The Fiscal Cliff Could Bankrupt Small Business Owners
Posted on Jan 07, 2013
Now that the fiscal cliff issue has been somewhat settled, consumers are getting a chance to review the changes and see how it affects them.
Small business owners may be hit particularly hard, because while the corporate tax rate didn't increase, many small businesses aren't corporations.
Business owners who make more than $400,000/year but who can't convert their company into a corporation could see tax hikes of more than four percent just on their personal income. Along with that, they have health care benefits to contend with: by 2014, any employer of more than 50 employees must have health insurance in place for all workers.
Some business owners are dealing with these new costs by laying off staff or halting new hires. In fact, nearly a third of small business CEOs planned to hire fewer workers as of December 2012, according to the Wall Street Journal.
Some businesses simply won't be able to handle the financial strains. With the recession already hurting struggling companies, it's likely some organizations will have to go out of business or sell.
In the meantime, small business owners are burdened with a higher tax rate at a time when many people are already deep in unexpected debt from the financial crisis. A 4% tax increase can be crippling to a family already behind on their mortgage or car payment - an easy thing to have happen if the family bought a nice house or vehicle right before the recession.
Castle Law Office has been helping residents of the Kansas City metro get a fresh financial start for the past 14 years. Call us today at 816-842-6200 to speak with an attorney. Or you can email us and schedule your free consultation.