Hudson Business Service

TAX UPDATE - ENERGY CREDITS

2011-12-22T11:37:00.002-05:00

Some Energy Credits still available:
Special Edition Tax Tip 2011-08, November 21, 2011

The IRS reminds homeowners that they still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits.

The Nonbusiness Energy Property Credit is aimed at homeowners installing energy efficient improvements such as insulation, new windows and furnaces. The credit is more limited than in the past years, but can still provide substantial tax savings.

The 2011 credit rate is 10 percent of the cost of qualified energy efficiency improvements. Energy efficiency improvements include adding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count.
The credit can also be claimed for the cost of residential energy property, including labor costs for installation. Residential energy property includes certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel.
The credit has a lifetime limit of $500, of which only $200 may be used for windows. If the total of nonbusiness energy property credits taken in prior years since 2005 is more than $500, the credit may not be claimed in 2011.
Qualifying improvements must be placed into service to the taxpayer’s principal residence located in the United States before January 1, 2012.

IRS Delays More Forms for Filing This Season

2011-01-11T08:12:00.001-05:00

WASHINGTON, D.C. (JANUARY 10, 2011)

BY MICHAEL COHN

The Internal Revenue Service said a series of forms will be disabled until mid- to late February with error codes.

In an e-mail alert to software developers, tax return transmitters, and authorized IRS e-file providers and electronic return originators, the IRS said Friday that the following forms would be disabled until mid- to late February with a new error reject code, 0248.

The following forms cannot be electronically filed at this time, according to the IRS:

Schedule A, Itemized Deductions

Form 3800, General Business Credit

Form 4684, Casualties and Thefts

Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (Page 2)

Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit

Form 8834, Qualified Plug-in Electric and Electric Vehicle Credit

Form 8859, District of Columbia First-Time Homebuyer Credit

Form 8910, Alternative Motor Vehicle Credit

Form 8917, Tuition and Fees Deduction

Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit

In addition, Error Reject Code 0014 does not allow entries for educator expenses (Form 1040, line 23 and Form 1040A, line 16) or tuition and fees (Form 1040, line 34 and Form 1040A, line 19). In mid- to late February, the record layout for Form 1040 and Form 1040A will be updated to allow entries for educator expenses (SEQ 0623) and tuition and fees deduction (SEQ 0705), according to the IRS.

The IRS said last month after the late passage by Congress of an extension of the Bush-era tax cuts that some of these same forms, especially Schedule A for itemized deductions and other forms for educators and tuition expenses, would not be available until mid- to late February, but it did not list many of the other forms enumerated on Friday at the time (see IRS Says Tax Season Will Be Delayed for Some).

Separately, the IRS also announced a delay in its Modernized e-File system for accepting some types of business tax returns. The IRS said that due to the extensive amount of infrastructure work being done on the MeF system to enhance performance, and the impact of additional work in support of the recently passed extender legislation, the annual Business Master File cutover window has been extended, and BMF startup has been delayed. Instead of opening at 9:00 am, Eastern on Saturday, January 8th, the MeF system will open for BMF returns and extensions at 9:00 am, Eastern on Wednesday, January 12.

Once BMF startup begins, and until changes caused by extender legislation are implemented, the IRS said it would reject any BMF e-filed tax returns that have the following forms or schedules attached: Form 1120-PC (Tax Year 2010), Form 6478 (Tax Year 2010) and Form 8849, Schedule 3 (Tax Year 2011). The IRS said it is working as quickly as possible to implement the necessary programming changes so these forms/returns can be processed.

The IRS noted that the due date for any tax return or extension originally due on January 15th has been extended to Tuesday, January 18th due to the 15th falling on a Saturday and the Martin Luther King Day holiday on Monday

House Passes Extension of Bush Tax Cuts and Unemployment Benefits

2010-12-17T08:30:00.001-05:00

WASHINGTON, D.C. (DECEMBER 17, 2010)

BY MICHAEL COHN

The House approved an $858 billion extension of the Bush-era tax rates and unemployment benefits late Thursday night, a day after the Senate approved the bill, sending the bill to President Obama’s desk.

