The White House Conference on Small Business.

Beginning in June 1994 and culminating in June 1995, small business owners will have an opportunity to participate in The White House Conference on Small Business. Lisa A. Winton, Conference Coordinator for the American Institute of Certified Public Accountants, has agreed to serve as the main point of contact for educating AICPA members about the conference and encouraging CPAs to serve as delegates to the state, regional and national meeting. The issues of primary concern to the AICPA include fiscal-year conformity, workload compression and securities litigation reform.

Members of the AICPA Tax Division's Small Business Taxation Committee have already served on issue task forces that developed fact sheets on issues of concern to small business. These fact sheets have been compiled into an issue handbook and provide background information to prospective delegates who register to attend their state conference. The goal of the CPA/delegates is to persuade their peers that the items on their agenda should be represented at the regional and national levels. Many CPAs have already been chosen as state delegates and have agreed to attend their regional and national conference. However, only 19 conferences have occurred, so there is still time to register to become a state delegate.

Interested parties should contact their state society and/or The White House Conference on Small Business at [phone] for conference registration material. The advance registration fee is $40 (which includes the cost of lunch and refreshments); on-site registration is $50.

Following is a summary of the nine topics of primary interest to the small business community.

Overview

Capital formation, regulation and paperwork, and taxation continue to be the areas receiving the most attention--often other recommendations are directly related to these three areas. Most of the discussion and resulting recommendations can be classified into three underlying themes.

1. Access to capital: Participants continually cite the need for start-up and follow-up capital. In addition, loan simplification and relaxed collateral standards are high on their priority list.

2. Making government more "user friendly": Small business participants feel that most government regulations are cumbersome and redundant and ultimately inhibit their ability to do business. Simiarly, there is a sense that existing tax policies and costly regulatory compliance do little to encourage an environment in which small business can flourish.

3. Access to information: There are three major areas about which small business people want information: capital/loan opportunities; business opportunities; and existing and new government regulations.

Issues

Capital formation: Access to capital is the most pressing concern of conference participants. Small business people are frustrated with the complexity of applying for loans/funding, the scarcity of capital, and the outdated, unrealistic and prohibitive standards by which loan applications are considered. In addition, there is a sense among small business people that current tax policies and government regulations do little to encourage initial investment and reinvestment in small businesses. participants have also voiced the need for loan programs targeted to minorities and women.

Among the recommendations that have emerged from those state conferences already held are:

* Small businesses seek alternative ways to access seed money, expansion funds and working capital. Congress should make provisions for public and private pension funds to invest in or extend credit to small businesses without suffering increased tax liability.

* There should be a rollover of the capital gains tax for beneficiaries who use the tax benefit to invest in small business, and to investors who sell existing investments and reinvest in qualified small businesses.

* Government should encourage lending institutions to relax regulations on collateral, and should do so itself, particularly as it relates to nontraditional businesses.

* Congress should act to increase the participation of investment companies in small business, and in the establishment of a secondary market for small business loans.

Regulation and paperwork: Along with access to capital, regulation and paperwork is the issue of most interest to participants. There is one clear and consistent theme: small business people must be consulted before, during and after regulations are formulated, in order to help determine their cost-benefit effect and over-all impact. Current regulations, especially those dealing with the Office of Safety and Health Administration (OSHA) and starting a business, are the most prohibitive in terms of cost, time and manpower. There is a great deal of frustration among small business people over the volume, complexity and redundancy of government regulations.

Among the recommendations that have emerged are:

* The Regulatory Flexibility Act should be amended to allow judicial review to ensure Federal agency compliance.

* Such agencies as OSHA and the Environmental Protection Agency (EPA), whose rules and regulations are most onerous to small business, should begin the practice of seeking input from the affected business groupings before regulations are published. This practice would help secure rules and regulations that help rather than hinder small business, while preserving protections for the workplace and the environment.

* Existing regulations should be streamlined to avoid redundancy, and new regulations must be reviewed so that they complement (rather than duplicate) existing regulations.

Taxation: The overriding concerns in terms of taxation fall into three areas:

1. Creation of tax policies that encourage, promote and allow for small business reinvestment.

2. Simplification and fairness in the Internal Revenue Code.

3. Tax rates that are too high.

As small firms are dependent on retained earnings for reinvestment and working capital, conference participants thus far seem unified in the belief that current tax policies discourage small business growth.

Among the recommendations that have emerged are:

* Congress should amend the Internal Revenue Code to grant home-based businesses the same tax benefits that nonhome-based businesses enjoy. Government should take steps to acknowledge the legitimacy of home-based businesses.

