Column: Back, don't tax small businesses
Updated: Mar 2
Advocating for a better small business environment has always been a part of our passion. Creating visibility and awareness around excessive taxation levied on small businesses that stifle small business growth in the community was at the center of this published piece.
We got our first beehive several years ago and quickly developed a passion for our pollinator community and ecosystem. We have always looked for ways to elevate our connection to the ecosystem. At first, it was a hobby and when we made honey, we would share with friends and family.
Looking for more ways to elevate the honeybee and connect people with the ecosystem beyond just a jar of raw honey, we eventually would discover how to offer products that used beeswax, raw honey, and propolis that made ordinary products “un-bee-lieveable.” We decided to start a business.
It started with a table at markets and soon after that we launched www.HiveAndHoneybee.com in early 2021 after spending four months building a sweet website. This new website offered us an opportunity to meet people in their living rooms or home office and on their time. It gave us a platform to provide ongoing and regular education through our blog articles. Shortly after launch we realized that other beekeepers, handcrafters, and artisans were struggling the same way we were with the ongoing COVID-19 pandemic shuddering markets and pop-up venues. We began reaching out and soon began creating partnerships with veteran-owned, woman-owned and other small businesses to be the tide that lifts all boats. They introduced new and exciting honeybee-inspired products that we have never even thought about which gave our customers more sweet things to find.
Our small business roadmap includes opening a shop on Valley Street in downtown Scottsville, the first official Bee City USA in the Commonwealth of Virginia. This is something we have been excitedly looking forward to and working towards. However, just a couple of days ago, we received an email with the 2022 Albemarle County, VA Business Tangible Personal Property Tax Return. After reviewing this with our CPA, it became abundantly clear that Virginia is not pro-small business. In Albemarle County there is a tax on all tangible property. This means that computers, desks, office chairs, software, etc. are taxed at an incredibly high rate.
The first year is at a 25% rate of the original value. Over several years, the rate eventually drops to 10%. That means that over the 10-year required tax payment, Albemarle County wants our small business to pay a rate that adds up to 152.5% of the original value to use these items to run the business. When originally purchased, the items already incurred a sales tax. Out of the 5.3% tax, 4.3% goes to the state and 1% to the county. In other places, the local sales tax can be up to 3%, depending on the locality.
So these items are overhead for small businesses and have already been taxed by the county when they were purchased. Profitability is already a real struggle for any small business. While the Commonwealth of Virginia likes to say that the state is “open for business” and “supports small business,” those promises seem to come with license fees, usage taxes, sales taxes, and a number of other taxes. There seem to be no tax credits or tax breaks for small businesses – something repeatedly extended to large companies. This sends a very clear message that the state is not looking out for the little guy.
Our tax problem isn’t affecting those multinational corporations located in the Commonwealth but it has a very real impact for us and other small business owners. This needs to change if Albemarle County and the Commonwealth of Virginia actually want to make good on their promise of supporting small businesses. We need to look for ways to truly support small businesses and make Albemarle County and Virginia a place where small business owners can choose to invest. We must now seriously consider if it is really worth being taxed on 152.5% of the original value over time, while we try to find the money to invest to grow our business.
Items produced by small businesses generate revenue that will also be taxed. The Commonwealth of Virginia and Albemarle County need to do better at accelerating small business growth, not choking it out with complex tax forms, double taxation, and forcing business owners to take time and money away from improving products and operations that will generate more revenue that could help the public coffers.
Entrepreneurs need more incentives and simplicity to build the state and local economies. We need fewer complex tax reporting requirements. It is time for the state and localities to show they truly do support small businesses by removing the Business Tangible Personal Property Tax, or at the very least, eliminate the reporting and collection of that tax for small businesses reporting less than $250K in revenue.
Published April 29, 2022 by The Daily Progress as a letter to the editor, titled "Column: Back, don't tax small business"