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. Legislators' ideas include certifying them as homegrown businesses, opening the door for more cottage-industry food artisans and making permanent a small-business tax exemption set to expire in 2014 all currently before lawmakers.

"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 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. Another would create a state Small Business Advisory Council.

"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.

"I do believe Texas is very pro-business," said Ann Hodge, president of the Katy Area Chamber of Commerce. "This certainly has been demonstrated over the past eight years as Texas has continued to be named the No. 1 state for business by various studies and publications.

Hodge said changes to the Texas Business Tax laws will enhance the business climate and benefit communities by allowing more businesses to grow and generate increased sales tax.

"If you review the environment for business growth in Texas versus other states you can clearly see the exceptional environment we have to help businesses grow and succeed," she said.

The cottage industry

Bills by Rep. Eddie Rodriguez, D-Austin, would expand the list of foods allowed to be made and sold by small, independent artisans to include non–potentially hazardous foods, such as candy, dried fruits, cereal, granola, dry mixes and vinegar.

It also allows those foods to be sold at farmers markets, farm stands, fairs and similar events directly to customers.

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 start-up businesses to meet the growing demand for locally produced foods in both rural and urban areas, Rodriguez 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."



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