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5 ways Washington can help small business

U.S. flags stand ready below the dome of the U.S. Capitol on the West Front. They were set up for the signing ceremony for HR 5297--a $30 billion lending fund that will provide for a variety of small-business tax provisions.
Scott J. Ferrell | Congressional Quarterly | Getty Images
U.S. flags stand ready below the dome of the U.S. Capitol on the West Front. They were set up for the signing ceremony for HR 5297--a $30 billion lending fund that will provide for a variety of small-business tax provisions.

Privately owned and operated in every city and town, America's small businesses are the engine of the U.S. economy and pillars of the community. From dry cleaners and convenience-store operators to small manufacturers, farmers, plumbers and contractors, small businesses create two-thirds of the net new jobs annually, employ more than half of the private-sector workforce and generate nearly 50 percent of annual U.S. GDP.

In short, small business is a big deal. By focusing on these ways to help small businesses, Congress can strengthen the backbone of America.


Reform our broken regulatory process

In recent years, small business' ability to grow has been threatened by a rising number of burdensome regulatory requirements handed down by Washington. Since 2009, there has been a 44 percent increase in the number of federal regulations defined as "economically significant," each costing the economy $100 million or more. Today there are 3,305 federal regulations in the pipeline. Among them proposals to expand overtime eligibility. The estimated cost of compliance with federal regulations in 2013 alone tallied $112 billion, resulting in more than 67 million hours of paperwork.

Read MoreRaise the minimum wage, we slow hiring: Business

Small-business owners are fighting a tidal wave of regulations—when all they want is to run their business. Before adding additional layers of regulation, it is important to ensure the integrity of the regulatory process, which will give small businesses the certainty they need to expand and create jobs.

Create a budget and pay down the deficit

According to the latest NFIB Small Business Optimism Index, one of the most important problems facing small business right now is weak sales, which is magnified when you look at the other concerns: health care, high taxes and government rules and regulations. Small-business owners see Washington's spending addiction as an impediment to growth. A small business cannot 'kick the can' down the road—they have to balance their budget, pay their bills, and be financially responsible in order to stay in business. When Washington acts irresponsibly with taxpayer's money, it does not quell fears, making small business weary to expand and hire.

Small Business Optimism Index
Roller coaser continues: After Feb.'s decline, confidence up 2 points in March to 93.4
Index component Net % Chnage from Feb.
Plans to increase employment 5% -2
Plans to make capital outlays 24% -1
Plans to increase inventories 1% 6
Expect economy to improve -18% 1
Expect real sales higher 12% 9
Current inventory 0% 4
Current job openings 22% 0
Expected credit conditions -7% 0
Now a good time to expand 8% 2
Earnings trends -24% 3

Repeal the HIT

The small-business community has consistently said that controlling the rising cost of health insurance premiums is their No. 1 concern and should be the focus of health reform legislation, but the Health Insurance Tax (HIT), included in the new health-care law, raises the cost of small-business health insurance premiums.

Read MoreIRS may focus on retired entrepreneurs

The HIT, which will cost $134 billion over the first 10 years of its existence, is almost entirely passed on to consumers in the fully-insured marketplace, where nearly all small businesses and the self-employed purchase their coverage. Despite delays and extensions of some of the law's mandates, the HIT is causing premiums to increase this year. This tax on small-business owners raises insurance costs for already struggling small businesses and is contrary to the goals of health-care reform.

Restore the small-biz expensing limit permanently

Small-business expensing, known as Section 179 in the tax code, allows small businesses to immediately deduct the full value of equipment in the same year the investment is made instead of depreciating the investments over time. This simplifies accounting and frees up cash to be reinvested and grow the business.

Despite broad bipartisan support, small-business expensing fell from $500,000 to $25,000 this year as a result of the fiscal cliff negotiations. H.R. 4457, the America's Small Business Tax Relief Act of 2014, would provide small businesses with expensing levels that are permanent, predictable and at a level adequate to their needs. The bill recently went through committee markup in the House, and we hope it will be brought to the floor soon. If the Senate passes the legislation, small businesses will be able to plan for the future, invest in the economy and hire new workers.

Visit a small business

Between now and the November elections, lawmakers will be spending a good amount of time back home in their districts. Why not take a few hours and visit a locally owned and operated small business to ask questions to see what it takes to be an anchor of Main Street? Everyone should remember to support their local retailers and shop small.

NFIB's core mission is to instruct and remind policymakers that small businesses are not smaller versions of big businesses, but instead have uniquely different difficulties in remaining solvent and that small business—not big business, big labor or big government—that employs the majority of working Americans and generates most net new jobs. By taking the time to actually visit a small business, lawmakers can shape better policies for both small-business owners and employees.

—NFIB is a nonpartisan group that promotes and protects the rights of small businesses. Dan Danner can be reached at Twitter @NFIB.

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