Whats Holding Back Small Businesses Article Example | Topics and Well Written Essays - 500 words

Whats Holding Back Small Businesses - Article Example The hardest hit is small businesses due to the small capital base as they are not able to invest in big research projects to propel the business entity forward and continue to maintain their market share or better still increase the market share (Shleifer, 2004). The major challenge according to the article is not related to overregulation or taxation but low demand for business products. Over thirty percent of American small businesses attributed their underperformance mainly to poor sales. However, the research carried out by the National Federation of Independent Business also attributed the underperformance to competition from large businesses, financing and interest rates, insurance cost and availability, red tape, government requirements, cost of labor and quality of labor among others. All these factors are mostly attributed to the global inflation facing the world economy. The debate in the recent past on how to improve growth of small businesses and encouraging hiring has concentrated on transforming the tax picture to be more business-friendly. However, from the research, small businesses attribute underperformance to other factors other than taxes. Only a small percentage, about 17-22%, of the businesses attribute underperformance to the amount of taxes paid to the government. Though the government has imposed hefty taxes on the businesses, the amount paid to the authority as tax has little impacts on the performance of the businesses. Businesses are just tax collection agencies to the government as the amount of money collected from the client is that which is paid as tax. Businesses transfer the tax burden to their clients and thus businesses do not pay taxes but collect tax from their clients on behalf of and later submit their collections to the government. The other factor holding down small businesses is the accessibility of loans to stimulate growth in operations.