Companies owned by venture capital firms would have much greater access to Small Business Innovation Research awards under legislation introduced in the House than they would under a bill moving through the Senate.

The SBIR program requires 11 federal agencies with large outside research budgets to award at least 2.5 percent of their spending to small businesses.

The House bill would allow small businesses that are majority-owned by VC firms to receive up to 45 percent of SBIR awards at the National Institutes of Health, the Department of Energy and the National Science Foundation. At other agencies, VC-owned firms could receive up to 35 percent of SBIR awards.

The Senate bill, by contrast, limits VC-owned firms to 25 percent of SBIR awards at NIH, Energy and NSF, and 15 percent at other agencies.

Firms majority-owned by VCs currently aren't eligible for any SBIR awards. In 2003, an administrative law judge ruled that these types of companies don't qualify as small businesses since they aren't independently owned.

This meant more than half of all small biotechnology companies in the United States could no longer compete for SBIR awards, according to the Biotechnology Industry Organization.

BIO and the National Venture Capital Association have been trying to regain SBIR access for VC-owned firms ever since.

Rep. Sam Graves, the Missouri Republican who chairs the House Small Business Committee, said the House bill "focuses the program on the best ideas with the greatest chance of success and not a company's financial structure. Given the difficulty in acquiring capital to support innovative ideas, we thought the current program was overly restrictive and needed to be changed."

Current SBIR recipients and some small-business groups, however, fear that allowing too many VC-owned firms into the program would dilute the program's effectiveness in helping other types of small businesses.

For more information, see www.smallbusiness.house.gov

The House voted 240-179 to overturn the FCC's net neutrality rules, which bar Internet service providers from blocking or impeding Web traffic.

The legislation, however, is unlikely to pass the Senate, and the White House indicated President Barack Obama would veto it.

Rep. Fred Upton, the Michigan Republican who chairs the House Energy and Commerce Committee, said the bill would "ensure the Internet remains open and free from unwarranted and unwelcome government regulation. The FCC's rules threaten to chill the very investment and innovation we need to ensure the Internet keeps pace with the growing demands being placed on it."

But Sen. Jay Rockefeller, the West Virginia Democrat who chairs the Senate Commerce Committee, said the bill would "undo the integrity of the FCC's process and unravel their good work."

"Americans want the Internet to remain free and open, and the FCC's net neutrality rules provided just that," Rockefeller said.

For more information, see http://energycommerce.house.gov

Taxes cost small businesses a lot of time and money.

A new survey of National Small Business Association members found that 38 percent spend more than 80 hours a year dealing with federal taxes. Half of the small businesses surveyed spend more than $5,000 a year on administration of federal taxes, including accounting fees.

These numbers don't include compliance with state and local taxes, which ranked just behind payroll taxes as the most burdensome taxes for small businesses.

Payroll services are used by 44 percent of NSBA members. Payroll taxes eat up a lot of time, even at firms that use outside services: 28 percent of these small businesses spend six hours or more a month dealing with payroll tax administration.

This burden is going to get worse for some businesses. Beginning next year, those with more than 250 employees will have to report the cost of their employer-sponsored health insurance on their employees' W-2 forms. This reporting is optional for smaller firms, at least for now. Most NSBA members said that requirement would have a negative impact if it applied to them.

Supporters of health-care reform tout the health insurance tax credit that is available to some small businesses -- those with fewer than 25 employees with average wages below $50,000. But only 10 percent of members say they qualify for the tax credit.  

For more information, see www.nsba.biz

Kent Hoover: khoover@bizjournals.com