By SBA Great Lakes Regional Administrator Rob Scott
Michigan is home to more than 870,301 small businesses which employ 49.2% of the state’s workforce. Not only do these small businesses contribute to local economies, they invest in the communities. Whether employing workers, sponsoring high school sports teams or supporting non-profits, there is no question that small businesses make a tangible difference in Michigan’s towns and cities.
Despite the number of benefits that small businesses bring to communities across Michigan, they face obstacles in staying in business. Thankfully, some of those challenges have been mitigated as the Tax Cuts and Jobs Act, which President Trump signed in December, has provided entrepreneurs across America with the opportunity focus on their businesses, rather than on a burdensome tax code.
Most small businesses will now be able to deduct 20 percent off their business income in addition to having their taxable income taxed at lower rates. And for the first five years, they’ll be able to write off investments in new equipment the year the investment is made.
As the U.S. Small Business Administration’s Great Lakes regional administrator, I have seen the difference that the Tax Cuts and Jobs Act has made for Michigan entrepreneurs firsthand. Thanks to the recent federal tax cut, local business owners are making investments in their businesses and employees by raising wages, increasing benefits and purchasing equipment to grow their businesses and create new jobs.
The benefits of the Tax Cuts and Jobs Act are far reaching, extending to Michigan’s small urban cities as well, with the creation of Opportunity Zones, which allow long-term private sector investments in low-income communities nationwide. In Michigan, 282 Opportunity Zones have been certified, potential sites to increase employment and stimulate local economies.
By creating a favorable environment for small businesses to thrive, we are improving entrepreneurs’ chances for success and strengthening Michigan’s economic outlook. Small business owners are more optimistic about their companies’ success, leading to more jobs, higher wages and increased sales and profits.
We are already seeing the success of the Tax Cuts and Jobs Act, with workers’ pay improving nationwide. As a result of the act, the typical Michigan couple with two children is receiving nearly $2,300 more in their paycheck every year. Consumers will be able to spend their hard-earned money where they want, great news for small businesses offering unique products and services.
Another impact of the Tax Cuts and Jobs Act is that Michigan small businesses are optimistic about the future and eager to hire new employees. According to the National Federation of Independent Business’s job report, the number of small business owners hiring or trying to hire is at 63 percent, the highest level in 19 years.
These stories and statistics offer a clear picture of the impact that the Tax Cuts and Jobs Act has had on small businesses. By cutting taxes and regulations, the act has helped small businesses, the backbone of America’s economy, to thrive and grow.
The SBA empowers and advocates for small businesses and entrepreneurs throughout Michigan and the United States. We are dedicated to working for their continued success, as go-to resource at every stage of the businesses lifecycle for aspiring or current entrepreneurs. I encourage you to reach out to our field offices or visit SBA.gov to learn more about what we can do for you. Follow us on Twitter at @SBAGreatLakes for frequent updates throughout the region or sign up for our e-newsletter at sba.gov/updates.