Women Owned Businesses in USA : The ranking Democrat on the Senate Finance Committee, Mr. Sen. Ron Wyden, D-Oregon, introduced legislation for the creation of two brand new tax incentives to facilitate help small businesses owned by women in the United States. According to the new tax bill, women-owned small businesses in USA will get tax credits and incentives to get help for hiring and growth of the business along with getting access to the capital. A detailed summary of the bill is available here for our readers’ guidance. If you are running a women empowered business and want to have business advisory or financial planning for your business, you can request call back with our representative. We can guide you in the best possible manner to help your business grow with the tax credits and other accessible benefits.
1. First Employee Credit:
- A new tax incentive for women-owned business is provided by the PROGRESS (Providing Real Opportunities for Growth to Rising Entrepreneurs for Sustained Success) Act which is called “First Employee Credit”.
- This tax incentive stimulates business growth as well as job creation for the women-owned businesses in the United States.
- This tax credit would be equal to a total of 25% of the reported W-2 wages.
- It could be claimed on annual basis. Up to $10,000 can be claimed in a single tax year and the lifetime limit can exceed up to a total of $40,000.
- Furthermore, first employee credit for women-owned business would be creditable against the payroll tax liability of the business as a profit in their early years is not like-able in case of the most of the start-up businesses.
- First employee credit is accessible for those businesses that have not their full-time equivalent W-2 wages in a prior year. Get complete taxation services in United States with Black Ink.
- The first employee credit’s eligible businesses need to be majority owned by U.S. individuals. Moreover, the eligible business owners must be earning $100,000 or less per year (or $200,000 in the case of joint filers).
2. Investment/Investor Credit:
- Another new tax incentive for women-owned business is “Investor Credit” or “Investment Credit” that provides third-party capital investments in small businesses owned by women in the United States.
- This tax credit could be claimed for up to 50% of a qualified debt or equity investment in USA.
- It could be claimed on annual basis. Up to $10,000 can be claimed in a single tax year and the lifetime limit can exceed up to a total of $50,000.
- Investment/Investor Credit can be used by those investors who fund certain businesses in order to increase their rate of return.
- All Investment/Investor Credit’s eligible business owners would be required to have at least one full-time equivalent employee.
- Furthermore, the eligible businesses must be owned by majority individual(s) and they must be earning $100,000 or less per year (or $200,000 in the case of joint filers).
The Senate Finance Committee released the two tax credits especially for women-owned business in USA after noting the fact that the share of business revenues for women-owned businesses has not changed in two decades despite of the noteworthy growth in the number of women-owned businesses. The revenue is still persistent at around 4%. In the first three years, male entrepreneurs in USA much more expected to ask for bank loans in addition to other sources of capital for their businesses’ development.
The Senate Finance Committee’s ranking director, Mr. Sen. Ron Wyden, D-Oregon., said in an announcement,
Women business owners, particularly women of color, are underestimated, underrepresented and under-capitalized. Existing tax incentives do not do nearly enough to help women-owned small businesses. Our bill would diminish these gaps and help women-owned businesses hire and grow.
The CEO of the U.S. Women’s Chamber of Commerce, Margot Dorfman, also issued a statement in the appraisal of the proposed legislation of women businesses tax credits,
Women-owned firms represent 36 percent of all U.S. firms, but they only produce 4 percent of U.S. revenues. Firms owned by women of color face even greater challenges. While women of color own 28 percent of women-owned firms, they secure only 14 percent of all women-owned revenues. The obstacles to growth facing women business owners are dramatically impacting their business revenues and profits. Women business owners need access to capital for their businesses to reach their full potential. We commend Senator Wyden’s efforts towards economic equity for women entrepreneurs. This is the kind of tax policy we need for women-owned businesses to grow and thrive.
The co-chair of Businesses for Responsible Tax Reform and president and CEO of the South Carolina Small Business Chamber of Commerce, Mr. Frank Knapp, also expressed his thoughts and said,
Access to capital continues to be a problem for entrepreneurs and small-business owners contributing to both a 40-year low in start-ups and the suppression of job creation in very small businesses. Since almost all net new jobs come from businesses under five years old with less than five employees, the future of our economy is threatened. This bill to promote investment in very small businesses and the hiring of a first employee will put our tax policy squarely on the side of our small-business owners and entrepreneurs.
The third-party sources of funding (e.g. venture capital) has a greater gap as merely 2.3% of venture capital funding went to companies founded exclusively by women, as per the statistics of the year 2018. Over the past 10 years, Latinx and black women have raised only 0.32% and 0.0006% of venture capital funding. What are your thoughts about this tax credit relief for women entrepreneurs in the United States? Share your thoughts in the comments section. Ask for best accounting & taxation services in USA from Black Ink.