Small businesses are the lifeblood of our economy and the backbone of our communities. According to the Small Business Administration, small businesses account for 64% of new jobs in America and employ nearly half of the American workforce.
About 44% of U.S. economic activity comes from small businesses, the reason for America’s robust middle class.
Unfortunately, running a small business is getting increasingly expensive.
I was raised in a small business household. My dad was a house painter, so I was on rooftops caulking and rolling paint from a very young age (in violation of several labor code provisions, I’ve come to learn as a workers’ rights attorney – but I digress). This was in the 1990s. We were able to get by as a small business household, but I’m not certain our household would have been able to afford life today.
The good news is that over the past three years, 16 million new business applications were filed in the United States – the highest rate over a three-year period on record. The increase in growth in entrepreneurship has been particularly high among women, Latinos, and Black Americans.
Black business ownership is growing at the fastest pace in 30 years. The rate of women-owned businesses was 94% greater than the growth of men-owned businesses.
This growth can be attributed in substantial part to the Bipartisan Infrastructure Act, which was spearheaded by the Biden Administration and invested $400 billion in our roads, bridges and supply chains.
According to Wallethub, California ranks the 13th best state to start a small business and, according to Forbes, we have the highest business survival rate in the country.
Unfortunately, the cost of doing business in California is the reason why we are not ranked higher overall. We can, and must, do better. Strengthening our economy requires it of us.
Here are some of things we can do to help small businesses, all of which I will fight for in the state Senate:
• Franchise tax exemption for the first three years. I started and sold a small business in my 20s – an online education company. I was disappointed to learn that even when my business was in the red during my first year, I still had to pay an $800 franchise tax. This minimum tax should be forgiven for businesses for their first three years of operation, unless the business has earned at least $250,000 in revenue. Making this shift would give small businesses that time they need to get off the ground, without making the cost of doing business too prohibitive.
• Clarity on Assembly Bill 5: We need to make it easy and cheap to determine whether a small business must classify its workers as employees or independent contractors. Ambiguities and repeated modifications of AB5 have created unnecessary difficulty and costs for our small businesses. The state should provide easy and accessible guidance for small businesses to be in compliance with state law. We should also continue to listen to both workers and businesses to determine where employer/employee relationships make sense and where independent-contractor/hirer relationships make sense.
• Cut the Red Tape. Unfortunately, too many small business owners have an unbelievable amount of red tape standing between them and achieving their dream. We need to streamline processes and cut the number of agencies involved in approvals and oversight so that business growth moves faster in California.
• Low-Interest Loans. With increased interest rates, California should invest in offering low-interest loans to first-time entrepreneurs. IBank and other state programs should be fully funded in order to make it easier for small businesses to access capital.
• The California Dream Fund Grant. California needs to fund more grant programs that allow small business owners to get off the ground. Currently, the California Dream Fund Grant — after an intensive training program related to how to grow a business — seeds entrepreneurship and small business creation. We need more of these programs.
California has become too expensive, particularly for our small businesses.
To ensure a growing and robust middle class, and to keep families here in California, we need to lower tax burdens, streamline processes, and get small businesses access to low-cost capital.
As your next state senator, I will work to achieve these goals and move us toward becoming the best state in America to start a small business.
Kipp Mueller is a Canyon Country resident and candidate for the state’s 21st Senate District, which encompasses the Antelope, Santa Clarita and Victor valleys. “Democratic Voices” appears Tuesdays and rotates among local Democrats.
