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EVERYONE WANTS TO HELP SMALL BUSINESSES - EVEN IF THEY DON'T KNOW WHAT A SMALL BUSINESS IS!

Posted by Admin Posted on Feb 28 2011

It's a given in Congress that small business creates more jobs than big businesses.  So jobs legislation tends to focus on small businesses

But the small business impact on tax policy -- which is based on this assumption of jobs creation - may be out of proportion to reality.

But the real question is how to define a small business.  For example, an S Corporation is created by filing a Form 2553 - Election by a Small Business Corporation.  But a corporation with billions of dollars in revenues and thousands of employees can file this election.  It is only small in terms of the limitation to 100 shareholders.

With corporate tax reform on the table in Washington, the definition of a small business is front and center for the upcoming hearings.  The administration is suggesting that at some level a business should have to pay its own taxes - that is, it cannot pass its income through to its shareholders for them to pay taxes.  Republicans say this would -- wait for it! -- stifle jobs growth.

It isn't clear whether the same limits would, could or should be applied to limited liability companies and partnerships.

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