How do small businesses get free money? – Government Grants For Renters

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A little-noticed provision in the 2011 Dodd-Frank financial reform law known as the Volker Rule is helping some small businesses that are getting the money they need from the federal government without raising taxes, said Charles Ogletree, executive vice president for government affairs for the National Federation of Independent Businesses.

The rule gives business owners an exemption from state and local taxes that are owed and charges a 3.8 percent excise tax on gross income above a certain threshold to help the nation’s smallest businesses pay back tax breaks and relief.

For example, a tax bill that would have been the equivalent of 10 percent of the income of a small business in North Carolina would be reduced to 6.5 percent after the new tax on income, Ogletree said. The reduction in income is part of a broader set of rules that make it easier for small businesses to qualify for federal funding.

“There is no greater blessing than getting a tax break without actually having to pay taxes,” Ogletree said.

The rule also enables small business owners to keep the portion of the sales tax paid to city, county and state agencies back to the businesses.

There is no set list of what qualifies as income that qualifies for this refundable business credit, which is similar to income from a partnership or sole proprietorship. But small business owners who pay taxes on their incomes are only eligible to get a small business income break if they have a net annual income that is at least $150,000.

Most of the businesses receiving this tax break are small coffee shops and convenience stores. In many cases, they are owned by people like Ogletree and Steve Kline, owner of Zingerman’s Creamery in Raleigh.
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“We don’t spend a ton of money, but we do spend a lot of money paying taxes and a lot of time,” Kline said. “That is part of the reason we are doing this, and that is part of why I decided to give this tax credit to these coffee shops.”

This is part of an ongoing effort by the federal government to encourage companies to bring more jobs to the United States, particularly small business owners and service professionals who do more for customers and more often than they do for management. The government pays companies and businesses a small percentage of their sales in taxes and reimburses them from the federal economic stimulus package.

The Volker Rule has become an even bigger source of relief for small businesses because the government will be refunding the federal portion

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