Oregon Among Worst States for Small Business
Thursday, January 29, 2015
The state was ranked as the 6th worst in the nation by the index that weighed issues such as taxes, regulations, government spending and debt.
“Oregon is pretty good at nurturing startups, but once they get started it hits them in the head with a hammer,” said Brian Vierra, a venture catalyst at Economic Development for Central Oregon. “Once they start making money, they get hit with all the regulations.”
Small business owners in Oregon feel they could get greater support from the state, according to a 2014 survey by the website Thumbtack.
"Creating a business climate that is welcoming to small, dynamic businesses is more important than ever, and Oregon has more to do to get there," said Jon Lieber, chief economist with Thumbtack.
South Dakota was ranked as the friendliest state for small businesses, followed by Nevada and Texas. California came in at the bottom of the list.
Oregon received the low rankings due to the state's individual capital gains and personal income tax rates. Up to 9.9 percent of someone’s personal income can be taxed in the Beaver State, the third highest percentage in the nation.
Vierra said that when businesses consider where to locate, personal income tax is one of the key factors they consider.
“For attracting talent, [personal income tax] stands in the way. Businesses love a choice,” Vierra said.
California had the highest personal income tax of 13.3 percent, which may help some businesses who want to settle on the West Coast pick Oregon, according to Vierra.
One area Oregon received high marks for was wireless taxes, sales taxes, and gross receipts and excise taxes, which companies pay on revenue. The state led the nation in both categories. Oregon is one of five states that has no sales tax.
Seasons Koll is the owner of Presents of Mind, a north Portland boutique. She said although Oregon’s high property taxes are frustrating, it is better than the alternative.
“A sales tax and dealing with it on a day-to-day basis would be far worse,” Knoll said. “Better one than the other.”
Oregon does have incentives geared towards startup companies to help support their launch and growth, according to Vierra. For example, the Oregon Investment Advantage program removes the state business tax liability for new or freshly-located Oregon startups during their first few years of operations while the Entrepreneurial Development Loan Fund supplies them with loans up to $50,000 at fixed interest rates for five years.
Knoll is pleased with the state’s efforts to help startups, but would like to see more programs that give small business and entrepreneurs a leg up.
“Everything we can do it make it easier to be self sufficient is important,” Knoll said.
New state and federal legislation went into effect this year will have an impact on the small business community. Starting in January 2015, Oregon’s minimum wage rose to 15 cents to $9.25 an hour, the second highest minimum wage in the nation. A mandate from the Affordable Healthcare Act also went into effect on Jan. 1, requiring small businesses of 100 employees or more to offer health insurance for their employees.
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From legal marijuana to civic battles with rideshare giant Uber, Oregon had another year of growth in 2014, coming in as the ninth fastest-growing economy in the nation.
Vegan Condoms Launch in Sustainable Portland
Sustainability and safe sex were married in Portland this year. Well, sort of. The world’s first fair-trade, vegan, sustainable condom launched in Portland in October. Seventh Generation founder Jeffrey Hollender teamed up with daughter Meika, 26, to create Sustain. The Vermont-based company launched exclusively in the Pacific Northwest because of its leading sustainability chops. The condoms are made from ethically grown rubber, carry the Forest Stewardship Council’s blessing, and are packaged in recycled material. Find them at Fred Meyer, Green Zebra, PCC, and Amazon.
Low Worker's Compensation Premiums Boost Oregon Economy
Oregon’s economy emerged as one of the nation’s fastest-growing since 2010, and one factor giving the state a competitive edge is low worker’s compensation premiums. Oregon has the 9th lowest workers’ compensation premiums in the country, with employers only paying an average of $1.85 per $100 of an employee’s payroll to insurance companies who fund worker compensation benefits. The low rates help economic growth and employment in the state. Lower insurance premiums mean lower operating costs for business, helping them become more successful. Some states have almost three times those insurance rates. A growing manufacturing sector is aiding Oregon’s rapid growth.
Bitcoin Trend Grows in Portland With Pioneer Square Mall ATM
You can now do business up to $100,000 with the digital currency Bitcoin.
