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A non-partisan, member driven organization that promotes the success of small business through political advocacy, networking, support services and educational programs.
Policies and Positions
EDGE tax credit reform - House Amendment 2 to HB1336
Problem: Our economic development policy revolves around providing special tax breaks to a few select companies through the EDGE tax credit program. The requirements of the program lock out small businesses. Further, the program requires more transparency and accountability to ensure taxpayers are getting the best bang for the buck for these special tax breaks.
Research: A 2012 Pew Center on the States report entitled Evidence Counts considers Illinois tax credit program among the worst in the country in terms of transparency, accountability and ensuring that the state gets the most jobs created from each of the special tax breaks.
Solution: HB 1336 (Franks-Yingling-Conroy-Sente, Mitchell) would modernize and improve the EDGE tax program in a number of ways:
1. Creates independent, bipartisan oversight for approving applications. Currently, there is no check-and-balance in the selection progress. The same Department promotes, awards and monitors the special tax breaks. That’s not a good system. The bill would create an independent, bipartisan Board of 9 professionals with accounting or financial backgrounds to approve or reject EDGE applications. The Treasurer and the Director of Revenue, two of the most appropriate officials to determine whether special tax breaks are truly justified, would serve
as ex oficio members of the Board.
2. Increases Accessibility To Small Businesses. Professional services firms by law may not
Make the voice of small and mid-market business folks heard!
Email your Legislators our SBAC 2013 Policy Agenda and request their support directly from our our SBAC site below:
Small Business Advocacy Council
2013 legislative agenda
The Small Business Advocacy Council is a new organization of 650 small and mid-sized businesses. We actively engage in shaping public policy to reflect the interests of small and mid-sized businesses.
Of the 1.1 million businesses in Illinois, about 870,000 are self-employed, about 250,000 have 1-499 employees and 4300 have more than 500 employees. About half of the state’s 5.1 million employees work at small to mid-sized businesses (under 500 employees).
To create a better business climate in Illinois for small and mid-sized businesses, the SBAC proposes the following measures in 2013 for the General Assembly to consider:
1. Lower LLC filing fees
Illinois has the highest filing fees for LLCs (Limited Liability Companies) in the nation. Each one of the two dozen or so fees (for an annual report, changing a name, amending articles of organization, etc.) are more than three times as high than the equivalent fees for corporations. These fees are well above the market for what states typically charge as filing fees for LLC and serve as a disincentive for entrepreneurs to create (or keel) their businesses in Illinois.
We support the following bills:
HB 65 (Ford-Davis, Golar, Flowers, Hoffman, Morrison, Williams, Pihos, Meier, Mayfield)
Reduces LLC fees to the same level as corporate fees
HB 2230 (Kay-Tryon-Pritchard-Hays, Sacia, Brauer, Rosenthal, Brown, Mitchell, Cavaletto, Halbrook, Davidsmeyer, Unes, Hammond, Tracy, Cabello, Kosel, Leitch, McAuliffe, Poe, Senger, Sommer, Bellock, Ives, Pihos, Durkin, Roth, Reis)
Reduces LLC fees by 50%
HB 2987 (Pihos)
Eliminates LLC expedited filing fee for requests submitted online
HB 3033 (Cloonen)
Reduces business filing fees for the first two years of its existence
HB 3395 (Pihos)
Reduces LLC article of organization fee to $100
SB 2246 (Radogno)
Reduces LLC filing fees to the same level as corporate fees
As a constituent and small business advocate, I write to ask you to co-sponsor HB 65, a bill that reduces the fees associated with the formation and operation of limited liability companies to mirror those charged to Illinois corporations. The flexibility provided by LLCs make them the right choice for many small and mid-market businesses. Formation as an LLC also encourages entrepreneurs to invest their time and money into viable business enterprises. Our state’s fee structure must not arbitrarily penalize small and mid-market businesses for choosing the best structure for their companies.
Presently, the fee for filing as an LLC in Illinois is three times higher than filing as a corporation and ranks among the highest in the nation. Indeed, it costs $500 to form an LLC in Illinois. It costs only $150 to create a corporation. Not only is the Illinois LLC filing fee excessive, but the costs of maintaining and modifying an LLC are arbitrarily higher than those associated with Illinois corporations. Each year an LLC must pay an annual fee of $250 to the state. Corporations pay a much lower annual fee. To register a corporate name, one must pay $50.00. It is $300 to register the name of an LLC. This disparity even extends to folks intending to dissolve their business. It costs $100 to dissolve an LLC, as opposed to only $5 for corporations.
