Today, U.S. Senators Mark Pryor (D-AR), Scott Brown (R-MA) and Herb Kohl (D-WI) introduced the bipartisan Small Business Savings Account Act to help entrepreneurs turn their innovative ideas into job-creating small businesses.
The bill allows individuals seeking to start a small business to save up to $10,000 annually and grow the savings tax free. These funds can be used for equipment, facilities, marketing, legal fees and other capital and operating expenses required to start and run a small business.
"Start-up costs often stand in the way between a good idea and a profitable business venture," Pryor said. "This legislation provides a bridge -- allowing entrepreneurs to save enough seed money to get their business off the ground."
"Small businesses are the driving force behind job creation and we should reduce the hurdles that cause industrious people to abandon their business plans," Kohl said. "This bill provides a path forward with one of the first challenges encountered by prospective business owners."
"Small businesses are the engine that drive our economy, and it's critical that we create an environment for our entrepreneurs to grow and thrive," Brown said. "This bipartisan legislation will make it easier for the thousands of innovators in Massachusetts to turn their cutting-edge ideas into good-paying jobs and get our economy going again."
Personal financing is becoming increasingly important to start a business, especially in light of the current credit crunch and economic downturn. Instead of savings, would-be-business owners are turning to retirement savings and credit cards in order to produce enough start-up capital. The average cost to operate a small business in its first year is $80,000. The tax free start-up accounts would put entrepreneurs on better financial footing by reducing their need to incur heavy debts or deplete retirement savings.