And the average tax rate is ....

What average tax rate are business appraisers using in their calculations? According to a recent report by the Small Business Administration (Effective Federal Income Tax Rates Faced By Small Businesses in the United States – April 2009) small businesses in the United States pay an estimated average effective tax rate of approximately 19.8 percent.

The study goes on to say that sole proprietorships face the lowest average effective tax rate at 13.3 percent, small business partnerships face an average effective tax rate of 23.6 percent, and small business S corporations face an average effective tax rate of 26.9 percent. These calculations include only those entities with positive net income for the 2004 tax year.