Small Business Week will take place from May 4th to 10th. This week celebrates entrepreneurs and small business owners, and their impact on the national economy. Small businesses (those with 500 employees or fewer) are our nation’s economic engine, as the driving force in our workforce and the backbone of every community. Female entrepreneurs make a unique contribution.
To see how much you know about small businesses, especially female-owned ones, let’s play “Two Truths and a Lie.”
A. Female small businesses are largely one-woman enterprises.
B. Women-owned businesses are very small.
C. The 2017 tax cuts did nothing for small businesses.
Let’s take these statements one at a time:
A. TRUE! The U.S. is home to 12 million female-owned businesses that employ 10.8 million workers. Women-owned businesses represent about a third of the 35 million small businesses in America. However, despite employing nearly 11 million workers, the whopping majority (nine out of ten) of women-owned businesses have no employees.
B. TRUE! Many women-owned businesses tend to be very small. In 2023, men-owned businesses averaged $754,000 in revenue, nearly four times that of women-owned businesses ($193,000). Female-owned enterprises that do not have a staff—about 90% of all women-owned enterprises, averaged less than $50,000 in revenue.
Women tend to value flexibility and start their small businesses to balance work with caregiving responsibilities. Some also hang their shingle out of necessity, when they can’t find jobs or to supplement their income. They tend to start with less capital than men and depend on their incomes to fund their startups, making tax policy very important.
C. LIE! A vast majority of women-owned small businesses are likely organized as “pass-through entities,” meaning they are taxed under individual income tax rates. These business owners benefited in several ways from the 2017 tax cuts: individual tax rates were slashed, allowing them to keep more of their incomes; pass-through entities were provided a 20% deduction to reduce their tax burdens; and certain businesses were given a 100% bonus depreciation deduction on the purchase of eligible business property.
Small business owners such as trucking company owner Lana Pol purchased new trucks and hired new drivers with her small business’s tax savings. Iowan farmer Jolene Riessen purchased harvesting equipment.
Employer companies across the country hired workers, gave out bonuses, raised pay, and offered employees with new benefits.
As Congress works to extend or make the 2017 tax cuts permanent, small businesses are watching closely. The certainty from knowing that taxes won’t rise and tax benefits won’t disappear beginning January 1, 2026, will provide the certainty needed to plan for the future.
To learn more about how small businesses were boosted and households prospered because of the tax cuts, visit: iwf.org/taxcuts.