The crypto-currency generated buzz in the Rose City this year when an ATM, designed to convert Bitcoin into American dollars, opened in one of downtown Portland’s busiest malls. You can’t hold it in your hand, it’s not issued by a government or bank, and its value is based solely on the demand for it at a given time. The controversial currency, valued in and around $400, were worth $1,000 a year ago. Portland banker Mike Fors founded Bitcoin NW, the state’s only brokerage firm capable of converting up to $100,000. Enthusiasts say it can save money, as it has no fees unlike credit cards. Approximately 25 businesses in the Portland area use Bitcoin.
Magazine Agents, Animal Hospitals Get Most Business Complaints
The five types of businesses in Oregon with the highest number of complaints may surprise you. According to the Better Business Bureau, statistics for individual businesses were not available, but could be sorted into business “type.” Magazine subscription agents topped the list with 439 complaints, and animal hospitals came in second with 361 complaints. Auto dealers, new and used, vied for third position. Used auto dealers garnered 268 complaints in Oregon while new car dealers ranked third with 277. Financial services received 232 complaints, finishing fifth.
Nike Adds 2,000 Jobs in Government Tax Deal
A sweetheart tax deal for NIKE meant job growth for Oregon. NIKE added more than 2,000 new full-time positions since Jan. 1, 2012, as part of a job-expansion agreement with the state of Oregon, according to a report from the Governor’s Office. The deal between NIKE and the state is based on a law enacted in 2012 that enables companies to maintain the same “single-factor-sales” tax rate for at least 20 years in exchange for adding a minimum of 500 new jobs and capital investments of at least $150 million. Sept. 30, 2014, Nike had 8,709 full-time employees, up 2,084 from 6,625 Jan. 1, 2012. The company must invest $150 million in capital expenditures, which it has yet to do, to fulfill the second condition of the contract.
Oregon Poised to Become Drone Economy Hub
As the nation awaits an FAA ruling on unmanned commercial aircraft, Oregon is poised to become a hub for the drone economy, potentially bringing in thousands of jobs and billions of dollars in investment to the state. The unmanned aircraft would benefit two of Oregon’s biggest industries -- agriculture and forest fire fighting. Of six drone test-sites in the U.S. approved by the FAA, three are in Oregon: Tillamook, Pendleton and the Warm Springs Reservation. There are over 100 companies in Oregon working in the field of unmanned aerial vehicles in some capacity. The industry is expected to generate hundreds of billions of dollars per year, with approximately 80 percent of the industry used for agricultural purposes. Oregon State University is already involved with projects using drones for agricultural testing and scanning for crop and soil quality. The drone economy could create between 70,000 and 100,000 jobs in the US.
Weekend Closures in Old Town Entertainment District Hurt Businesses
Drunken revelers are safer and committing fewer crimes, but businesses are taking a financial hit. Businesses in Old Town and China Town reported a drop in margins -- to the tune of 30 percent -- after city-imposed weekend street closures took effect. The area’s business coalition reported businesses enclosed in the Old Town entertainment district saw drops in business between 20 and 30 percent. The weekend closures launched as a pilot project in Dec. 2012, and stuck because violence, liquor violations, and disorderly conduct dropped dramatically. Some business owners were concerned the city did not ask for their input. The district closes the blocks between Northwest 2nd and 4th avenues from West Burnside to Northwest Everett Street between 10 p.m. and 3 a.m. Friday and Saturday.
Some Portland Homeowners Pay Disproportionate Property Tax
A study and mapping tool released by the Multnomah County Auditor in October revealed homeowners paid drastically different levels of tax for properties of the same value, depending on where they lived. Residents can use the Inequities in Multnomah Property Taxes tool to compare property values and taxes by neighborhood. The study solidified anecdotal evidence that homeowners were paying more taxes in some areas for homes with similar property values. For example, a house in Southeast Portland’s Brooklyn Neighborhood that costs $400,000 can pay up to $3,500 more in property taxes than a house of the same value in North/Northeast Portland’s Eliot neighborhood.The disparity ultimately has a negative affect on first-time homebuyers and low-income residents.