After procedural hurdles held up the vote for much of the day on Thursday, the House reconvened in the evening to settle the terms of the debate. Amid widespread dissatisfaction among House Democrats over the terms of the deal struck by President Obama and Republican congressional leaders, especially on setting the estate tax at a rate of 35 percent for estates over $5 million, they agreed to first hold a vote on an amendment by Rep. Earl Pomeroy, D-N.D., which would set the estate tax rate at 45 percent for inheritances over $3.5 million. That amendment was defeated by a vote of 233 to 194.

The bill includes a two-year extension of the Bush-era income tax rates, including those for dividends and capital gains. It also extends emergency unemployment insurance for another 13 months. The bill would also lower Social Security payroll taxes by 2 percentage points from 6.2 percent to 4.2 percent for a year. Several lawmakers, however, criticized that provision, saying it would weaken the Social Security trust fund and not be open to government employees.

The bill would also extend the Child Tax Credit, the Earned Income Tax Credit, and the American Opportunity Tax Credit for college tuition. It would also allow businesses to deduct 100 percent of investments in plant and equipment in the first year, and extend for two years the state and local sales tax deduction. In addition the bill would “patch” the AMT, extending Alternative Minimum Tax relief for two years to prevent the AMT from ensnaring millions more taxpayers. The bill also includes extensions of the Research and Experimentation Credit for businesses.

It also would extend a variety of popular tax breaks, including the ability of schoolteachers to expense purchases of school supplies. The bill also includes energy tax breaks for biodiesel fuel, ethanol and renewable energy sources.

Your Paycheck May be Shrinking! from CNN

2010-11-24T08:52:00.000-05:00

NEW YORK (CNNMoney.com) -- Are you ready to give up $30 a month?

     That's what may come out of your paycheck if -- as expected -- the Making Work Pay tax credit expires at the end of the year.
     The credit was enacted last year as part of the Recovery Act to put more cash in people's pockets. For the past two years, it has boosted paychecks by up to $400 for single filers and $800 for joint filers by reducing the tax withheld and giving a credit for that amount. That's $33 or $67 a month
     Taxpayers who make $75,000 or less are eligible for the full credit, while higher earners can receive partial credit. More than 90% of working Americans have been helped by the tax break.
     Now they will feel the pain when the credit goes away.
     A Senate Finance Committee aide said panel chairman Max Baucus, a Montana Democrat, is working on a proposal to extend a number of expiring tax breaks when Congress returns next week.
     Obama proposed an extension months ago, but it's unclear if the administration will fight for it now.
     Tax cut stew for Christmas
     And with only weeks remaining in the lame-duck Congress, the credit is likely on its way out, said Clint Stretch, managing principal of tax policy at Deloitte Tax.
     "I haven't seen any serious effort to extend Making Work Pay," Stretch said. "For this to get passed, somebody in Congress would have to be saying this is a priority, and we just haven't seen that happening."
     Instead, most of the buzz is about the Bush tax cuts, which are also slated to expire at the end of the year.
     Republicans are fighting to extend the Bush cuts for everyone -- including higher income Americans. But Obama, who has promised not to raise taxes on the middle class, is pushing to preserve the cuts only for family income up to $250,000.
     "The most curious aspect of the tax debate is the obsession with taxes at the high end," said Chuck Marr, director of federal tax policy at the left-leaning Center on Budget and Policy Priorities. "But when almost every middle and lower class American is going to face higher taxes, nobody's talking about it."
     The big issue with keeping Making Work Pay around is its cost -- about $60 billion to extend it one year.
     "Stimulus is a bad word now, so anything labeled stimulus will not get traction," said Roberton Williams, a senior fellow at the Tax Policy Center.
     But if the extension isn't passed, the 110 million families that received higher paychecks in 2009 and 2010 will owe more taxes than they did during those two years.
     "Most people may have no idea they received it and no idea that it's going away," said Marr. "But what you can be certain of is that they'll have less money and they'll spend less -- and this is a terrible time for the economy to lose $60 billion of spending."

