Small businesses, which employ more than 4 million Texans, are the core of the state's economy.
They provided 45 percent of state's private-sector jobs and accounted for more than 98 percent of the state's employers, according to 2010 statistics from the U.S. Small Business Administration, which defines a small business as one with fewer than 500 employees.
The crucial role of small operations in Texas means helping them is a focus at the Legislature. Ideas before legislators include certifying small businesses as homegrown; expanding the list of foods that can be sold direct to consumers, which opens the door for more cottage-industry food artisans; and making permanent a small-business tax exemption set to expire in 2014.
On May 4, the House passed the bill that would make the tax cut permanent and sent the bill on to the Senate.
"Whether it be through lessening the impact and reach of the business margins tax, providing creative economic development incentives or increasing the transparency and predictability of government regulations, lawmakers are clearly prioritizing the interests of small businesses around the state, upon whom we all depend to keep the economic engine going," said Rep. Giovanni Capriglione, R-Southlake.
Tax relief proposal
On April 16, Gov. Rick Perry announced a four-point plan to give nearly $1.6 billion in tax relief to all Texas businesses that are subject to the state's franchise tax.
The plan reduces franchise taxes by 5 percent, provides a $1 million deduction for businesses with revenue of up to $20 million, lowers the tax rate for 1040EZ tax form filers and gives companies relocating to Texas from out of state a one-time moving expense deduction.
Perry's plan also would make permanent the small-business tax exemption, which affects 29,000 businesses.
"Gov. Perry's tax relief proposals will go a long way in helping entrepreneurs and smaller businesses grow during this period of economic recovery," said Will Newton, executive director of the Texas branch of the National Federation of Independent Businesses. "These four specific points demonstrate an understanding of the kind of relief small-business owners have said they want."
The 2011 Small Business Survival Index lists Texas as the third-friendliest state for small business, but lawmakers said they hope to boost it to No. 1.
"I think most of the bills that are presented tend to be favorable to small business, and large [businesses] in some instances as well. What we've heard so far is in that line of thinking — and certainly protecting the business climate in Texas," said Rep. Cecil Bell Jr., R-Magnolia, who owns six small businesses in the cattle industry.
Underscoring the importance of small business in the Lone Star State, the House of Representatives has a committee dedicated to them — the House Economic and Small Business Development Committee.
In its interim report to the Texas Legislature, the committee recommended that lawmakers make it easier for students to get entrepreneurship education, ease taxes on small businesses, create incentives for investing in small businesses, consolidate resources for entrepreneurs and brand the state as immigrant-friendly.
"Most small businesses are not intended to become the next huge corporation," the report says. "But their impact on the economy is important, and we could use a lot more people who, but for a little encouragement, might open their own businesses."
The cottage industry
The House approved a measure May 6 that would expand the list of foods that can be sold by local producers directly to consumers at farmers markets, farm stands, fairs and other events.
The "Cottage Foods Bill" by Rep. Eddie Rodriguez, D-Austin, allows the following products to be sold: roasted nuts and nut butters, fruit butters, candy, cereals, granola, dry mixes, vinegar, pickles, mustard, roasted coffee or tea, and dried herb mixes.
The bill has bipartisan support, said Rodriguez, head of the House Farm to Table Caucus. It awaits passage in the Senate.
Producers would still be required to label their items as home-produced and to include the producer's name and address.
The bill provides opportunities for micro- and startup businesses to meet growing demand for locally produced foods in both rural and urban areas, he said.
Legal labor certification
Legislation by Capriglione would create a "Made in Texas" certification for businesses that use the E-verify system to make sure their employees are in the country legally.
The bill would benefit small businesses because it rewards them for following the rules, he said.
"If you're a small-business owner, I think you're being penalized," Capriglione said. "If you're trying to keep to the rules [and] follow the laws, you'll find that you're paying these extra expenses and maybe some other business isn't, and I think that's unfair."