Senate Finance Committee Chairman Max Baucus wants to overhaul the nation's tax system, an ambitious undertaking that would certainly have effects on large multi-national corporations.
But what does it mean for your small business?
One thing it could mean is a lower rate. By simplifying the code and imposing more taxes on overseas assets, as well as addressing certain deductions, Baucus hopes to lessen the strain on domestic companies, especially the smaller ones.
"America today is using a bloated tax code that was built for businesses close to 30 years ago," Baucus said while releasing his plan, adding that "more must be done to simplify tax rules, lessen the burden on small businesses and jumpstart job growth."
The senator aims to use the revenue generated by his plan to slash the corporate tax rate, from its current 35 percent to an ideal level of below 30. Data from the Small Business Administration supports this as a method for helping fledgling companies, as many of the 1.3 million C corporations with fewer than 500 employees would benefit from this adjustment.
The plan would also allow for simpler business management. Companies have two options: accrual accounting, which takes sales into account when a contract is signed, and cash accounting, which only counts them when payment is received. While the former is considered more complicated, it is often the only option available to smaller companies, based on their size and sector. The new proposal, however, would let any company with less than $10 million in sales use the simpler method, which in turn may help them save in costly outside consultant fees.
All of these proposed updates are good news for anybody looking to incorporate online. This simplified and pro-small business tax code would be a major benefit to any prospective entrepreneur.