Fiscal Cliff

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.