handbook (free to all businesses)
Helpful Tips for Hiring a Lawyer
(free to all businesses)
Model Employee Handbook for Small
Business ($40/free to NFIB members)
Small Business Guide to Document
Retention ($40/free to NFIB members)
Small Business Guide to Handling OSHA
Inspections ($40/free to NFIB members)
21
Each session features experienced attorneys
detailing in plain language how business owners can better run their businesses and, more
importantly, avoid expensive fines and lawsuits.
For example, our webinar on wage and hour
laws explained the minimum wage and overtime exemptions, and what posters are required
by law to be posted in the workplace. Another
webinar, on collecting money, explained how to
collect money from delinquent customers, and
what to expect should a small business owner
need to use the small claims process.
For more information on our complete series,
visit www.NFIB.com/legalwebinars.
An Eight-Year Record of Victories
Upholding Time Limits for Lawsuits—The Legal Center was able to help convince the U.S. Supreme Court to uphold the 180-day time limit for filing wage discrimination claims. This decision will spare small business owners from
the burdensome task of defending themselves against an alleged discrimination claim that occurred years in the past.
Workers’ Compensation—The Tennessee Supreme Court ruled that the “loss of ability to enjoy every day activities” should not be included as part of a workers’ compensation award, keeping workers’ compensation premiums
from escalating nationwide.
ADA Lawsuit Abuse—A federal appeals court ruled that Jarek Molski, a notorious filer of Americans With Disabilities Act lawsuits, was wasting the court’s time and taking advantage of easy targets like small business owners.
Molski had filed more than 400 ADA lawsuits in California, establishing a clear pattern of abusive litigation. The
victory deters frivolous ADA suits that can cripple small businesses and pervert a law meant to provide the disabled
with suitable access to public accommodations.
U.S. Tax Court—The Legal Center won a ruling in the U.S. Supreme Court that quashed a secretive Tax Court practice that made appealing Tax Court decisions virtually impossible for small businesses.
Labor Unions—In a unanimous ruling, the Supreme Court upheld a Washington State law requiring unions to obtain
the consent of non-member dues payers before using their dues for political purposes. This decision means that
unions in Washington will have to get the permission of non-members before they use their dues to try to achieve
political outcomes that will likely hurt small businesses.
OSHA—Intervention by the Legal Center made it possible for an independent review panel to once again consider
the reasons why a small business might miss an OSHA 15-day deadline to appeal a citation.
IRS—The Legal Center helped overturn a U.S. Tax Court decision that would force small businesses to perform a
confusing maze of tax calculations rather than simply deducting certain annual expenses—helping to ease the timeconsuming tax-filing process for small businesses.
23
The NFIB
Young Entrepreneur
Foundation
The NFIB Young Entrepreneur
Foundation is the education arm
of NFIB. The foundation promotes
free enterprise in the classroom and
informs young people about the
critical role of small business to the
growth of the American economy.
The foundation encourages high
school students to consider careers in
small business and entrepreneurship
as well as providing financial
assistance to further their education.
YEF also provides NFIB members
with ways to actively support
entrepreneurship education.
From its inception, YEF has recognized teachers
and other mentors who help students experience
the benefits of entrepreneurship. YEF is actively
partnering with like-minded organizations,
including Junior Achievement, The Consortium
for Entrepreneurship Education, DECA, Future
Business Leaders of America and the National
Foundation for Teaching Economics promoting
entrepreneurship education for youth.
The foundation encourages NFIB members to
share their entrepreneurial experiences with
students in the classroom. NFIB members can
be directly involved in all YEF activities. They
can support the awards program by providing
financial support, interviewing and/or nominating students, or by introducing the award
program to high schools in their communities.
In 2009, YEF will:
■
■
■
Eric Knudson, Serve It Up
Originally named the NFIB Education Foundation, YEF has for more than 20 years recognized the importance of helping young people
understand the risks and rewards of owning
and operating their own businesses.
24
Award more than $500,000 in scholarships
to graduating high-school seniors.
Support the Entrepreneur-in-the-Classroom
curriculum in more than 30 states.
Promote the use of its new online business
simulation game, Johnny Money, to thousands of high-school students across the
country.
Hank Kopcial—Executive Director
Kopcial came to YEF with extensive experience
managing programs that supported business
education, including 14 years with the National
Junior Achievement program. He has also spent
more than 15 years in Washington, D.C., developing financial support for several other business membership organizations, including the
U.S. Chamber of Commerce and the National
Association of Manufacturers.
