Tag Archives: Jake Clabaugh

Access to Angel Investors Just Got Easier

Posted on by
Reply

By: Jake Clabaugh, WIPP Government Relations

AI

Seeking to clear up a gray area triggering securities registration, the House of Representatives passed The Helping Angels Lead Our Startups (HALOS) Act pushed by Small Business Committee Chair Steve Chabot (R-OH).

Pitch events or demo days are common methods for business owners to showcase their companies and products to a room full of investors. Right now, there is confusion about whether these events are allowed because the Securities and Exchange Commission’s rules prohibit “general solicitations.” The HALOS Act would clarify that pitch events hosted by angel investors are not general solicitations and do not require securities registration – a complex and expensive process for both angel investors and companies seeking investment.

Angel investment is particularly important for women-owned businesses. Recent data indicates that one in four angel-backed companies are led by women. The number of women-led companies receiving angel investments has increased by 234% in just the last decade. Since women-owned businesses receive only 4% of conventional small business loan dollars, it is vital to cultivate other sources of capital.

This bill will now move onto the Senate for consideration. WIPP will continue to engage Members of Congress on access to capital issues. An additional recommendation in WIPP’s access to capital platform, Breaking the Bank, urges Congress to incentivize angel investments with tax credits.

 

 

Filing Frenzy: Tax Deadline Strikes Today

Posted on by
Reply

tax-day

By: Jake Clabaugh, WIPP Government Relations

Tax Day is upon us and woman business owners have been working overtime. Not on growing their firms, planning investments or making important hiring decisions, but on tax compliance. At least, that’s according the House Small Business Committee, which took a look at the burdensome tax.

Forgetting tax liability – the amount a business owes – the Committee focused on how difficult it is for small businesses to satisfactorily comply with dense tax rules. According to the Small Business Administration (SBA), small businesses spend 5.5 billion hours preparing and filing taxes – time that should be spent growing the business. The costs and complexity of calculating tax provisions makes it difficult for smaller businesses to take advantage of incentives designed to reward investment. As a result, larger businesses that can incur the costs of calculation reap the rewards.

As we’ve heard from WIPP members across the country, tax certainty is a top priority. Clarity on what provisions and incentives will be enacted would provide businesses with the ability to plan ahead, rather than adjust to a changing environment. For the last few years, Congress has passed legislation solely for “tax extenders” – deductions and credits that were set to expire at the end of the previous year, but were extended to cover the current tax year. While many of these credits could provide some relief for small businesses, firms spent the entire year without knowing if these provisions would be available. Hardly an efficient way to have to run your business.

A simpler tax code would reduce compliance time and allow owners to focus on their business – not the latest tax rules. Also, small businesses should be able to take advantage of the same incentives that larger businesses can. WIPP will continue to focus our advocacy on the two guiding principles of simplicity and fairness for women-owned businesses.

Could comprehensive reform – not seen since the 1980’s – be on the horizon? House Ways and Means Committee Chair Kevin Brady (R-TX) announced last week that his Committee is planning to release a tax-reform “blueprint” this summer. Additionally, Members of the House and Senate have stirred over international tax reform in the wake of recent corporate mergers. While the conversations are ongoing, comprehensive tax reform in an election year, with an ardently divided Congress seems, at least in our view, unlikely.

For updates on tax policy and other finance issues, please visit WIPP’s Economy and Tax section and WIPP’s Economic Blueprint.

 

 

Costs and Benefits: Paid Sick Leave For Federal Contractors

Posted on by
Reply

By: Jake Clabaugh, WIPP Government Relations

sick leave paidFederal contractors have been hit with a bevy of new regulations over the past few months – everything from increased reporting of labor and safety violations, a raise in minimum wages and increases in mandatory overtime pay. The next shoe will drop in January 2017, when ALL Federal contractors, primes and subs, will have to provide paid sick leave benefits to workers. The Department of Labor (DOL) proposed rules that would implement this change last month.

Contracts issued January 1, 2017 will require all Federal contractors to give employees 1 hour of paid sick leave per 30 hours worked. This rule will only apply to time spent on Federal contracts, so if an employee performs some work for a private sector client, those hours would not count toward sick leave accrual. Additionally, earned sick leave will carry over from one year to the next.

Why just contractors? The President issued an Executive Order to make the change. Like other new regulations pertaining to contractors, the President can make these decisions for his workforce. Congress has been unable to decide if or how to move forward on these issues so the President decided to act on his own. As the Commander in Chief, he can determine procurement policy – including requirements for contractors – without Congress having to pass a law.

While WIPP members support worker benefits in practice, we don’t believe that the DOL gave enough consideration to how this rule will affect small businesses. Without an exception for small businesses, the vast majority of women-owned business will be compelled to provide the same benefits as multi-billion dollar firms.

WIPP’s comments to DOL on the proposed rule can be read in full here.

Venture Capital Pool Opens for Women Entrepreneurs

Posted on by
Reply

By: Jake Clabaugh, WIPP Government Relations

VCIf you are an entrepreneur seeking capital, the path to venture funding could be getting a little easier. Earlier this month, the House Financial Services Committee took action on two bills that make venture investments more attainable for entrepreneurs – The Helping Angels Lead Our Startups (HALOS) Act and the Main Street Growth Act. As women entrepreneurs only receive 7% of venture dollars, improving access to venture capital is a top priority in the women’s business community.

Due to ambiguities in the law, pitch events or demo days that are sponsored by angel investors may or may not be legal. Yet, these events are a great opportunity for entrepreneurs to get themselves – and their products – in front of a room full of potential investors. The HALOS Act makes this easier by clarifying this ambiguity. Currently, the Securities and Exchange Commission (SEC) prohibits “general advertising” and “general solicitation,” but the HALOS act would clarify that these events are permitted for groups of angel investors and not subject to the prohibition on general solicitations. The bill’s sponsor, House Small Business Committee Chair Steve Chabot (R-OH), remarked, “clarifying the law to give entrepreneurs and investors more certainty and opportunity is a step in the right direction.”

To further incentivize investment, The Main Street Growth Act (H.R. 4638) will create securities exchanges specifically for venture capital investments. Existing stock exchanges could create a new tier to specialize in venture capital investments or entirely new exchanges could be established. These securities exchanges will bring together buyers and sellers of venture capital and create a more liquid market, which will incentivize investors to support startups.

While no single policy change or piece of legislation will break down the barriers that prevent women entrepreneurs from accessing capital, these incremental improvements show that Congress is committed to leveling the playing field for women entrepreneurs. WIPP’s access to capital platform, Breaking the Bank, continues to gain traction with legislators and WIPP is dedicated to growing women entrepreneurs’ share of venture capital funding.