Lawmakers seek to enhance state's climate for small-business owners

Small businesses are at the core of the Texas economy. Defined as those with fewer than 500 employees, small businesses provided 45 percent of the 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.

More than 4 million Texans work for small businesses, and the Legislature is focused on trying to help small businesses. Ideas currently before legislators include certifying small businesses as homegrown, expanding the list of foods that can be sold directly to consumers 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; that bill now faces lawmakers in the Senate.

Rebecca Melancon, executive director of the Austin Independent Business Alliance, said it is important for the state Legislature to focus on small businesses since they play a crucial role in the state's economy.

"I'm thrilled to see any governmental body focus on small, local business because it's too long been focused on big, national business," she said.

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 state's small-business tax exemption, which currently affects 29,000 businesses and is scheduled to end in 2014.

"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."

Business-friendly state

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 with several ideas.

One proposal would require the comptroller and state agencies to give preferences to small businesses when purchasing goods or services with a value of less than $500,000.

"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 small businesses—the House Economic and Small Business Development Committee—which is considering more than 100 bills this session.

In its interim report to the Texas Legislature, the committee recommended that lawmakers make it easier for students to get entrepreneurship education, ease tax burdens 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 said. "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. [Future entrepreneurs] are probably already in our state, and they don't even know it."

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 now awaits passage in the Senate.

"I'm excited to see what kinds of small businesses are able to flourish after this bill makes it through the Senate," he said.

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.

Drew Scheberle, Austin Chamber of Commerce vice president of education, said Rodriguez's bill would help encourage more entrepreneurs to go into business.

"It will help reinforce the innovation and quirky entrepreneurism that part of our business community is known for," he said.

To follow specific bills written by lawmakers

Representatives: www.house.state.tx.us/members/

Senators: www.senate.state.tx.us/ 75r/senate/members.htm



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