How Will the Fiscal Cliff Effect Small Businesses
like Tech Reworks, Inc.?
The “Fiscal Cliff” refers to an automatic $560 billion in
tax increases and spending cuts that go into effect in January 2013.
Why is this important
to Small Businesses like Tech Reworks, Inc.?
First the automatic tax hikes and spending cuts designed to
cut the deficit in half may be so steep that the combination would send the
country into a recession. Spending cuts
would be imposed on numerous federal agencies resulting in the closing of
military bases, reduction in staff and hours of operation at national parks and
historic monuments which would in turn hurt the small businesses and local
economies.
Additional consequences would be the end of unemployment
benefits and a one-third reduction in Medicare reimbursement rates for
physicians. The unemployed worker will
hold onto their disposable income rather than spend it with small businesses
like Tech Reworks. Doctors will put off
upgrading their practices with newer computers, equipment and software to
modernize their offices. As a result
small businesses like Tech Reworks who specialize in Computer Recycling and
Refurbishment services will see lower volumes of obsolete equipment coming from
corporate and residential consumers.
With regard to the tax policy, the following tax hike will
go into effect:
1.
Expiration of the 2% Social Security payroll tax
cut and the imposition of new taxes that will be part of the Affordable Care
Act.
2.
A return to the Alternative Minimum tax rates to
2000 levels and,
3.
The expiration of the Bush tax cuts that where
extended by President Obama in 2010.
For some small business owners the increased tax rates
referenced above combined with the provisions of the Affordable Care Act (Obamacare)
are resulting in concerns about cash flow and a general sense of
uncertainty. For many small businesses
the tax policy is very important, especially for S-Corporations and Sole
Proprietorships who claim the profit and losses at personal income tax
rates.
To conclude on an up note, for many entrepreneurs’ and small
businesses, Tech Reworks included; the primary, day to day concerns are
customer demand, acquiring new customers, generating sales and being innovative
with their products and services. We believe
there is never a bad time to start your own business, for tech startups like
Tech Reworks the demand for technology has been constant. We believe if you start up in a recession or
a sluggish recovery and survive, there is less competition and we will come out
of it stronger.
