A new bill introduced in the North Carolina Senate is intended to make it easier to start new businesses in the state.
The Right to Start Act, introduced by senators Jay Chaudhuri and Todd Johnson, would defer the payment of business taxes for young companies with net incomes of less than $5,000.
The bill’s language also encourages the state government to increase the use of young contractors in operation for less than five years, and it asks the state to track and report on the participation of those businesses in North Carolina government contracts.
Sen. Jay Chaudhuri, a Democrat (Johnson is a Republican), said the focus is on main street small businesses – though that doesn’t exclude those from other sectors, such as tech startups – they just have to be less than five years old with less than $5,000 in net income to qualify for the tax deferral.
Chaudhuri said the initial proposal was inspired by Right to Start, though conversations with business owners in North Carolina have also influenced the measure.
Right to Start is a nonprofit group pushing to level the playing field for entrepreneurs, in part by lobbying for bills. The first Right to Start Act was passed in 2021 in Missouri, and similar measures have been introduced in multiple state legislatures across the country. The legislation is being pushed by the American Legislative Exchange Council, a conservative organization that funnels legislation to state legislators across the country.
Locally, entrepreneurial groups say they’re “aware” of the bill.
Thom Ruhe, president and CEO of the NC IDEA Foundation in Durham, declined to comment on the bill, but said, “in general terms, anything that supports entrepreneurs through public policy is good – and long overdue.”
Chaudhuri hopes the bill “gets the conversation started about what state government can do to encourage more small-business growth in our state.”
Evaluating how state governments contract with young companies could also lead to additional action down the line.
“In the event that we discover small businesses are really comprising a very, very small percentage of government contracts, the next question to ask is why, and if there is a conclusion that in some instances small businesses don’t have a level playing field in trying to compete for some of these contracts,” he said.
Chaudhuri said government contract wins can be a “game-changer” for a small business.
“First, there’s an opportunity for small businesses to generate more revenue, but second and more importantly, it gives small businesses the credibility to compete in their space,” he said. It also allows state government to be “entrepreneurial” in how they look to address problems.
Chaudhuri said he's hopeful the bill will get a hearing this session.
Victor Hwang, founder of Right to Start, said North Carolina is an ideal state for this kind of legislation, as it is "one of the nation's leaders in regional technology development, and it makes perfect sense today that North Carolina would be a natural leader on entrepreneur-led growth policy for the modern economy."
"The Right to Start Act in North Carolina will make an economic impact because it boosts new emerging businesses who don't have a level playing field today," he said in an email. "New businesses under 5 years old create almost all net job growth in the economy; they also raise incomes, reduce inequality, fight poverty, and generate community wealth. But entrepreneurs are usually ignored in policymaking. That's why the bill matters. It gives new, emerging businesses a fairer shot at government contracts, which are usually biased towards large established corporations."