What's between Black Friday and Cyber Monday? AmEx promotes 'Small Business Saturday'

2010-11-09T12:29:00.002-05:00

KAREN MATTHEWS Associated Press

NEW YORK (AP) — Hoping to drum up support for independent merchants, American Express' CEO said Monday that his company will promote "Small Business Saturday" on the weekend after Thanksgiving.
"This is the start of a movement," said Kenneth Chenault, who joined New York City Mayor Michael Bloomberg at a City Hall news conference to announce the effort.
Chenault said that large retailers have Black Friday and online retailers have Cyber Monday, "and now, starting on Nov. 27 of this year, small business owners will have Small Business Saturday."
Chenault said the first 10,000 small business owners who sign up to participate will get $100 worth of Facebook advertising. American Express will give a $25 credit to 100,000 of its cardholders who pledge to use their cards at independent businesses on Nov. 27.
Bloomberg said small businesses "are the backbone of our economy and the glue that holds communities together."
American Express will spread the word about Small Business Saturday on Facebook and Twitter, Chenault said.
Black Friday, the day after Thanksgiving, is the unofficial start of the holiday shopping season. The following Monday has in recent years been promoted as Cyber Monday for Internet shopping.
Chenault said Cyber Monday did not catch on immediately and Small Business Friday may not succeed overnight.
"This is not a flash in the pan," he said. "We are committed to this effort for years to come."

Good News for W2 Preparers

2010-10-13T12:02:00.002-04:00

The IRS announced Tuesday that it will defer the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan, making that reporting by employers optional in 2011.

The draft Form W-2 includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan. The Treasury Department and the IRS have determined that this relief is necessary to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement. The IRS will be publishing guidance on the new requirement later this year.

Although reporting the cost of coverage will be optional with respect to 2011, the IRS said it continues to stress that the amounts reportable are not taxable. Included in the Affordable Care Act passed by Congress in March, the new reporting requirement is intended to be informational only, and to provide employees with greater transparency into overall health care costs.

How to Raise a Business Owner

2010-09-23T12:24:00.002-04:00

By BARBARA TAYLOR

On Labor Day weekend my husband and I – the only small-business owners at a gathering of family and friends – were asked repeatedly how our business was doing. We were honest and said that it’s a very difficult environment for small business right now and that we feel fortunate to be hanging in there.

One nameless relation stopped clearing the dishes and piped up with the following statement: “If it doesn’t work out, you two can just go out and get jobs like the rest of us.”

There’s one in every crowd, isn’t there?

Yet another relative at a different holiday gathering said more or less the opposite: “At least you guys are out there trying to do something, rather than expecting someone to hand you a paycheck every two weeks.”

As a small-business owner, I’ve become accustomed to encountering both points of view. But it made me wonder how I instill the latter mindset – that you can make your own way in the world and don’t necessarily need to rely on someone else to provide you with an income – in my own children.

People love to argue about whether entrepreneurs are born or made, with many feeling that success in small business is somehow genetic. My husband has five siblings. An entrepreneur raised all six kids, yet only one became a small-business owner. I had no exposure to business growing up, yet here I am on my second venture. Rather than calling it genetics, I think it has more to do with children of entrepreneurs being the beneficiaries of an early education in business.

My 6-year-old is starting to figure out how the world works, and where we all fit in. He knows that his mom and dad run a business together, but I can see that it doesn’t always add up in his mind. Other parents have jobs. They work for somebody, or sometimes one parent works and the other stays home. He doesn’t meet many kids with parents like his. I guess we’re not the norm, which is something children pick up on at a young age.

As my children get older and begin their elementary school education, I keep an eye out for where business literacy emerges as part of the curriculum. So far, I don’t see much, although the basics of personal finance – bills and coinage, and how to count them – begins in kindergarten.

