Katie Roth is a writer, artist, and entrepreneur. Originally from Alabama, she now resides in the UK with her husband and two dogs, and works with clients and other business owners in Europe and the USA.
Women in business still face too many hurdles, and unfortunately 2020 has only exacerbated them. Common issues like securing adequate funding or accessing much-needed resources have been complicated by the coronavirus. COVID-19 has brought about unprecedented challenges not just for women, but for the global business community. As we all learn how to manage our new reality in 2021 and look forward to a slow emergence from the grips of the virus, it is time for people to give real thought to how they might bring about new success in business once more.
It’s with that in mind that we’re looking at some important things Alabama’s women business leaders should know regarding taxes, loans, and grants.
Regarding taxes for business leaders, there aren’t necessarily points to make that are specifically relevant to women. However, there are some simple reminders worth keeping in mind for anyone who is starting or attempting to grow a company.
The first reminder is that Alabama is considered to be a particularly favorable state when it comes to personal tax — which can free up some funds to manage business expenses. Just this year, an article ranking state income tax rates listed Alabama in a tie for 10th place (meaning 10th lowest), with a rate of 2-5%. Given that some states have personal income tax rates of 10% or more, it’s a good idea for women to consider launching businesses in Alabama. The slight but meaningful financial cushion allows for more business investment opportunities.
Additionally, registering as an LLC can compound the benefits you get from the favorable tax situation. LLC structure in Alabama is such that a business with this sort of official standing is actually not taxed as its own entity. Instead, owners simply pay income tax on what they make from the business. This means that rather than having a hefty, separate tax on business earnings, you can simply enjoy that same 2-5% rate on business-related income. That said, LLCs are subject to something known as a “business privilege tax,” which relates to the company’s net worth. Still, it’s worth running the numbers on the idea, because particularly for a newer or smaller businesses, the net benefit of the LLC structure can be significant.
Where loans are concerned, Alabama is again an appealing state for new, small businesses. Recent years have seen lenders give out nearly $1 billion in loans to small businesses— spread out over more than 50,000 individual arrangements. These numbers, given the size of the state and the number of people working in small businesses, justify the notion that Alabama has actually been one of the better states to secure a business loan.
As for specific loan funding for women-led businesses, we’d recommend keeping an eye on a Birmingham support program known as “Upward,” which was designed specifically to help women leaders in business — particularly now as we all look to move forward from COVID. It’s just the sort of resource that has become invaluable to such leaders in communities where women in business are seizing more opportunity — offering leadership coaching, help with goal setting, network support, and more.
In the grant department, there is more business aid to be found with specific regard to the coronavirus crisis. In July, we saw the announcement of the $100 million “Revive Alabama” grant, which was designed to help fund struggling small businesses. The $100 million was pulled out of $1.9 billion that Alabama received in total from the federal CARES Act, and it was made available to businesses earning less than $5 million annually and employing no more than 19 people. The hope is that additional grant packages of this sort will be made available to small business leaders once again if and when the federal government signs off on another relief package.
There are also some more accessible grants available. Most notable among these is the Amber Grant. Launched by WomensNet, this is a $10,000 grant given out to at least one woman in business each and every month. It also involves an additional $25,000 bonus given to a single “winner” at the end of each year. It’s an excellent example of what a program meant to stimulate innovation among women entrepreneurs can look like.
Funding a business and managing its finances is difficult, but for women in Alabama looking to endure the coronavirus and thrive in business thereafter, being aware of everything discussed above can amount to a helpful head start on the financial front.