Money & Business
Small Business Watch: Small Business Finds Some Hope in Tax-Reform Plan
Todd Flemming's take on the report President Bush's tax-reform panel recently issued: "The report itself is like 400 pages long," he says (actually 272 pages). "That should tell you something." Back in March, Flemming, the CEO of Infrasafe, an Orlando electronic-security firm with 54 employees, told the panel he favors a flat tax and other changes. Of its two competing plans--one simplifying credits and deductions, the other creating a modified consumption tax--Flemming offers: "My feeling is that it was a missed opportunity. " Indeed, the Small Business Administration says that abiding by tax rules costs small firms 67 percent more per worker than it does their larger brethren. There is at least one major simplification in the report, however--elimination of the alternative minimum tax, which would be repealed under both plans. One proposal that has drawn major wrath: the transformation of the home mortgage interest deduction into a tax credit geared more toward middle- and lower-income taxpayers. The National Association of Realtors predicts enactment would "drive down real estate values" --and, presumably, brokers' fees. But the National Federation of Independent Business sees some positives in the plan. One is lowering individual tax rates, with the highest at either 30 percent or 33 percent. "Over 85 percent of small-business owners file as individuals," says the federation's Ryan Peebles, "so they care about the top rates." Both proposals would allow immediate and unlimited expensing of most asset purchases by small businesses. Currently, only the first $102,000 of purchases per year can be deducted from taxable income.
Small Business Watch: A Man's Fight to Keep His Store--and a National Debate
Scott Mahan could be preparing to celebrate the 80th anniversary of his family's Suburban Office Equipment in Ardmore, Pa. Instead, he is fighting to make sure the store, founded in 1926 by his granddad, will still be around. Two years ago, the local township designated his and other businesses a "blight" area and targeted them for acquisition under eminent domain powers for a mixed-use private development. Mahan and fellow business owners have protested and offered alternative plans, to no avail. So when the Supreme Court ruled recently that a city could condemn private property for economic-development purposes, Mahan paid attention: "It was, like, 'Oh no!' " But he has found a silver lining: The decision created a backlash. Now, some 38 states, including Pennsylvania, have passed or will pass legislation giving property owners more protection. And earlier this month, the U.S. House of Representatives passed by 376 to 38 a bill that would withhold federal development funds from local governments that use eminent domain powers to transfer private property to developers solely for economic reasons. So how should small-business owners defend themselves? Get a lawyer, of course. And raise a ruckus in the local media.
Small Business Watch: Lessons From the Front Line
It may seem that running a McDonald's has little in common with serving up $20 steaks. Allen Bernstein begs to differ. He's run Wendy's, Hardee's, and Godfather's Pizza outlets and is now CEO of the parent of the 69-restaurant Morton's the Steakhouse chain. But "whether your average tab is $5 or $85, like at Morton's," Bernstein says, operating a successful restaurant requires the same skills--employing smiling, friendly people and tasking them accordingly. "I can teach someone the restaurant business," he says. "I can't teach him to be warm and friendly." Most restaurateurs know this but don't do it. And while worrying about the soup and nuts, don't forget the nuts and bolts. "What fast food taught me was standardization and uniformity," he says, valuable when you are trying to expand and maintain quality. At Morton's, every server knows when to put the onion bread in the oven, at what temperature, and when to serve it. That's an approach that might work for any small business.
This story appears in the November 21, 2005 print edition of U.S. News & World Report.