Small Business Survey Regarding 2010 Small-Business Health-Care Tax Credit

Recently we surveyed over 200 business owners and they are not certain whether their company qualifies for the small-business health-care tax credit that became available in 2010. The credit was created to help small businesses and small tax-exempt organizations afford the cost of covering their employees. In 2010, only 170,000 small businesses took advantage of a health-care tax credit, according to a Government Accountability Office report last month. Millions of small businesses had been expected to be eligible.

"There is still a huge gap between those that can potentially take it and those that are taking it," says John Pillow, the chairman and chief executive of United Mediation Services, an organization dedicated to national commercial debt collection / mediation firm based out of the Dallas - Fort Worth area. UMS has over 70 years of hands on debt collection experience.

Since the high court upheld the tax-credit provision, many observers expect an intense debate over whether that credit should be expanded to include a bigger swath of small U.S. companies. The health-care tax credit took effect when the Affordable Care Act was signed into law in 2010.

Some respondents cited such complaints as overly narrow restrictions, complex tax forms and low dollar returns as reasons for not using the credits, but others believe that lack of awareness of the program is the most significant reason for the low number of users. In its own recent polling, the Small Business Majority found that nearly half of small-business owners weren't aware the credits existed. If firms don't know about the tax credit, "what will happen when there are more complicated things that roll out in 2014" like employer mandates, individual mandates and subsidies?" asks Pillow.

Our survey, released Friday, provides insights into business and public-policy issues and is limited to the heads of businesses with annual revenue between $1 million and $20 million.

A Small Business CEO Confidence Index, based on some of the monthly findings, will track changes in sentiment among small-business owners and chief executives. Because the index is new, it is currently at 100, a base number, and it will fluctuate up or down depending on future survey responses.

Another key finding in the CEO survey: Half of all companies plan to hire in the year ahead. Some 58% of firms in the West anticipate expanding their staffs, compared with 44% in the Northeast. A third of the heads of small companies said they had job openings in June that they weren't able to fill. In addition, small businesses are very optimistic about their own sales revenue. Some 67% said they anticipate rising sales and only 8% expect a decrease, for instance. But the outlook wasn't as positive about economic conditions in the U.S. overall. Business owners in Southern states were the most optimistic, with about 40% expecting better conditions. In the Northeast, only 24% expect that result. About a third of business owners expect overall economic conditions to improve, while 46% expect them to stay the same and 18% expect them to worsen.

"These firms are much more positive about their own revenue growth and their own employment and profit growth than they are about the economy as a whole," says Richard Curtin, an economist at the University of Michigan who analyzed the survey's findings. "They think they have positioned themselves to overcome economic problems."