waitress wearing protection face mask turning open sign board on glass door in modern cafe coffee shop, cafe restaurant, retail store, small business owner, food and drink concept

One of the defining characteristics of America is the entrepreneurial spirit that has defined so much of this country. As this year comes to a close, we thought it would be pertinent to celebrate the history of small business in this country, some of the ways they can move forward, and a few things to expect in the upcoming year.

Many business owners today are feeling isolated and forgotten by their elected officials. Here at Biel Fisette Iacono, we work with business owners across many industries. And while their businesses may be different, they all have one thing in common: they are hard-working ethical people who believe in what they are doing and producing. As a CPA firm, we understand the difficulties that small businesses face in normal circumstances, let alone during a pandemic that has kept many of their doors shut for months at a time. Let’s pay tribute to the great small business tradition and look at some hopeful news for the upcoming year. 

The Role of Small Business in the Economy 

The American economy is driven and, in many ways, spearheaded by small businesses. Prior to 2020, small businesses were creating two-thirds of net new jobs and were driving a lot of U.S innovation and competition. Start-ups were emerging left and right. From small startups to those that became household names, the economy benefited from the momentum of a booming economy. 

From Farmers to Pioneers to the Neighborhood Market

The self-starter, pioneering, risk-taking idea-man (or woman) is an American archetype. Since the first colonial settlers, the self-sufficient producer was a part of the country’s establishment. Most of the early settlers were farmers who were cultivating new lands and dealing with unknowns and hardships. Families initially produce their own goods from soap, food, milk, and other necessities. Slowly small agricultural enterprises spread and trade within communities began to create free markets. As Independence was won from Britain and westward expansion increased, the demand for trade grew.

Before the Industrial Revolution, of course, all businesses were ‘small businesses.’ Large corporations and national conglomerates were not really a thing. It was not until about the 1920s and 30s when industrialization and mass production began changing the way companies operated and allowed for growth and expansion. As the middle class grew and the economy experienced several booms and busts, there was an increasing awareness of the ‘big business’ and the ‘small business.’

From the corner barbershop to the neighborhood market to the local burger shop, the American business owner has always had a special place in the American psyche. Many of today’s household names began as a small local business or small operation and slowly grew to dominate their industry. Examples of this would be fast-food chains like McDonald’s, big box stores like Wal-Mart, and revolutionary companies like Google and Facebook. 

The Challenges For Today’s Business Owner 

The business owner has really been hit hard during one of the most tumultuous years in the country’s history. Not only were many states shut down for months at a time, but the looming fear of health became a preoccupation for many. For business owners, keeping their doors open was and continues to be one of the biggest challenges. 

As many hard-working Americans saw the situation close in on them, many reported that it was a good opportunity to assess the state of their business. Some have been able to recalibrate, reassess, and adapt to changing circumstances. For others, like the restaurant industry, that has become difficult as their options for ‘staying open’ are reduced to curbside or pickup and competing with large national chains. 

Upcoming Changes to Take Note of in 2021

We’re not the only ones writing about small businesses today. It is a national conversation happening across the business world. A few months ago, we wrote a few tips on how to stay afloat during trying times. All of that still applies, only the situation has grown dier for many. Here are a couple of developments:

  • The COVID-19 pandemic has led to new tax incentives and programs to aid small businesses. 
  • Tax legislation 2018 led to changes for small businesses, many of which are still being implemented. This includes rules for pass-through entities and bonus depreciation. 
  • There were no major changes to the tax code this year, but there were some changes that happened because of the pandemic.

For the upcoming year, a few things to remember: 

  • The CARES Act introduced paycheck protection as an emergency loan and money received through the loan will be forgiven if the funds are used for payroll, rent/mortgage, or utilities. 
  • Economic Injury Disaster Loan was expanded by the Small Business Administration. Businesses that receive funding under this loan may have to pay income taxes on it.
  • Employee Retention Tax Credit. Businesses that are affected by the pandemic can use this to help retain staff. There are some qualification restrictions, but those that qualify are eligible for a tax credit equal to 50% of qualifying wages. 

Need to Find a Trustworthy CPA for Your Business?

Biel Fisette Iacono can help your business look at options and see what’s best for the upcoming year. Whether you have 50 employees or 200, we are here to support the entrepreneurs of our country. Despite challenges, we are confident that the resiliency of small business owners will come out triumphant on the other side.