TAX CUTS ARE WORKING IN TENNESSEE -- (House of Representatives - March 17, 2004)
(Mrs. BLACKBURN asked and was given permission to address the House for 1 minute and to revise and extend her remarks and include extraneous material.)
Mrs. BLACKBURN. Mr. Speaker, today I rise to talk about jobs and to talk about the success that we are seeing from the Bush tax cuts that this body passed last spring. The child tax credit, marriage penalty, expensing, depreciation, those are working for small businesses. They are working for entrepreneurs. They are working for the people that make this economy grow.
I want you to take a look at this article. I found it this weekend when I got home sitting on the top of my desk: "Boom times ahead. LLC Formations Soar." What it tells us is that in Tennessee where these tax cuts are working, the State registered 15,064 new corporations, LLCs, limited partnerships. That topped the previous high of 14,500 in 1997 and is up 22 percent.
Now, jobs growth is working for small business. This is working for women, because the fastest growing sector of small business growth is women, women-owned businesses.
Tax cuts are working in Tennessee. I commend this body and the President.
[From the Nashville Business Journal, March 17, 2004]
Boom Times Ahead? LLC Formations Soar
(By Holly Dolloff)
The formation of limited liability companies in Tennessee has soared over the past two years, a trend that could mean the region's bleak jobs picture may soon brighten considerably.
The Tennessee Secretary of State Division of Business Services registered 7,412 LLCs last year--500 more than were formed in 1998, the previous high mark, and 49 percent more than in 2001.
The number of LLCs registered last year was more than double the number of 1995, when companies first gained that option from the state. Local attorneys attribute the recent boom to several factors, from increased comfort levels with the process to a sluggish economy.
"The LLC has come into its own," says Leigh Griffith, an attorney at Waller Lansden Dortch & Davis. "It's the entity of choice for closely held companies."
Total for-profit business formation also set a new high. The state registered 15,064 new corporations, LLC, limited partnerships or limited liability partnerships. That topped the previous high of 14,565 set in 1997 and was up 22 percent from 2001.
Griffith speculates the 2003 boom may have resulted from the down-turn that began in 2001.
"As the economy gets softer, people get laid off and start their own businesses," he says.
A very similar dynamic applies to higher education and particularly graduate and professional programs. When the economy goes south, enrollment very often will rise as out-of-work professionals seek new opportunities or new skills.
Though their greater numbers may often be attributable to past bad news, new LLCs could end up improving the local and state economic picture as they grow into bona fide businesses with multiple employees.
At this point, it is very unlikely that many of the new companies are being counted in the local or state economic statistics that show a stagnant job market despite optimism from both consumers and business owners.
The record number of LLC formations last year also marked only the second time--1998 was the first-that Tennesseans created more LLCs than for-profit corporations. The year saw 7,209 corporations formed, up less than 1 percent from 2002 and 5 percent below their 2000 level.
Fellow Waller attorney Michael Yopp, who recently published "Tennessee Limited Liability Companies: Forms and Practices" (DataTrace Publishing, 2004), says the 1996 renovations of state law facilitated understanding and increased employment of the structure.
"Fairly extensive" litigation involving LLCs in the late '90s has also contributed to the higher numbers, he says.
Yopp is part of a group of attorneys currently revising the LLC statutes.
Griffith was a prime author of the original statutes creating LLCs and remains a proponent of them. He says the most obvious benefit of an LLC is limited responsibility for liabilities incurred by others, particularly in small businesses.
"When you realize the fate of your company is in the hands of a 19-year-old delivery boy who may be hung over from the night before, and he hits someone with the delivery vehicle, your house is on the line," says Griffith.
Partners in LLCs could lose their businesses in a smaller situation, but their personal property is immune from seizure. And the LLC format offers breaks from the taxes and red tape that corporations incur.
"You don't have to have annual meetings and you're covered by operating agreements and not by-laws or restrictive stock," says Larry Papel, managing partner at Baker Donelson Bearman Caldwell & Berkowitz, who has registered several LLCs for clients.
One such client was a restaurant group with multiple locations. Papel says such businesses may be better off registering each entity separately, an assessment with which Griffith agrees.
"If each restaurant in a chain is an LLC, they won't all suffer if one has a problem," Griffith says.