In fact, I’m not sure that we have a real grooming system for raising entrepreneurs and business owners in this country. The ethos is built into our culture – you can do anything with hard work – but it seems business education doesn’t begin in earnest until you choose a major in college. The “land of opportunity” and the “American dream” are synonymous with the entrepreneurial spirit. Yet if you were to stop people on the street and ask them how to start a business, I’ll bet the common response would be something like a) get a friend or relative to loan you some money, and b) try it, see what happens and hope for the best. It’s no wonder that entrepreneurs are perceived as risk-takers and failure rates for start-ups are so dismal.

Certainly a business degree is no guarantee of success. Which brings me back to early education at home. Here are a few qualities that I try to instill in my kids – for success in both life and entrepreneurship:

1. Ability to solve problems creatively.

2. Desire to learn and expand knowledge.

3. Ability to analyze a situation and make good decisions.

4. Self-motivation and belief in your own abilities.

5. Persistence, tenacity and resilience.

I’m always listening for potential opportunities to illustrate general business principles and create awareness of the business behind everyday things. For example, we drove by a construction site the other day. My youngest pointed out the window at an excavator and said, “I want to drive one of those some day.”

“Maybe some day you’ll own a business that helps people build things,” I replied. There was silence in the back seat. I figured what I said either made no sense whatsoever, or perhaps got him thinking about the world in a different way – if only for a moment.

Barbara Taylor is co-owner of a business brokerage, Synergy Business Services, in Bentonville, Ark.

Making Cities Entrepreneurial

2010-09-21T13:27:00.002-04:00

Small Business Trends

September 20, 2010 By Scott Shane

There’s an industry of consultants offering advice to city, county and state policy makers on how to generate more entrepreneurs in their locales. Much of this advice is based on research that looks at what’s different about places that have more entrepreneurs from places that have fewer of them.

Many governments are following this advice without looking deeply enough at the research behind it. A brief glance shows four problems with using much of the analysis to develop public policy.

1. The evidence doesn’t always support the theory. Consider, for example, the argument made by economic development guru and consultant, Richard Florida, that increasing demographic diversity will increase entrepreneurial activity. Florida’s own research fails to show that places with more diversity have more entrepreneurs. His diversity index, which measures the share of the population that is gay, and his melting pot index, which captures the foreign born share of the population, have no statistical relationship to the rate of new business formation when other factors are also considered. The theory that increased demographic diversity will lead to more entrepreneurship isn’t supported by the evidence.

2. The causality is often backwards. Again consider Professor Florida’s research. It shows that places with more amenities tend to have more entrepreneurship. But the direction of causality of this relationship is unclear. Does having more amenities lead to more entrepreneurship or does more entrepreneurship result in the creation of more amenities? Because the former interpretation suggests a policy action – build amenities – while the latter does not, policy makers have assumed that more amenities leads to more entrepreneurship and have built amenities in the hope of attracting more entrepreneurs.

3. The studies often focus on only a few types of new businesses. Consider, for example, a new report by Edward Glaeser and William Kerr with the catchy title “What Makes a City Entrepreneurial?”

In their study, the authors defined “entrepreneurship” as the formation of new independent manufacturing establishments with employees. While that definition sounds reasonable, these businesses account for only one percent of all new companies.

Drawing conclusions from a one percent sample wouldn’t be a problem if the places that have a lot of new manufacturing employers also have lots of other types of new businesses. But they don’t. Glaeser and Kerr write, “Our entry metric has a 0.36 … correlation with the 2000 self-employment rates at the city … level.” That is, cities with the highest self-employment rates aren’t the ones that have lots of new independent manufacturing establishments with employees.

Recent research conducted by Larry Plummer for the Office of Advocacy of the U.S. Small Business Administration provides further evidence for why drawing conclusions about entrepreneurship on the basis of new business formation in manufacturing is problematic. Looking at the rate of new independent establishment formation from 1990 to 2006, Plummer found that the rate in manufacturing correlated only 0.33 with the overall rate. Moreover, it correlated only 0.16 with the rate in retail trade, 0.13 with the rate in high tech, and 0.06 with the rate in business services.

