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Impact of Tax System on Small Business & Entrepreneurship

Learn about the complex and costly impact of the tax system on small businesses and entrepreneurship, including compliance costs, organizational structure influences, decision-making impact, competitiveness challenges, and the need for tax reform.

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Impact of Tax System on Small Business & Entrepreneurship

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  1. Tax System's Impact onSmall Business and EntrepreneurshipTodd Flemming, President & CEOInfrasafeOrlando, FL President's Advisory Panel on Federal Tax Reform March 8, 2005 Tampa, Florida

  2. About Infrasafe • Founded 2002 • 52 employees • $16 million in revenue in 2004 • We provide electronic security products and services primarily to the Federal Government

  3. Tax System's Impact on Small Business and Entrepreneurship Complexity of Tax System Drains Resources Compliance Costs: • Tax Preparation • Payroll Service Fees (multiple states) • Staff & Management Time • Other President's Advisory Panel on Federal Tax Reform March 8, 2005 Tampa, Florida

  4. Tax System's Impact on Small Business and Entrepreneurship Complexity of Tax System Influences Organizational Structure • Nuances of Entity Selection • C Corp, S Corp or LLC • Transition Costs to New Structure • Tax Advisor Costs • Staff and Management Time Assessing Options & Transition President's Advisory Panel on Federal Tax Reform March 8, 2005 Tampa, Florida

  5. Tax System's Impact on Small Business and Entrepreneurship Tax System Impact on Decision Making • Counterintuitive decisions • Beneficial tax provisions • Changes that have led to productive action • Entity Structure President's Advisory Panel on Federal Tax Reform March 8, 2005 Tampa, Florida

  6. Tax System's Impact on Small Business and Entrepreneurship Tax System’s Impact on Small Business Competitiveness • Efficiency of scale issues • Per-employee compliance costs higher • Cost of capital higher • Business exit or succession difficult • Inefficient reinvestment of exit proceeds President's Advisory Panel on Federal Tax Reform March 8, 2005 Tampa, Florida

  7. Tax System's Impact on Small Business and Entrepreneurship The Pro-Small Business Approach to Tax Reform • Tax code certainty and clarity • No AMT • Eliminate tax on capital and savings returns • Do not raise taxes • Simpler, Flatter President's Advisory Panel on Federal Tax Reform March 8, 2005 Tampa, Florida

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