No Salt on Roads is Costing Oregon's Economy
Portland’s snow-induced paralysis became a source of humor and frustration this year, particularly among transplants. All jokes aside, a state ban on salting roads could cost Oregon's economy $40 million each day snow and ice closes businesses, transit and schools. #Snowmageddon rocked the city in February, and whispers of a coming snowstorm in November closed Portland Public Schools. Portland uses a magnesium chloride liquid de-icer, rather than salt, although officials concede salt is more effective. When a state's commerce is shut down during a snowstorm, its total economic losses range from approximately $80 million to $700 million per day, according to a 2014 report released by the American Highway Users Alliance. The Oregon Department of Transportation holds storage and equipment costs, combined with environmental impact, outweigh its benefits.
Portland Struggles to Enforce Airbnb Permits
Another online service operating in quasi-legal terms in 2014, Airbnb allows residents to rent their homes short term through the company’s website. Sept. 2, the city began accepting permits for residents looking to rent out rooms through Airbnb, after a public struggle with neighborhood advocates. The $180 permit allows renters to operate legally by passing a city inspection. But few are playing ball and enforcement of the law is complaint-driven. Despite more than 1,000 rentals listed Portland's Airbnb.com page, only a fraction of the listings carry a permit from the City of Portland. By mid-September, the city had received only six applications for Airbnb-style short-term rentals. The number grew only slightly through the remainder of the year. In March, the San Francisco-based company announced its plan to open offices in Old Town. Portland’s city council minted the new rules in July and set up a tax on the rentals.
Cover Oregon Debacle Gives Oracle a Wakeup Call
Widespread issues with Cover Oregon, the state’s failed healthcare exchange, preceded organizational changes at software giant Oracle. CEO Larry Ellison, who founded the company in 1977, resigned and appointed himself Chief Technology Officer in September. This preceded a damning October report from state-contracted business consultant Clyde Hamstreet. The Cover Oregon debacle offers insight into technological issues Oracle, GoLocal Mindsetter James Reilly writes. Going into 2015, Oregon and Oracle are suing each other, and those seeking coverage from the state exchange must enrol with national platform healthcare.gov. Oracle did not keep up with industry shifts to cloud-based computing, Reilly writes. The Cover Oregon debacle pushed Oracle to a point of action now 20 years in the making.
Rents increase as young, educated adults flock to Portland
More than 25,000 people move to Portland from across the country every year since 2011. The continued migration strains the city’s supply of one-bedroom apartments and studio lofts, driving up the price of rent. Vacancy in Portland is a low 3.44 percent, compared to the national average of 6.49. House-hunting for rentals is increasingly competitive and expensive. The average rent for a one-bedroom apartment in Portland in 2010 was $987, which increased to $992 in 2011, $1,012 in 2012 and $1,036 last year. The average price for a one-bedroom apartment in downtown Portland is around $1,751. GoLocal rounded up apartments you can rent for $1,500. The city is projected to gain an addition 112,000 united over the next 20 years.
Legal Weedonomics: State Laws Stand in Way of Marijuana Businesses
When the green industry got the green light in Oregon with the passage of ballot measure 91, consumers and entrepreneurs alike rejoiced. Although marijuana does not become legal until July 2015, Oregon is gearing up for the economic influx. Once the legal market gets its footing, everything from dispensaries to retail shops, smoking lounges and online payment start-ups are looking to cash in. But, current legislation including bans on smoking in places of employment and public spaces stand in the way of lounges. Laws against extracting active ingredients prevents a potentially behemoth ‘edibles’ industry. A tax on the plant will support schools, law enforcement and health. In Vancouver, a battle to legalize smoking lounges was supported by Mayor Tim Leavitt, who saw it as a business opportunity.
City Fights Back After Uber Rolls Into Portland Illegally
The controversial rideshare company halted operation in Portland Dec. 21, after a courtship, a launch, and a lawsuit. Uber launched Dec. 5 in Portland, despite regulations that prevented the company from operating. The city fired back, levying over $67,000 in fines against Uber, and requested a court injunction to stop operations. An agreement is in the works while the city puts together a task force to reform taxi laws. The company circled Portland, the largest U.S. city without a ridesharing service, launching in Vancouver, Salem and Eugene. Uber launched Dec. 5 in Portland, despite regulations that prevented the company from operating. The city fired back, levying over $67,000 in fines against Uber, and requested a court injunction to stop operations. An agreement is in the works. Uber operates in over 100 cities around the world, often illegally. April 9, 2015, the city will hear the recommendations.