How will women-owned small businesses be affected by the looming tax hikes (set to take effect in 47 days)?

For starters, small businesses will be hit with increases at the top rates.

  • Many small businesses are not structured as corporations, and their owners file as individual taxpayers – meaning they could be subject to any increase in taxes levied against the top two income brackets.
  • According to Americans for Tax Reform, two-thirds of small business profits would be impacted by the upper-bracket tax hikes.
  • Profitable small businesses are the ones who do the hiring and purchasing.

Many small businesses are women-owned.

  • According to an October 2010 Department of Commerce report, in 2007 (the most recently available data) 30 percent of all non-farm, privately held U.S. firms were women-owned -7.8 million – which accounted for sales/ receipts of $1.2 trillion. Women-owned firms employed 7.6 million workers. Between 1997 and 2007, the number of women-owned businesses grew 44 percent, (twice as fast as men-owned businesses) and added approximately 500,000 jobs.

On average, women-owned businesses have narrower operating margins, and are thus even more vulnerable to tax hikes that cut into their bottom line. As I pointed out in a Stiletto Nation article a few weeks ago:

…[W]omen-owned businesses are often smaller than men-owned businesses, and “average sales/receipts for women-owned businesses are only 25% of average sales/receipts for men-owned businesses.” With a narrower margin, piling on additional costs can mean the difference between staying open or shutting the doors.

To get our economy back on track, our small businesses (both women- and men-owned!) need to be able to keep more of their own money to reinvest in hiring, capital, expansion, and innovation. In addition, they need the certainty that permanent tax rates would provide – not just a temporary extension of a year or two that would merely delay the inevitable.