Tax Cuts Bring Big Gains to Small Business

From John Horne

BY JOHN HORNE SRQ DAILY SATURDAY PERSPECTIVES EDITION SATURDAY MAY 26, 2018

I never used a résumé to get a job because I started as a bus boy in a seafood restaurant on Anna Maria Island in Manatee County during summer break from college. I stayed with that small independent business and helped the owner open five more restaurants. I became a server, assistant to the assistant’s assistant, general manager, area manager, then opened my own restaurant, an 85-seat oyster bar on the Anna Maria City Pier. Twenty-one years later, I have four restaurants in Manatee County with 333 employees; 300 are hourly employees with an annual payroll of $2.5 million in the past 12 months, and 33 managers who earned $1.5 million in salary and bonus. We serve between 700 to 1,000 guests at each location every day.

Every industry thinks theirs is the most important industry in the country, but ours actually is! One out of three Americans got their fist job in the hospitality industry. Many people believe that it is only an entry level job, but in Florida alone, the hospitality industry is the largest in the state and we collect and remit more sales taxes to Tallahassee than any other industry. Of my 300 hourly staff members, no one is paid minimum wage. My 300 range from: 113 between $10 and $12.50; 39 between $12.50 and $15; 40 between $15 and $20; and 64 over $20 (most of these are bartenders and servers earning $20-$30 per hour in tips). And 47-48 percent of our hourly staff earn over $15 dollars per hour. In the last 12 months, FICA payments at our four stores was $552,544. Matched with the employees’ payments, that’s over $1.1 million our small businesses contributed in FICA taxes.

Small businesses are big businesses. I met with my CPA after tax season this year when he brought me my returns. What he explained to me was one of the parts of the new Tax Cut and Jobs Act where I get a 20 percent Business Income Deduction this year. He showed me what my taxes were in ’17 and if the new code were in effect what they would have been. I’ve already planned 2018, plugging my adjusted gross income for this year with the 20-percent deduction. We’ve been very consistent in our stores over the last 10 years as far as bottom lines go.

So what do I do with the 20-percent reduction that the new Tax Cuts and Jobs Act will provide? There are so many options, one I’ve already taken. Back in April after I met with my accountant, I bonused $60,000 to some of my staff. I purchased two new two-sided LED signs at $20,000 each for two of my locations to attract new customers. I heard my accountant say we’d probably realize $100,000 in savings/benefits from the new plan.

Speaking of reinvesting in our businesses, which we all have to do to remain viable in our industry, we do need Congress to fix an alleged scrivener’s error when the new code was passed. It reverted depreciation for restaurants back to 39 years; it was at 15 years due to the excessive wear and tear on restaurants due to the volume of guests and equipment upgrades necessary. We need to get the depreciation back to 15 years so we can keep investing our dollars back into the businesses.

We’re very seasonal in Florida, but what many of us in our area have noticed, business is up, and the seasonality is not near the levels it used to be. Our guest counts are up, people are eating out more. Many of my fellow restaurateurs in our local Restaurant Association are raving.

The most important thing the new tax plan does is it helps small businesses stay in business and continue employing 333 people livable wages and helping our communities.

John Horne, owner and president of Anna Maria Oyster Bars, provided testimony to the U.S. House Ways & Means Tax Policy Subcommittee on May 23.

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