The Plight of the Business Owner

Frank has been thinking about something for quite awhile, but has been somewhat reluctant to reduce it to writing for fear of offending. It is a subject that can be misunderstood, but is a subject that affects us all. It is a subject of political pundits, a subject easily exaggerated.

As most of the readers of this blog are aware, Frank is an accountant, the founder and owner of a CPA firm in the Nashville suburb of Pleasant View, TN. The firm has passed its five year anniversary and recently opened a second office in Kingston Springs, TN, another suburb of Nashville. The firm has enjoyed growing revenues and profits since its birth in September, 2005.

One of the niches of the firm is to assist businesses with their accounting, payroll and tax compliance issues. Contrary to what some would have you believe, accountants don't lock up their offices on April 16th and come back in mid-December to prepare for the following tax season. If only it were that simple. But I digress. In any event, Frank and his team have learned to work with small to medium sized businesses and other entities and have made a decent business for themselves in the process.

One thing that Frank has observed, is that the primary business owners have one thing in common...they have a burning passion for what they're doing. Whether it be the holder of a professional license such as a doctor, attorney, or heaven forbid, an accountant; or someone who has a gift or talent such as auto repair, florist or graphic artist; or perhaps they are the modern day warriors of the business world and just have a drive to make it on their own and want to birth a business, invest not only financial capital but sweat equity in the form of blood, sweat and tears, to see the business grow and flourish.

Frank has developed the habit of trying to learn as much about a business as he can before and during the time he works with a business client. The easiest way to do this is to talk with the owner or primary contact of the business. It never ceases to amaze Frank how these individuals will literally light up when talking about their business, or their business idea. They get excited, there's a twinkle in their eyes and they want everyone around to share in that excitement. Not so long ago, Frank and his team toured the facilities of one of their clients that sold hay. The owner, a wonderful guy, would get so excited about explaining the different types of hay, the different grades, the different smells. More that once, he would extend a handful of the dusty harvest, and exclaim, "smell that!...Isn't that sweet?"

All this is leading somewhere, just hang on. All these businesses that are successful have that fire, that burn, that passion in common. Those that don't have this passion, well, they don't last. Maybe they've started a business with the misconception that it will be fun; or perhaps the owners think they can work nine-to-five and leave early on Friday; or believe they can manage and grow the business by proxy or remote control. These cases, sadly, don't survive.

Its hard enough to run and grow a business when the passion is there. There are other forces at work. Competition. Technology and process changes. Natural disasters. The economy. Increased costs and reduced revenues. A whole gamut of issues that are, at a minimum, troublesome to the business owner. Another issue that has seemed to crop up more often for business owners is increasing rules and regulations and taxes and fees imposed by federal, state and local governments.

In most cases, these government intrusions can be traced back to one situation...all of these entities are revenue-starved. Their citizenry expects a certain degree of service, with competent and trained personnel such as emergency responders, teachers, etc., but at the same time, this same citizenry doesn't want their taxes raised.

At this point, Frank would like to point out that he doesn't believe these government intrusions and increased regulations and taxes are some far-flung conspiracy to turn the current economy to a socialism model. Even though these rules and fees have been increasing of late, Frank holds true to believing the drive is revenue, not government takeover.



Early in the recession, there was a late-night passage of an unemployment tax increase in the state of Tennessee. This one was actually lobbied for by the TN Chamber of Commerce and the National Federation of Independent Businesseses, two supposed advocacy groups for small businesses. As unemployment tax is a pure expense of businesses, the "advocacy" of these groups was, well, not to welcome by the business community.

Other changes have been increased reporting and compliance requirements. The recently-signed health care reform requires all businesses, regardless of size, to report any cumulative transactions with any individual or business in excess of $600.00 per year. What does this mean, you ask? If I, as an independent business purchase $600.00 or more in goods and services from any individual or business, I have to give that individual or business a Form 1099 at the end of the year and report those transactions to the IRS. To show how cumbersome this is, for example, if my firm purchases $600.00 or more worth of copy paper from Office Depot in a year's time, according to this regulation, I must give Office Depot a 1099-MISC and report it to the IRS.

There are so many components of the health care reform that will affect businesses, they are too numerous to list here. From reporting requirements, to providing health insurance for their employees, to increased costs of running a business. All, in an effort to raise the needed revenue to support the health care reform.

All this is coming at the business owner at a time when he/she is trying to survive the effects of the ongoing recession. All that most small business owners want to do is utilize their given talents and passions in such a way that they can support their families and enjoy some degree of happiness in their lives. If the business is successful, they hire more employees; if not, the owners work longer hours. As the business grows in its success, the more profit it makes. The more profit, the more taxes it pays. When the business hires employees, those employees have income to be used for spending. More spending, more successful businesses, the more taxes to generate revenues for local, state and federal governments.
In the coming weeks, governments at all levels, federal, state and local, will begin the unenviable process of trying to balance the demand for government services with the limited revenues it receives. As federal stimulus monies begin to dry up, less monies are available to state and local officials. Those same states and locals will, by state constitutions and local charters or other organizing documents, be required to balance the budgets for the next fiscal year. They don't have the option of raising the "debt ceiling" or "deficit spending." In all likelihood, new or expanded sources of revenues is going to be needed over the next couple of years.
On behalf of those small to medium size businesses, I would like to respectfully request that the decision makers sitting in those budget meetings, give business owners a reprieve. We don't mind paying our fair share, or shouldering our share of the load. But, if you let the business owners do what they do, they will generate more profits which will lead to more revenue for the governments in the way of taxes and fees.