Mark Cuban, billionaire owner of the Mavericks and serial entrepreneur has written a fascinating blog entry on the best way to cure America’s (and indeed the world’s) economic problems.

He shows why the debate about tax cuts and capital gains is unproductive:

You can cut taxes for 95pct of Americans and raise taxes for the rest. You can cut taxes for businesses and retain the Bush Tax Cuts. You can increase or decrease the capital gains tax 5 or 10pct either way.  Under both programs the deficit for the country will increase,  we will borrow and print more money.  5 or 10pct variance either way, given the big hole our economy is in wont matter.

and:

We are in an economic mess right now. It doesn’t matter who caused it. It’s here. It doesn’t matter what our Presidential candidates and their economic advisors come up with. Its meaningless. 

His solution is what has always been the driving force behind the American economy:

The cure for what ails is us the Entrepreneurial Spirit of this country.  We are a nation of people who encourage , support and invest in those of any and all age, race and gender who will use their ingenuity and come up with a new idea.

Its always the new idea that re energizes this country.  Industry, manufacturing, transportation, technology, digital communications, etc, each changed how we lived and ignited our economy and standard of living. Tax policy has never done that.  The American People have.

So what is the specific solution? :

What we need is our candidates to stop yelling at each other and starting looking at the American people and encouraging the best of who we are.  That is who I want to get behind. That is what I would like to see for our country. That is what will energize and motivate people to create companies and invent products that will  turn the economy.

The best time for little guys to start a business is when the big guys are worrying about surviving in theirs. You dont need to raise money. You need to be smart and be focused.  I had no idea until this current financial crisis that when I started MicroSolutions, my first company, it was in the middle of a very bad recession. I had no idea whatsoever. I didnt know what the tax rates were, and I didnt care. I had an idea, a floor to sleep on and a lot of motivation.

Now is the time for Entrepreneurs to step up and do our part for our country. Its up to us to start businesses and create jobs. That is the cure to this country’s economic problems.

So there you go, starting a business or managing and growing your existing business will get us out of this economic mess and back on the road to prosperity.

I also recommend his other article: The Best Equity is Sweat Equity, especially for those concerned about raising startup capital in this tight credit market.

People often wonder how to cancel an existing FEIN (Federal Employer Identification Number, also called a Federal Tax ID) when closing a business. The IRS has information available HERE on this topic.

We can make the process of closing an existing business simple and painless! Just visit our page on filing Articles of Dissolution to properly close your company and we can make sure your company is closed properly (and also prevent your company from having to pay recurring fees).

The IRS has improved the procedure for electing S-Corporation status after the filing date for the S-Corporation Election Form (Form 2553) has passed.  If you can show reasonable cause for why the election is late it is now easier to obtain S-Corporation Status after the deadline.  Information on the change can be found here.

For more information on how an S-Corporation is organized and the differences between entity types see our page on choosing an entity.

From the Book The Entrepreneurial Imperative:

For the United States to survive and continue its economic and political leadership in the world, we must see entrepreneurship as our central competitive advantage. Nothing else can give us the necessary leverage to remain an economic superpower. Nothing else will allow us to continue to enjoy our standard of living. We either support and nurture increasingly entrepreneurial activities in all aspects of our society and around the globe, or run the very real risk that we will become progressively irrelevant on the world stage and suffer economically at home.

(via Dr. Cornwall)

Wonderful news from Newsweek:

Entrepreneurship is transforming America—not just for a few, but for all of us and for the better. Consider: Today roughly 45 million Americans, about 30 percent of the labor force, run their own businesses. Sometime during their careers, well over half of university graduates will start a business. Most Americans today work in firms that have entrepreneurial teams in charge. And most U.S. job growth and new technology comes from entrepreneurial companies. In short, ours is no longer an economy of big, old, stable corporations. Yes, we have many of those. But increasingly, we live in an economy of new, rapidly growing (and sometimes rapidly declining) entrepreneurial companies. America is unique in the world, a nation rebuilding itself on the principles of entrepreneurial capitalism.
(via BizOpps)

From the Small Business Administration comes statistics about small businesses (PDF) from the years 2001-2004.  Overall, Small Businesses (firms with less than 500 employees):

• Represent 99.7% of all Employer Firms.
• Employ half of all private sector employees.
• Have generated 60-80% of all new jobs annually over the last decade.
• Create more than 50% of nonfarm GDP.
• Produce 13 to 14 times more patents per employees than large firms.
• Employ 41% of high tech workers.
• 53% home-based and 3% franchises.

 

 

The Congress is proposing some changes to the law that governs S-Corporations including:

1. changes to the way “Passive Income” is classified and taxed (eliminating the hidden “double taxation” by classifying dividend income correctly).
2. allow more than one class of stock.
3. allow non-resident aliens to become shareholders.
4. allow flexibility in the 75 day deadline to file for an S-Corporation.

Overall, I think all these changes would be great, which is all the more reason to form an s-corporation today!

You can view the full text of the proposed changes here.

(via Dr. Cornwall)

The Small Business and Entrepreneurship Council has ranked congressional delegations by State according to how they voted for small business issues like lowering taxes, reducing regulation, etc.

Here are the top 10 States:

1 Idaho 95.7
1 Oklahoma 95.7
3 Alaska 94.3
3 Wyoming 94.3
5 Utah 92.4
6 Kentucky 92.1
7 Alabama 91.0
8 Nebraska 90.6
9 Kansas 88.6
10 New Hampshire 87.0

Note that only one of these is in the Northeast (New Hampshire) and that the rest are either in the south or the West.

The Bottom 10 is made up of the usual suspects (with the exception of North Dakota):

41 New Jersey 41.6
42 Connecticut 41.2
43 New York 38.9
44 Maryland 35.2
45 North Dakota 33.8
46 Maine 30.9
47 Hawaii 24.1
48 Rhode Island 18.1
49 Vermont 15.7
50 Massachusetts 12.2
Every single one of these states is in the Northeast with the exception of Hawaii and North Dakota.

Read the whole report here.

(Via The Entrepreneurial Mind)

From a report at the Kauffman Foundation:

Our economy is generating: 

- 5,568,000 new businesses a year
- 107,077 new businesses every week
- 15,297 new businesses every day
- 637 new businesses every hour
- 11 new businesses every minute

Dr. Cornwall: “Any question that the US is now in an entrepreneurial economy?” 

 

Top 10 reasons to become an entrepreneur from Everyday Entrepreneurs.

This week’s Carnival of the Capitalists is up!

Something I’ve always suspected.  More here…

(Via BizOpportunities)

Visit this link and join the debate.

Small businesses rank 2nd behind only the military in a poll conducted recently by Harris that rated their confidence in certain groups. 

At the bottom of the list? :

• The Press
• Major Companies
• Organized Labor
• Congress
• Law Firms

Not very surprising really.

(via Dr. Cornwall)

According to a survey, more than 50% of California small business owners think the State is headed in the wrong direction and are not optimistic about the future.  Excessive regulation, health insurance prices and workers compensation insurance premiums are frequently cited reasons. I believe this is why about 30% of our clients who incorporate in Nevada are actually from California.

(Via Biz Opportunities)