* Estate tax laws should be revised to ease the tax burdens on owners of small businesses in order to encourage the continuity of family ownership.

Human capital:

Health care: It is important to note that, although there is general agreement that some type of reform is needed, there is little consensus on possible remedies to the nation's health care problems. Some small business people support incremental reform targeted at specific problem areas, such as medical costs, lack of portability and preexisting conditions. Others support more comprehensive, structural reform. The common factor, no matter what the specifics, is dislike of government mandates, and concern over the impact of any type of reform on small business and the resulting quality of the health care system.

Education and job training: Education and job training have also received a great deal of attention. Declining U.S. industrial output, the growing trade deficit and the overall weakness of what were traditionally strong American industries (e.g., aerospace, autos and computers) have caused many to question whether our education system is deficient in terms of preparing students for today's economy. Participants cite the need for private sector job training initiatives, stronger vocational programs and continuing education programs for the current work force, which sharpen their skills to meet an ever-changing economic and technological environment.

It has been recommended that:

* Congress should provide incentives for private industry to create job training and apprentice progams.

Technology/information: The discussion and recommendations in technology/information have dealt with the Information Superhighway and whether small business will have the same opportunities for access as larger firms. In addition, there is concern that a great deal of our population, especially recent high school graduates, know little about technology and computers; firms must therefore train and educate new employees, which proves costly. Participants voiced the need for government/Small Business Administration coordinated programs specializing in technological and information training for small business applications.

Among the recommendations that have emerged are:

* The Federal government should compose a national, coherent policy regarding the Information Superhighway, addressing such questions as ownership, construction, utilization, access, and privacy and property rights, with special attention given to the role and needs of small business.

* Government should help finance the development of new technologies.

* Government should provide technical assistance to private financial institutions to assist in the evaluation and creditworthiness of new technologies.

International trade: Small firms want access to international trade opportunities. They know foreign markets exist and are not the exclusive domain of large multinational corporations, but do not know how to approach these potentially lucrative opportunities. Most of their discussions and recommendations deal with "leveling the playing field" vis-a-vis their larger counterparts, who have both the "know-how" to secure these markets and the resources to seek out international business opportunities.

In addition, participants have discussed the need for more stringent laws and enforcement that discourage unfair trade practices by other countries.

Among the recommendations suggested are:

* Government should provide small business with the necessary information for gaining access to the international market. What is recommended is the establishment of a single international trade clearinghouse that would function as a "one-stop shop," providing information on import/export opportunities, how to do business in the international market, etc.

* Government should broaden its focus on the global marketplace to include both import and export opportunities.

Environmental policy: The recommendations dealing with environmental policy are similar to those found elsewhere: too many regulations; current regulations are duplicative in nature and often unrealistic in terms of cost and labor needed for compliance. Conference participants cite the need for a more cooperative relationship between the EPA and business to avoid violations and "after the fact" liability.

Among the recommendations that have emerged are:

* Eliminate retroactive liability provisions, especially those that relate to environmental activities that were legal at the time of occurrence.

* Government should focus on prevention and incentives-based compliance rather than punitive-based compliance.

* Congress should make available tax credits or accelerated depreciation for purchases of environmental control equipment to comply with mandated Federal compliance.

Community development: Participants have been concerned primarily with the lack of a cohesive effort in terms of community development, and encouraging business in neighborhoods that traditionally do not attract commerce. There is consensus that regulatory reform is needed to encourage banks to make long-term financing for commercial real estate (i.e., longer than five years). In addition, conference participants have advocated "nonbusiness," comprehensive community development through nutrition/health, housing, outreach and family services.

Among the recommendations that have emerged are:

* Federal funding for community development projects should be increased, and dispensed through local government.

* A single lead agency should coordinate all rules, opportunities and programs dealing with community development. This agency should have responsibility for designing initiatives that governments (Federal, state and local) might undertake to attract and keep businesses in empowerment zones and enterprise communities, and stimulate job creation by small business in distressed communities.

* The Federal government should provide conversion assistance to those small businesses negatively affected by defense downsizing.

Procurement: Recommendations in procurement deal primarily with what small business people see as a lack of information about government contract opportunities, and the complexity of being a government contractor. Participants support the idea of continued and increased small business set-aside opportunities to ensure they receive a fair share of government contracts.

Among the recommendations that have emerged are:

* Government agencies should enhance their procurement planning and notification processes to ensure that small businesses are aware of contract opportunities. Perhaps the establishment of an electronic posting system would help more small business people remain aware of requests for bids.

* Government agencies should strengthen their oversight of prime contractors to ensure compliance with set-aside and targeted procurement goals.