Report: Small Businesses to Suffer Most Under Net Neutrality

A new report from the American Action Forum shows that smaller businesses make up 90 percent of thos affected by the Obama administration’s new net neutrality rule on internet regulations. As American Action Forum President Douglas Holtz-Eakin writes, the irony is that President Obama claimed the regulations were meant to help small businesses compete, when in fact it does just the opposite:

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According to the Federal Communications Commission (FCC) itself at least 90 percent of the businesses that will bear the burden of the new Title II (utility-style) network neutrality regulations will be small businesses. As part of doing its business, the FCC must identify the burden of new rules on small business. As it turns out, 20,640 companies will be affected, ranging from “Broadband Internet Access Service Providers supplied over client supplied connections” (1,274), to “Wireless Telecommunications Carriers” (1,383), to “Satellite Telecommunications Providers” (570), “Cable and Other Program Distributors” (2,048), and so forth. 
Of these, 18,532 are considered small businesses. It is true that much of the business activity will take place in the fewer, large companies. But complying with these regulations won’t be a one-time cost since courts are likely to change the meaning of the law. Even still, the relatively fixed cost of regulation will be disproportionately burdensome on the smaller firms.

You can read the full report at the American Action Forum.

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JOBSHow Our Over-Complicated Tax Code Makes it Tougher for Entrepreneurs

With tax-filing season around the corner, Americans are rushing to make sure their finances are in order. But with the advent of many crowd-funding websites, entrepreneurs that take advantage of such funding sources have the tax code especially burdensome.

From the New York Times:

Jenny Wecker, a fledgling Salt Lake City entrepreneur, had a hit on her hands at the end of December: She collected $42,000 in pledges from the crowdfunding site Kickstarter for more than 300 orders of a stylish diaper bag she had designed.

The project came together in a whirlwind after her husband persuaded her to test a broader market for the bags, which she had been making by hand and marketing on Instagram.

“We didn’t even think twice about how the taxes would affect us,” she said.

But with tax preparation time in full swing, thousands of people like Ms. Wecker who ran successful crowdfunding campaigns last year no longer have the luxury of ignoring the tax consequences of their efforts. In the eyes of the Internal Revenue Service, they are small-business owners — and come April 15, the taxman wants his share of their proceeds. …

Ms. Wecker’s tax liability was complicated by a timing issue that ensnares many novices: She ran her campaign in December but was not able to place her overseas production order for the bags until January, which left her with a big chunk of business income in one year and the major expenses to offset it in the next.

That common crowdfunding pitfall can leave entrepreneurs struggling to pay a larger-than-expected tax bill. Accountants say there are a few ways to handle it, but each involves nuances that are best sorted through with professional help. Businesses with certain corporate structures may be able to adopt a fiscal year that aligns their income and expenses. Others might opt to use an accounting method known as “accrual,” which can let those who presell items delay recognizing the income until customers receive the goods.

Read the full story at the New York Times.