Fiscal cliff tax law eases minds of small business owners
BY FRANCINE KNOWLES AND SANDRA GUY Business Reporters January 2, 2013 7:18PM
Sarah Argue, Community Social Media Manager, of Markitx works at the 1871 tech center in the Merchandise Mart in Chicago, Ill., on Wednesday, January 2, 2013. | Andrew A. Nelles~Sun-Times Media
Updated: February 4, 2013 2:57PM
Chicago area small business owners expressed relief Wednesday over the fiscal cliff deal struck by Congress New Year’s Day.
“I think it’s good news, especially for my customers, and it’s good news for me,” said John Meyer, owner of BJ’s Market & Bakery, which operates three restaurants in Chicago and employs 45 people.
“We’re on an upswing. It will keep that going for me. I’m excited about that.”
He and other small business owners had feared failure to reach a deal would have caused consumers to cut back on discretionary spending, hurting their enterprises.
Meyer is among most small business owners who won’t see their tax rates go up due to the legislation.
Not so for John Stanfield, owner of Downers Grove-based Stanfield & Associates accounting firm. He said his business will barely hit the $450,000 threshold and face a higher tax rate as a result. The company employs four people, including Stanfield.
“I don’t plan to change my day-to-day operations in any meaningful way,” due to the higher rate, he said. “I think we’re happy with the bill. It extended the positive tax environment that was implemented under the Bush administration.”
Brian Ficho, chief executive officer and founder of oBaz, an online marketplace for high-end fashion and home-decor brands such as Michael Kors, BB Dakota and Marcia Moran, worries about the end of the Social Security payroll tax break.
“We depend on consumer spending for growth,” said Ficho, 26, who started the company in August 2011 as part of Chicago investment fund Lightbank’s efforts to grow new businesses locally. “Any money that people aren’t getting in their paychecks is money they cannot spend.”
Nevertheless, oBaz, which now employs seven, plans to hire three people in sales, marketing and engineering in the next three months, since it is doubling revenues every month.
Ezekiel Morris, operating principal and managing broker at Hyde Park-based Keller Williams Realty, which employs eight people, said the higher payroll tax could make consumers more cautious.
He expects prospective home buyers to remain cautious in the first quarter until the uncertainties surrounding the upcoming debt ceiling debate and budget battles over spending and tax reform are resolved.
“I think once all the smoke clears, people will start to feel better,” he said. “I’m guardedly optimistic.”
Frank D. Muscarello, chief executive officer of MARKITx, an online exchange for buyers and sellers of IT hardware, said extension of a Research and Development tax credit included in the legislation could help his company expand more quickly and potentially hire more people. MARKITx has applied for the tax credit.
“We spend $1 million to $1.5 million in capital expenditures for software development,” said Muscarello, who started the company in April 2012, based in the 1871 tech-startup center in the Merchandise Mart. “[A tax credit] would let us expand quicker and make a better product faster.”
MARKITx employs seven. It aims to add 20 more workers in the next 12 to 18 months, including data scientists, web and software developers, and sales and business development leaders. The company doesn’t disclose its 2012 revenues but expects to grow to $6 million to $10 million in revenues in 2013.
Provisions in the legislation that allow MARKITx to write off a portion of its investment in software and equipment also open the way for the company to build profits, Muscarello said.