Fiscal cliff averted – So what does this mean for business owners?
As we all now know, last minute wrangling led to the fiscal cliff being avoided. An agreement was reached on tax increases for wealthy individuals amongst other issues. Spending cuts and the significant impacts of tax increases were both avoided. Well, not necessarily. In essence, the agreement postponed the most painful issues faced by the country, spending cuts and the debt ceiling.
So, what the country did gain was stability on the revenue side. Individuals earning over $400k annually will see their taxes rise in 2013. Capital gains will also rise to 20% for these individuals.
What has been delayed, for two months at least, were the rather large issues of both the debt ceiling and the spending cuts.
So, how will the aversion of the fiscal cliff impact the middle-market business owner? Well, we now all know the rules with certainty from the revenue generating side, however, the two outstanding issues do leave a high degree of uncertainty.
How will the proposed spending cuts impact the overall economy and more specifically, your business? What will happen if 2011 is repeated and no agreement is reached on the debt ceiling and the credit rating of the U.S is once again affected?
Whilst we lay no claim to possessing the ability to see into the future, what we are certain of is that delaying major decisions is no way to govern and at some point those elected to lead the country will have to come to some kind of consensus on the key issues faced and develop solutions to the problems faced.
Until this point comes, if you own a private business, at least you are aware of what your current tax situation will look like in 2013. What you do not know is how your company will be impacted by the spending cuts and uncertainty surrounding the debt ceiling issue.
Something you will also be aware of is your own tolerance level when it comes to risk and uncertainty. What business owners need to decide now is whether they are willing to wait around and see what happens when the elected parties finally come to some kind of agreement as procrastination could in fact cost them dearly.
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