Moreover, the top places for new manufacturing business creation are not the same as the superstars for new firm formation in other economic sectors. Of the 20 counties with the highest rate of creation of manufacturing establishments from 1990 to 2006, only one, San Juan, Colorado, was in the top 20 counties for overall rate of new business formation.

4. The factors that stimulate one type of entrepreneurship often dampen others. Consider, for instance, the factors that enhance entrepreneurship in manufacturing and high tech. Plummer’s study showed that places with more college graduates had fewer manufacturing start-ups, but more new high tech businesses. Many would argue that we should increase the number of college graduates in a region, even if that comes at the expense of number of manufacturing businesses started, especially if the rise in the number of degree holders leads to a boost in high tech start-ups.

In short, academic research doesn’t provide strong evidence of specific policies that increase rates of entrepreneurship in a locale. Maybe government officials should take the money that they are using to implement the academics’ recommendations and give it to the entrepreneurs they are trying so hard to create.

Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

Pricing Strategies for Selling Services

2010-08-18T10:31:00.000-04:00

Pricing Strategies for Selling Services

A common strategy for small businesses is to undercut the competition by charging lower prices. For instance, if every other graphic designer you know charges $100 an hour, you figure you'll steal business away from them by charging only $50 an hour. Charging low prices, or lowballing, as it is commonly known, is a terrible pricing strategy for service businesses-for several reasons.
First, your perception that a lower price makes you more attractive to clients is not universally true. Yes, some clients are price buyers, and your low price will draw them in like moths attracted to a flame. But there are many other clients who do not buy based on price. These clients value other attributes-such as quality, reliability, speed, customer service, expertise, track record, and reputation-and are willing to pay a premium price to get them. In fact, your low price signals to many of these buyers that you do not deliver those desirable attributes.and that you and your services are inferior. The low price actually turns these prospects off!
This is not theory, by the way. Direct marketers know that, in split tests of price, the low price for a product or service often loses and is less profitable than higher prices, which generate more orders and sales. Low prices create a perception in the client's mind of low value. As John Ruskin, the 19th-century English critic, pointed out, "There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person's lawful prey."
Second, your low price attracts a less desirable clientele than a premium price, which attracts clients who value good work and don't mind paying for it. Price buyers are the least profitable clients to work for, and ironically, often the most demanding and difficult to please.

Third, in a service business, time is money. The less you charge, the less money you make-and the less profitable your business. Given the choice, wouldn't you rather work for $100 an hour instead of $50 an hour, or earn $200,000 a year instead of $50,000 a year?

The Marketing Plan Handbook
Robert W. Bly
Build Out Your Product Line
Page 133
Entrepreneur Media Inc.
Copyright 2009

Let's Hope this Happens!

2010-07-28T09:41:00.000-04:00

AICPA Asks Congress to Repeal New 1099 Requirements

WASHINGTON, D.C.

(JULY 27, 2010)

BY WEBCPA STAFF

The American Institute of CPAs has written a letter to members of the House and Senate asking them to repeal the section of the new health care law that requires businesses to report to the Internal Revenue Service any purchase from a vendor of goods or services worth $600 or more during the calendar year.

The AICPA said it would be burdensome and costly for small businesses to compile the data and prepare the Form 1099-MISC information return. Furthermore, the AICPA said the information collected on the 1099 forms will not be very helpful to the IRS in collecting any unpaid taxes that should have been paid by the vendor because it will be difficult to reconcile payments reported on the forms and income reported by the vendor.

The reporting requirement is included in the Patient Protection and Affordable Care Act and is effective for purchases made in 2012 that will be reported on 1099 forms filed in 2013.

“This expansion of information reporting may prove to be so burdensome to small businesses that we believe it will significantly contribute to the hurdles to growth and formation that businesses face,” wrote AICPA Tax Executive Committee chair Alan Einhorn.

“Repeal of section 9006 of the Act is the best alternative to imposition of an overwhelming compliance burden on the nation’s small business community,” he added.

New 1099 Requirements for B2B Transactions

2010-07-16T12:36:00.000-04:00

A recent tax code addition will mean increased paperwork for small businesses.

