Small business more confident

Government regulations are the most important challenge facing small-business owners, a Nevada State Bank survey of 400 small-business owners finds.

The bank surveyed business owners with annual revenue between $500,000 and $5.5 million. The survey was conducted during the fourth quarter of 2014, Nevada State Bank President and Chief Operating Officer Terry Shirey said.

“We want to understand what is going on in the business community,” he said. “We want to fully understand the challenges our small-business clients are facing, and where they are seeing opportunities. It is also important for us to be a resource for Nevada’s decision makers.”

As far as the results, Shirey said respondents were not asked exact questions about government regulations. He believes most of the worries were anecdotal concerns about an overreaching government.

“A lot of people are probably lumping the health care law changes into that,” Shirey said. “There also is some uncertainty with the tax environment, which plays into that. In general, it would just relate back to the ease of getting business done.

“Any new regulations tend to make things difficult. I’m not saying they are not necessary, but they do have some impact on small business,” Shirey added. “If you are wearing four or five hats, regulations add a complexity that is not always directed at generating revenue.”

David Brady, owner of Brady Realty Group, pointed to business taxes and government regulations as the issue he is most concerned about. Brady did not participate in the Nevada State Bank survey, but was familiar with the overall results.

Brady has eight salaried employees, and he said he paid $35,000 in employee taxes this past year.

“I pay as much in employee taxes as it would to hire a new person,” he said. “It makes us slow to hire. … For every eight people, we are paying the equivalent to a full-time position in taxes.”

Brady said Realtors and property managers were concerned about the margin tax. A version that would have instituted a 2 percent tax on businesses in the state that make more than $1 million was soundly defeated by voters last fall.

But Gov. Brian Sandoval’s proposed tax increase also takes a margin tax approach. However, more than 53 percent of survey respondents believe legislators should identify an alternative source to increase funding programs such as education and health care.

Brady said the margin tax would have affected commissions; he added that most Realtors and property managers charge 8 percent to 10 percent commission on sales and management fees.

“We are percentage-based on commissions on management fees,” he said. “If we charge 12 percent, people would stop using our services and stop investing in real estate property in Nevada. Investors would start looking at places like Phoenix or reinvesting in California. It would cause a big shutdown on investment purchases.”

Gerald Sullivan, owner of Fantasy Cakes LLC and Pie Unlimited LLC, said competition is his biggest concern, citing what he calls an unfair bidding process at some of the larger casino properties. Sullivan also did participate in the survey, but was familiar with the results.

He said he was not concerned about government regulations. Although Sullivan was not happy with the idea of the Affordable Care Act, he is glad to see that the law is there to help his 36 employees.

More than 53 percent of those surveyed think the Affordable Care Act has affected them negatively.

“Most of the folks who work for me qualify for the extra help that you get through Obamacare, so actually in the end, it makes it easier on me,” Sullivan said. “Most of our people make $10-12 an hour, so they will fall in the area where they can get subsidies of Obamacare, and that takes the burden off of them more.”

More than 63 percent of respondents believe Nevada’s economy is headed in the right direction, while 42.5 percent of local small-business owners believe the national economy is headed in the right direction.

“Part of it was Nevada was hit so hard and we had an outsized negative impact because of the recession,” Shirey said. “We seem to be recovering faster than the national economy. At the national level, there are concerns that we don’t have in Nevada — the national debt and the perceived dysfunction in Congress.

“We have had some great success recently that has spurred our economy. We have an agreement with Tesla (Motors) to move a facility here, the expansion of Switch, and an increase in real estate values that has spurred opportunities as well.”

The good news is that small-business owners have a more positive outlook this year than they did last year, according to the results of the survey.

Sullivan said the reason for the optimism is that people can see all the construction, restaurants and movie theaters are fuller, and there is less negative media reports on the economy.

“That is just my overall perception, not hard facts,” he said. “For my business, we grew last year and profits were up in 2014.”

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