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May-June 2018

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Are Small Businesses O v e r C o nf i d e n t ? Business Blog by Gene Marks 36 PalletCentral • May-June 2018 palletcentral.com or over the past year and a half, many surveys have reported rising optimism among small business owners. Most recently, the U.S. Chamber of Commerce – an organization that represents the interests of more than three million businesses of all sizes – announced the largest increase on record for its quarterly small business index that it conducts with insurance company MetLife. More than two- thirds of the businesses that participated in the survey said they have a positive outlook for the coming year. Of course, that's good news – and it's not hard to understand why. The economy is growing, people are working, regulations have been loosened and a pro-business administration is running Washington. But – and maybe it's just the accountant in me – I can't help but think that we may be just a little too confident. Here are a few of my concerns as we finish out 2018. Healthcare costs are rising. Healthcare costs are projected to significantly increase in 2019. The reasons for this increase are many. The ending of the individual mandate, along with more exemptions for certain companies that were once required to provide health insurance will reduce the market of insurance buyers. President Trump's withholding of subsidies, an increased scrutiny of hospital and pharmaceutical companies' billing practices and more hurdles for people trying to enroll on the insurance exchanges are forcing many insurance companies to pull back coverage or increase rates. This is a big problem for businesses because health insurance is one of our most significant expenses. But there is some good news: more choices coming. "There are options," Tom Sullivan, the Chamber's Vice President of Small Business Policy told me. By this he means new rules allowing businesses to form "association" health plans and to offer less-expensive "skinny" plans to their employees. "Controlling healthcare costs will continue to be a challenge," Sullivan said, "But businesses will have more ways to address this cost then they've had in years past." Tax reform has some drawbacks. Sullivan is very bullish about tax reform – and he has reason to be. Tax rates in 2018 are now significantly lower for most corporations and "pass-through" entities than in 2017. Certain deductions have, for things like investing in capital equipment and purchasing automobiles, increased. Personal rates have also fallen for many as well and more deductions and credits are available. "Tax reform will be an enormous driver for small businesses this year," Sullivan said. "We've waited a long time for this." I'm in agreement, but I still have some concerns. For starters, I'm not sure most businesses truly understand the impact of tax reform and how it will affect their companies. To them, I say please meet with your accountant as soon as possible and do this analysis. More importantly is the cost of tax reform. Lower taxes will drive growth and help employers make more investments and hire people. But, longer term, the potential deficits it could create (an estimated $1 to $4 trillion in the next ten years, according to some analysis) could have a damaging impact on the government's ability to raise F BUSINESS I'm not sure most businesses truly understand the impact of tax reform and how it will affect their companies. To them, I say please meet with your accountant as soon as possible and do this analysis.

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