Current legislation that affects small business and some small business trends.
Look for the Small Business Administration to launch a program to increase small companies' access to technology expertise. An act passed in the waning hours of Congress requires the SBA and the National Institute of Standards and Technology to set up a five-year pilot project involving on-line databases. The aim is to connect small companies with technology experts in universities and government labs.
The repeal of IRS Code 2036(c) should be a substantial improvement for family businesses. Passed in 1987, 2036(c) eliminated the estate-freeze method of reducing taxes when passing a family business to heirs. Business owners feared that without freezes, estate taxes would necessitate liquidating their companies. Now that estate freezes are allowed again, the emphasis is on making sure owners pay enough gift taxes at the time of transfer. Having the issue be one of gift rather than estate taxes is a "tremendous victory," says John Carson of the U.S. Chamber of Commerce.
Other news from Washington: the first White House Small Business Conference since 1986 is scheduled for early 1994. State conferences will nominate delegates starting in December 1992. . . . More companies are taking advantage of the new trademark law to reserve marks for future use. Under the old law, companies couldn't apply to register unless their product or service was already being sold. Applications have increased more than 50% since the law took effect, in November 1989, says Nancy Omelko, a U.S. Patent and Trademark Office attorney.
More types of cookie-cutter retirement plans are becoming available for small companies. While financial-services companies have been able to offer these budget plans nationally for years, the IRS has only recently begun to accept such plans from regional sponsors like law firms, accountants, and benefits consultants. More trade associations and chambers of commerce are also becoming sponsors, according to Elizabeth Michel of the consulting firm Noble Lowndes.
Are businesses getting smaller? Only if they are technology based, concludes a new study by the SBA's Bruce Phillips, who studied company size between 1976 and 1986. In high-tech industries, the average number of employees per company fell 26%. In low-tech industries, such as retail, the average size increased 25%. Phillips theorizes that economies of scale are becoming less important in high tech and manufacturing, and more important in areas such as retailing. That, he says, reverses historical trends.