CompTIA: Fiscal Cliff Fallout to Hurt Small Tech Businesses

Will mobile device management (MDM) vendors and managed services providers (MSPs) experience major trauma if Congress fails to address the current fiscal crisis? A white paper released by CompTIA, the non-profit association for the IT industry, finds that small and medium information technology (IT) businesses will experience major trauma if Congress fails to address the “fiscal cliff.” Here's what you need to know.

According to CompTIA's white paper, which focuses on the $955 billion domestic IT sector, mandatory spending cuts will harm the overall U.S. economy, and specifically small and medium IT businesses. The report also concludes that specific business expensing and tax credit provisions will harm small IT firms, and the report details how cuts in government programs will impact the sector. The paper, Impact of the Fiscal Cliff on SMB IT Companies, analyzes a number of tax policies that have lapsed or are set to expire at the end of the year and threaten to hit technology businesses, including:

  • R&D -- The research and experimentation tax credit incentivizes developing or improving new products and technologies. CompTIA believes that this provision should be renewed.
  • Section 179 Expensing -- According to CompTIA, small business expensing will be reduced from $139,000 in 2012 to $25,000 in 2013. Upgrading new technology is a major business expenditure, reducing small business expenses is not the answer.
  • Government Purchasing -- CompTIA says that the U.S. government is a major purchaser of IT services. If the government's IT spending decreases, it will have an affect on the overall technology sector.
  • Access to Capital -- Limiting financing options for small entrepreneurs and startups will decrease small business lending and access to capital are another area of concern to the IT sector.
  • Access to Education -- According to CompTIA, there are currently 280,000 open IT-related jobs, which could be filled through training and certification programs. Cuts will affect training needed for these positions.
How will this affect your business? Do you have any plans to support CompTIA in the organization's efforts? Let us know.
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