By Bonnie Lee
July 14, 2010

I’ve got a bone to pick with our congressmen and congresswomen! You know how legislators sneak unrelated provisions into major bills? Yeah, well, they did it again. Section 9006 of the massive Patient Protection and Affordable Health Care Act will mean yet another huge paperwork burden for small business. It has to do with issuing 1099 forms; it has nothing to do with health care.

Beginning in 2012, all businesses will be required to prepare 1099s for all services and goods purchased from all vendors in excess of $600. Current law dictates that only services provided in excess of $600 must be reported via form 1099 and that corporations (with the exception of attorneys) are exempt from receiving 1099s.

Beginning in 2012, corporations will no longer be exempt, and purchases of goods must also be included. The passing of this legislation is an attempt by the government to close the $300 billion tax gap, which will help pay for health-care reform. So I guess it indirectly relates to the Patient Protection and Affordable Health Care Act in which it was included.

Depending on the industry, many businesses must collect, report and pay over a variety of excise taxes, as well. How much does all that cost your business in bookkeeping and payroll preparation fees? Now business owners must report all business-to-business transactions. So purchases your business makes from Staples, Office Depot and other vendors are included as reportable transactions. You must obtain every vendor's federal ID, track your purchases and prepare the form. This will involve many additional hours of bookkeeping time. It will be mandatory to get an accounting software upgrade because there will be a new form and new preferences to set within the software to track these numbers. It's great for all of the bean counters who can double, triple and maybe even quadruple their 1099 preparation fees. But at what cost to the small-business owner who is attempting to recover from this recession and keep her business going?

Speaking of 1099 reporting, the situation gets worse. Beginning in 2011, all credit card processing companies must report annual credit card transactions in excess of $20,000 and 200 transactions submitted to them for processing by any business on a new IRS form 1099-K.

I thought there would be overlap, but just as I fretted about this possibility, the IRS came up with a solution. So pay attention! If you pay for purchases with a credit or debit card, you are not required to issue a 1099. The credit card companies will do so. No overlap after all. You are only required to issue 1099s for payments made via check or cash. So I won't have to ask Office Depot for its federal ID after all. Because the format of form 1099 will change, we will all have to purchase the upgraded version of QuickBooks or whatever software is used for accounting and 1099 preparation.

It's still going to be a massive amount of paperwork.

________________________________________

Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all 50 states at all levels within the IRS. She is also the author of Taxpertise: The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business the IRS Doesn't Want You to Know, from Entrepreneur Press.

Health care mandate unconstitutional - From NFIB

2010-07-09T09:06:00.000-04:00

It's the time of year for fireworks, barbecues, pool parties and celebrating our nation's freedom. Because of what our forefathers fought for, the American dream of entrepreneurship, prosperity and limitless creative ambition has become a reality for so many people.

But this July 4 brings a harsher reality for Americans as one of our most core freedoms hangs in the balance: the freedom from the government to force citizens to buy a certain product or participate in any one part of commerce.

Three months ago, Congress passed and President Obama signed the health care bill into law. The nation needed health care reform, but this law was not the way to do it. In fact, this law is unconstitutional.

The health care law infringes on every American's right to purchase what they please, including health insurance plans. The law forces Americans to buy health insurance, whether they want to or not, or face a penalty in the form of a fine. Our nation was not founded upon a government that forces its own citizens to purchase something against their will or face a penalty.

Maybe being forced to purchase health insurance doesn't sound so bad to you. But what about if the government forces you to buy vitamins or join a gym, or says we can't eat our barbecue on July 4 because it's unhealthy? If the courts uphold the health care law, there is no limit to what the government will be able to mandate Americans purchase.

This law is not only detrimental to our freedoms but also to our businesses, particularly infringing on small business owners' abilities to manage the day-to-day operations of running their operations. The individual and employer mandates combined with the onslaught of new taxes, paperwork requirements and new rules will dramatically increase the cost of starting and running a small business. And while there are a few provisions that may benefit a limited number of small businesses, the overall effect of the law will do much more harm than good.