Young Entrepreneur Foundation Programs
NFIB Entrepreneur-in-the-Classroom—EITC
is designed to bring real-life stories of entrepreneurs into the classroom, allowing students
to learn firsthand about the risks and rewards
of operating a small business. EITC gives
educators a free three-module curriculum that
teaches students essentials, such as how to
create a business plan, how to obtain funding,
and other critical elements of starting and running a business. The curriculum was created
in conjunction with The George Washington
University and demonstrates
YEF’s commitment to raising awareness among the
nation’s youth of the critical
role that private enterprise
and entrepreneurship play
in creating jobs and growing
the nation’s economy.
He oversees YEF development efforts, manages the
EITC is composed of three
creation of new programs,
modules, all of which conworks closely with YEF’s
tain teaching notes, overboard of directors and repreTop: Jacob Lindemann, 360 Board Shop
heads, activities and quizzes.
sents both NFIB and YEF to
Carl and Abe Harper, Harper Technologies
outside organizations.
Kopcial currently serves on the board of adviModule One examines the definition of
sors to the Fund for American Studies and the
entrepreneurship and small business, while
board of directors of the Consortium for Entreproviding an overview of the past and present
preneurship Education. He also was selected to
small business environment.
represent YEF on the business board of adviModule Two delves into the steps and considsors for the Entrepreneurship Department at
erations involved with turning an idea into a
York College, York, Pennsylvania.
business: identifying a passion or hobby that
can provide a product or service, researching
Julie Carney—Program Manager
the market and weighing the risks of starting
Carney manages the Entrepreneur-in-thea small business.
Classroom programs, an umbrella of free
Module Three explores the nuts and bolts of
classroom resources for high-school educators
starting a business: writing a business plan,
and students. She is responsible for the developobtaining funding, and learning about the
ment and expansion of YEF’s entrepreneurship
agencies with which businesses interact to
curriculum, as well as working with teachers
become a legitimate entity.
to supplement their classes with the foundation’s educational materials. In 2008, Carney
Not designed as a stand-alone class, the curlaunched the newest of the YEF programs,
riculum is meant to supplement high school
Johnny Money Online Game, a small business
classroom materials, regardless of discipline.
simulation designed to complement the foundaEducators may download the cross-curricular
tion’s free curriculum and provide an interactive
supplement for free from the NFIB Young Enand accurate small business operating experitrepreneur Foundation Web site (www.nfib.org/
ence for high-school students.
eitc) for use in their classrooms.
■
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25
NFIB
Online
The NFIB Web site, www.NFIB.com,
is a leading source for finding
information about small business
and understanding the issues that
concern independent entrepreneurs.
In addition to the resources offered
through NFIB’s foundations
(described elsewhere in these pages),
you’ll find timely news and statistics
about small business and helpful
tools for growing businesses.
Issues & Elections
In the Issues & Elections section, NFIB highlights the issues and candidates most important to small business. Learn about the views
of small business owners as determined by
a variety of surveys and NFIB member-only
ballots. You’ll find NFIB member stories and
congressional testimony, plus reports from
the NFIB Washington office on legislative and
regulatory actions that affect small business.
This section also covers political news from
around the country as well as information
about NFIB’s political programs. Popular items
include key votes on small business issues, a list
of candidates endorsed by NFIB, and information about participating in NFIB’s PAC and
grassroots activities.
NFIB In My State
Each state has its own home page at NFIB.com,
which you can access by adding the two-letter
state abbreviation to NFIB.com (e.g., NFIB.
com/OH). Here you’ll find breaking news, issues, statistics and business discounts for your
state, plus contact information for key staff.
Business Resources
The Business Resources section is a comprehensive library of business-building information,
how-to articles and tips to support entrepreneurs’ success. Topics include starting a business, accounting and finance, healthcare and
benefits, insurance, management and leadership, safety and training, sales and marketing,
technology, and customer support.
27
Calendar
Newsroom
The NFIB calendar helps small business owners and their supporters stay up-to-date with
NFIB events and networking opportunities,
register for exclusive webinars and programs,
and keep informed about key business dates
and deadlines.
The Newsroom is your source for NFIB national and state news releases and statements,
along with links to recent NFIB news coverage
from around the country and in the blogs.
Legal Help
The NFIB Small Business Legal Center is the
voice for small business in the nation’s courts
and the legal resource for small business owners
nationwide. This section features the latest answers from calls to the Legal Center’s employment law hotline, legal tips, compliance guides
for small businesses and details about recent
courtroom victories.
Member Benefits
The Member Benefits section highlights the
many ways NFIB provides value to small business owners, particularly in the areas of reducing costs of employee benefit costs, getting
insurance, controlling expenses, protecting
assets, contacting elected officials and networking for growth.
28
This section includes biographies and photos
of NFIB spokespeople and executives, contact
information for media staff in the Washington
office and the states, and RSS news feeds for
automatic updates on small business issues
nationwide and in your state.
You’ll also find a monthly column about small
business issues from NFIB President and CEO
Dan Danner under “Hear From the President.”