Tax System's Impact onTax System's Impact onSmall Business and Small Business and EntrepreneurshipEntrepreneurship

Todd Flemming, Todd Flemming, President & CEOPresident & CEOInfrasafeInfrasafeOrlando, FLOrlando, FL

President's Advisory Panel on Federal Tax ReformMarch 8, 2005Tampa, Florida

About InfrasafeAbout Infrasafe

Founded 2002Founded 2002 52 employees52 employees $16 million in revenue in 2004$16 million in revenue in 2004 We provide electronic security We provide electronic security

products and services primarily to products and services primarily to the Federal Governmentthe Federal Government

Complexity of Tax System Complexity of Tax System Drains ResourcesDrains Resources

Compliance Costs: Compliance Costs:

● Tax PreparationTax Preparation● Payroll Service Fees (multiple states)Payroll Service Fees (multiple states)● Staff & Management TimeStaff & Management Time● OtherOther

President's Advisory Panel on Federal Tax ReformPresident's Advisory Panel on Federal Tax ReformMarch 8, 2005March 8, 2005Tampa, FloridaTampa, Florida

Tax System's Impact on Small Business and EntrepreneurshipTax System's Impact on Small Business and Entrepreneurship

Complexity of Tax System Complexity of Tax System Influences Organizational Influences Organizational StructureStructure

● Nuances of Entity SelectionNuances of Entity Selection●C Corp, S Corp or LLCC Corp, S Corp or LLC

● Transition Costs to New StructureTransition Costs to New Structure● Tax Advisor Costs Tax Advisor Costs ● Staff and Management Time Staff and Management Time

Assessing Options & TransitionAssessing Options & Transition

President's Advisory Panel on Federal Tax ReformPresident's Advisory Panel on Federal Tax ReformMarch 8, 2005March 8, 2005Tampa, FloridaTampa, Florida

Tax System's Impact on Small Business and EntrepreneurshipTax System's Impact on Small Business and Entrepreneurship

Tax System Impact on Tax System Impact on Decision MakingDecision Making

● Counterintuitive decisions Counterintuitive decisions ● Beneficial tax provisions Beneficial tax provisions ● Changes that have led to Changes that have led to

productive actionproductive action● Entity StructureEntity Structure

President's Advisory Panel on Federal Tax ReformPresident's Advisory Panel on Federal Tax ReformMarch 8, 2005March 8, 2005Tampa, FloridaTampa, Florida

Tax System's Impact on Small Business and EntrepreneurshipTax System's Impact on Small Business and Entrepreneurship

Tax System’s Impact on Tax System’s Impact on Small Business CompetitivenessSmall Business Competitiveness

● Efficiency of scale issuesEfficiency of scale issues● Per-employee compliance costs higherPer-employee compliance costs higher● Cost of capital higherCost of capital higher● Business exit or succession difficultBusiness exit or succession difficult● Inefficient reinvestment of exit Inefficient reinvestment of exit

proceedsproceeds

President's Advisory Panel on Federal Tax ReformPresident's Advisory Panel on Federal Tax ReformMarch 8, 2005March 8, 2005Tampa, FloridaTampa, Florida

Tax System's Impact on Small Business and EntrepreneurshipTax System's Impact on Small Business and Entrepreneurship

The Pro-Small Business The Pro-Small Business Approach to Tax ReformApproach to Tax Reform

● Tax code certainty and clarityTax code certainty and clarity● No AMTNo AMT● Eliminate tax on capital and savings Eliminate tax on capital and savings

returns returns ● Do not raise taxesDo not raise taxes● Simpler, FlatterSimpler, Flatter

President's Advisory Panel on Federal Tax ReformPresident's Advisory Panel on Federal Tax ReformMarch 8, 2005March 8, 2005Tampa, FloridaTampa, Florida

Tax System's Impact on Small Business and EntrepreneurshipTax System's Impact on Small Business and Entrepreneurship