Last week I was in Washington DC, fighting for small business owners.
I joined hundreds of other franchise professionals to discuss some of the biggest issues that have massive consequences on our cash flow and ability to grow.
We also went to Capitol Hill to meet with lawmakers and their staff and tell our stories to gain their support.
It’s important to understand their financial impact and vote accordingly this November.
Super Bowl of Taxes
2025 will be the Super Bowl of taxes. The Tax Cuts & Jobs provided some of the biggest tax cuts in the country's history which has led to massive economic growth.
Many of the provisions will expire in 2025. If everything is continued, it will cost taxpayers over 4 trillion dollars.
It’s amazing how there is never talk about reducing spending.
1) 20% QBI Deduction
Small business owners of LLCs, S-Corps, & Sole Proprietors got a 20% discount on their income as part of Trump’s 2017 Tax Cut & Jobs Act.
Instead of paying taxes on $100,000 of income, you’d pay taxes on $80,000.
For the tax dorks, it’s referred to as 199A Qualified Business Income deduction.
Lawmakers added this provision to balance the huge permanent cut they gave to big C-Corps lowering the corporate tax rate from 35% to 21%.
Unfortunately, the 20% discount will expire at the end of 2025. We’d like to make it permanent.
Every franchise owner improves the community they live in. They create jobs, invest in local marketing, sponsor events, and provide a valuable service.
2) 100% Bonus Depreciation
Another provision in the Tax Cuts & Jobs Act allowed businesses to deduct 100% of the cost of assets in the year they were purchased.
Before this change, if I purchased $10,000 of equipment, I would expense it over 3, 5, 7, or 10 years depending on its “useful life”.
For example, I spend $10,000 on equipment but can only deduct $1,000 (given a 10-year lifespan).
The TCJA allowed me to deduct 100% of the cost ($10,000) immediately.
This provision phases out, reducing from 80% to 60% in 2024, 40% in 2025, 20% in 2026 and gone as of Jan 1 2027.
This provision doesn’t reduce taxes; it just moves them forward. It’s the same $10,000 deduction, but you get it all in one year instead of waiting 3 to 10 years.
This was a HUGE benefit for me in an “asset-based” auto repair business. We purchased a lot of assets (car lifts, tire changers, racking, etc) as we grew. This bonus depreciation helped keep more cash in the business, which we re-invested into growth.
There is already bi-partisan support to extend this provision.
Business with Beers Podcast
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3) Expanding Work Opportunity Tax Credit
The government has a great program called the Work Opportunity Tax Credit (WOTC)
This program gives business owners a tax credit for hiring employees who’ve faced constant barriers to employment.
Employers can earn up to $2,400 credit per hire.
This is a credit, not a deduction. A credit of $2,400 means you are paying $2,400 less in taxes. 🙂
I’m a huge advocate for this program. Last year we received over $50,000 in WOTC credits. I highly recommend utilizing these credits if you run a blue-collar business.
Find a third-party service that integrates into your payroll provider. New hires answer a few questions as part of the onboarding process. The provider takes care of all the paperwork & you pay them a percentage if they get you any credits.
There is bi-partisan support to expanding this credit.
4) Joint Employer
This has been a lingering issue for over a decade. Losing this battle could kill the franchising industry as we know it.
The opponent's goal is to allow franchisee employees to unionize.
They want McDonald's employees all over the country to band together so they can strike for higher wages & free french fries.
The problem is every McDonalds restaurant is independently owned & operated. Every independent owner decides who they hire, how much they pay, what benefits to offer, and how they treat them.
Can you imagine what would happen if all independent franchise owners & the franchisor were responsible for the actions of a few rouge owners? It would kill the entire franchising business model.
The regulations are dictated by the opinion of the National Labor Relations Board (NLRB), whose members are appointed by the President.
Franchising got a huge win earlier this year when a federal court in Texas struck down the NLRB’s recent ruling. In July the NLRB voluntarily withdrew their case, backing down on the issue (for now).
Our objective is to pass a law that clearly defines the franchisee/franchisor relationship and permanently puts this joint employer issue to rest.
If not, the NLRB will continue to threaten it every couple of years.
What you can do
See who’s running in November for Congress and the House. Look up their positions on taxes and joint employer, then vote accordingly.
I will do my small part to fight for lower taxes & fewer regulations to make it easier for small business owners to create jobs & improve their communities
You control our destiny as a business owner. You can thrive no matter who’s in charge. That’s the best part of owning a business
Never quit!
Brian