We must create a business environment that stimulates small business and entrepreneurship. This will create jobs in Illinois and begin to combat the perception that Illinois is not a friendly place to operate a small business.
Would you co-sponsor and support HB 65? Please let me know if you will.
Thank you for your consideration and anticipated support.
Illinois has the highest fees for LLCs in the country - and the largest fee difference between LLCs and corporations.
Problem: Many small businesses want to set up as a Limited Liability Company, but the fees for doing so are three times as high as the fees for setting up a corporation. It’s $500 just to create an LLC. That’s the highest in the country. Further, since the fees for corporations are more reasonable than LLC fees, many small businesses choose to file as a corporation even when it
might be better for them to be an LLC.
Solution: HB 65 equalizes the fees for Limited Liability Companies to the same fee level as what corporations are charged.
Examples: The fee to file an article of dissolution for a corporation is $5. For an LLC it is $100. To file a registration of name: LLC: $300, corporation $50. Annual report: LLC $250, corp: $75
Choice of entity impacts: LLCs are far more flexible than corporations as corporations can only have “one class of stock” which limits the ability to bring in new investors on unique terms (such as income, cash flow or loss rights). Furthermore, one type of corporation - the S corporation -
requires all shareholders to be persons, not entities, which also eliminates the ability to bring in investors. Illinois fee structure should not push new businesses into forming as corporations.
Business-friendly background: Illinois has recently lowered taxes for specific large companies(CME, Ford, Sears, Motorola) but hasn’t done as much for the hundreds of thousands of small businesses that don’t get a special deal. Establishing reasonable, lower fees for all businesses is a better way than picking particular companies to subsidize.
In a perfect world, states would not offer tax incentives to lure companies away from their neighbors. In reality however, this happens all the time. Accordingly, Illinois awards EDGE Tax Credits to companies who threaten to leave the state or as an incentive for businesses to come into Illinois. Last year, approximately 65 million dollars in tax relief was provided to such companies. Many of our members are concerned because 1) the capital outlays generally required to obtain EDGE Tax Credits prevent the majority of small businesses from having a fair chance to receive them 2) the sole discretion for awarding and monitoring these credits rests with one governmental agency.
The SBAC has drafted legislation to eliminate the general requirement that small businesses invest 1 million dollars in infrastructure or equipment to obtain an EDGE Tax Credit. Indeed, many small businesses that employ many folks have no need for such a capital expenditure. The bill also ensures that appropriate mechanisms are in place to monitor these credits and confirm they are having the appropriate economic impact on the State to justify awarding the credits. At the present time, one State agency is responsible for awarding the EDGE Tax Credits and monitoring whether they effectively promote growth and jobs in Illinois.
The SBAC's proposed legislation will create an independent board charged with issuing the EDGE Tax Credits, ensuring that they are awarded in a consistent manner, and evaluating how the credits impact job creation and the long-term benefits to the state. This would not create a new level of bureaucracy. Rather, it would simply transfer these duties to a more independent agency.
A large number of small businesses in Illinois are formed as LLC's. Unfortunately, it is more expensive to file as an LLC in the State of Illinois than it is to file as a Corporation. The SBAC is drafting a bill to lower LLC filing fees to match corporation filing fees. Currently, it costs businesses $500 to file an LLC while filing for a C corp is $150 with fees renewable every year.
The SBAC is working with the City of Chicago's Innovation Delivery Team to draft local legislation that will eliminate archaic regulations that cost small businesses money. For instance, apparently, you cannot purchase spray paint at a local hardware store in some areas of Chicago because of the old graffiti problem. Hence, folks go to other stores to get their spray paint and everything else they need. After meeting with the City of Chicago's team, we look forward to working on legislation to eliminate a number of these rules that impact small businesses and fail to serve a public purpose.
Along with this, we are looking at launching a monthly networking event in less affluent Chicago neighborhoods. We would bring SBAC members into the local communities to empower local merchants and professionals.
The SBAC is working closely with Senator Durbin's office to pass the Marketplace Fairness Act, a bipartisan bill that grants states the authority to compel online and catalog retailers, no matter where they are located, to collect sales tax at the time of a transaction. Exactly like local small business retailers are already required to do. This will also not create a new tax. Rather, this will level the playing field for Illinois retailers. As the system stands now, it is left up to consumers to pay taxes on their online purchases, but few folks do as there is little reporting incentive and often states are unable to enforce this requirement. As a result, our local small business retailers are at a competitive disadvantage to online retailers and significant remote sales taxes go uncollected. This bill will have a powerful impact on reducing the state's debt and at the same time, allow local merchants to compete with large internet sellers.