Over the past few years, many small business owners have been given plenty of reason to be optimistic about their future potential for improvement. However, one of the big issues that many entrepreneurs still say serves as a bit of a stumbling block for them is the amount of money they have to pay in taxes every year, but a few states are now moving to address this issue.
That includes the state of New York, which is planning to cut small business taxes by 4 percentage points over a three-year period, according to a report from the office of Gov. Andrew Cuomo. The plan, which has been proposed but not yet passed by the legislature, would move the tax rate on these companies to the lowest rate ever seen in New York.
“Small businesses are the engine of opportunity and we will do everything we can to ensure they thrive and grow in New York,” Gov. Cuomo said. “As a key part of our 2015 Opportunity Agenda, we will cut small business taxes to their lowest rate since 1917 and will ensure Empire State is truly open for business.”
The specific plan
If approved, the state would see its net income tax rates for small businesses drop to just 2.5 percent from the current 6.5 percent for all small businesses who file under the corporate franchise tax, over a three-year period, the report said. That would include downward steps to 3.25 percent for the 2016 tax year, 2.9 percent the following year, and 2.5 percent by 2018. In all, this would likely save small companies $32 million by the end of that three-year span.
Already in the 2015 tax year, small businesses are going to pay less under corporate franchise tax law than their larger competitors (which pay 7.1 percent), the report said. And under the law, a company is a small business when it has fewer than 100 employees and annual net income of less than $390,000.
Owners in the state of New York who want to make sure that this allowance would be part of an overall effort to make their companies function better might want to consider the value of cutting costs, including those for small business insurance. For instance, if they can find more affordable general liability insurance, they might be able to save thousands of dollars annually which can then be used to improve other aspects of their companies.