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SB 641: Investing in California’s business future

Every year, each member of the California State Senate recognizes an outstanding business in his or her district as Small Business of the Year. This year, I had the distinct honor to name AAA Imaging in Lemon Grove as Small Business of the Year in my district.

The owners of AAA Imaging, Jim Butcher and Pete Celestino, are successful business owners and pillars of our community, donating their time and treasure to important charities and causes in San Diego.

At the ceremony Monday where my Senate colleagues and I introduced the outstanding small business owners from our respective districts, I was inspired by the stories and the entrepreneurial spirit of the men and women who risked so much and dedicated countless hours to start their companies.

The ceremony reminded me of the famous California entrepreneurs who started their businesses at kitchen tables and in garages. Flourishing companies such as Apple, Google, Hewlett-Packard, Maglite, and Mattel are just a few of the companies that began in humble places and now employ thousands of people.

California should encourage entrepreneurs who dream big and work to make those dreams a reality. Unfortunately today, this is not the case.

Current California tax law requires all new corporations to pay an annual minimum franchise tax of $800. Many new companies struggle to pay this burdensome tax because they have lost money or broken even.

Nearly 25 percent of all new businesses fail within their first year, nearly 50 percent fail by their fourth year. If struggling new business owners are hit with a mandatory minimum $800 tax bill, it could be the tipping point that forces them to close their doors.

Taxing a fragile new company that isn’t making money is wrong, and also bad business. It is in our best interest as a state to support new small companies. One day, it could possibly become the next Apple.

Right now, hundreds of fledgling entrepreneurs are working countless hours in their garages or on kitchen tables to create the next great California success story. The only equity they have at the moment is the sweat on their brow. It is wrong for our state government to put a tax on that sweat equity.

This is why I have introduced Senate Bill 641, which would allow newly formed small or micro-businesses that make less than $10,000 per year the opportunity to reinvest in their futures by eliminating the required tax for the first four years.

If passed, SB 641 would positively affect more than 39,000 small businesses. The money that would otherwise go to a state bureaucracy would instead stay in the hands of entrepreneurs to pursue their vision.

SB 641 is an encouraging lifeline for the most vulnerable new companies to keep their doors open and their dreams alive.

We must support new businesses today to create more careers and opportunities for tomorrow. Your help is needed to get this measure passed. If you agree with me that we need to better support new businesses in California, would you send me an email Senator.Anderson@sen.ca.gov expressing your support of SB 641? Together we can help bring about another California.

Anderson represents San Diego and Riverside counties in the 36th District in the California State Senate.

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