5 years or $50,000 plan

One thing that hurts businesses more than anything else is taxes. Though large corporations have to pay large amounts of taxes they still have plenty of cash lying around to run their business and expand. Even if large corporations start to run low on cash they still have a large amount of assets to sell or borrow agents. Large corporations also get to take advantage of tax breaks like deprecation of assets that were purchased for investment purposes.

For small corporations it’s a whole other story. Small corporations often need a larger portion of their profits to expand, so taxes in general have a much larger impact. They also tend to not have the money to invest in a full time CPA or tax attorney to help them manage their money in a way that would lower their tax bill on a day to day basis. As the people that run most small corporations get paid dividends based on what the company makes, after it pays taxes, and then they have to pay personal income taxes on their dividends. This double tax makes it hard for small business owners to justify expanding their business into a corporation.

For these reasons I suggest a 5 year or $50,000 plan to help small business to become a corporation. Under the plan the newly formed corporation would get their first $50,000 in taxes waved, or all of their taxes for 5 years for a total of $50,000. This would help corporations during that new growth period and help their owners survive.