A law that harms small business harms the entire nation. Small businesses deserve better than a health care law that was rushed through the legislative process, ignored the Constitution and ultimately will destroy jobs and force some small businesses to close their doors. Along with 20 states, the National Federation of Independent Business is fighting to overturn this legislation and protect our nation's freedoms through a lawsuit against the health care law.

Mandates from a central government authority that forced the people to behave or act in certain ways were exactly what we won our independence from more than 200 years ago. Let's not go back.

Julia Ciarlo Hammond, state director, National Federation of Independent Business, Richmond

Marketing with Social Media

2010-07-07T08:54:00.000-04:00

Social Networking

FacebookFacebook is an international social marketing technique originally adopted by teens to get to know one another. Using the Internet, Facebook provides a venue for sharing photos, information, news, and sales; it allows marketers to have an interactive Web presence with their existing clientele, as well as to encourage prospective customers to try their products. Consumers are encouraged to become "fans," post messages, and encourage their friends to become a friend of the fashion site. Nordstrom, Versace Couture, Chanel, and Saks Fifth Avenue use Facebook as a fashion marketing tool. It is an inexpensive, targeted, and highly effective method for reaching their primary target market.
Annabelle LaRoque"s private brand, LaRoque, has become extremely successful since its inception in 2005. In 2009, more than 1,000 custom-made designs were sold. What is so amazing about this figure is that the LaRoque brand is marketed solely by flyers, Facebook, and word of mouth. LaRoque says that Facebook has become the best marketing effort for her fashion house. Every design is featured on Facebook. The company receives at least five new orders through this medium every week. LaRoque and her customers e-mail each other, talk about fashions, and discuss new fabrics, styles, and designs - all through Facebook. Customers tell her when they are on their way to her store. Facebook "is amazing for my business," she says. "I change my profile picture every day. My picture is always one of my garments. I always tell people what I am doing at the store. Facebook provides a social relationship with my customers."

One of LaRoque's Facebook marketing efforts is the Rainy Day Sale. Any day it rains, the store has a 15-percent-off sale. Customers will log on to Facebook and e-mail Annabelle; they give her the weather forecast and a reminder that they will be in the store the next day. This marketing promotion instills loyal customer behavior and encourages the target market to continually look on Facebook for new ideas and additional contact with the owner, thereby instilling a sense of friendship.

Fashion marketers must always evaluate the success rate of any advertising strategy. As advertising dollars decrease, it is even more important to verify that every advertising strategy reaches its intended audience and that they retain the information. Retention is "a form of competitive advertising calculated to keep a product, services, industry, or view point in the public eye" (Ostrow & Smith, 1988 p. 207). Research on mobile advertising reveals that 40 percent of viewers recall mobile advertising. This recall level is very important in product advertising and encouraging purchase behavior (Ankeny, 2008).

Youtube

YouTube is a social marketing medium whereby videos, television commercials, and photos are posted on the Internet. Average YouTube viewers are 44 percent female and 56 percent male, between the ages of 12 to 17. The popularity of YouTube is widespread. Each month, more than 2.5 billion videos are watched (Woog, 2009). Its viewing frequency makes YouTube and excellent tool for the fashion marketing industry, and yet, despite the enormous number of consumers looking on YouTube on a daily basis, it would be a mistake to use this tool as your primary fashion marketing effort. And integrated fashion marketing effort remains vital to promote merchandise. Integrated efforts include a variety of marketing efforts that repeatedly demonstrate the fashion's benefits to consumers.
YouTube began as a social marketing tool among the younger target market. This marketing media is now used by a wide range of fashion companies. Companies are able to reach their stakeholder by posting television advertisements and fashion show. Designers use YouTube to continually build brand loyalty, market awareness, and product knowledge.

Fashion Marketing: Theory, Principles, and Practice

Mariaane C. Bickle

Pages 86-87

Fairchild Books

Copyright 2011

FRAUD IN THE HOMEBUYER CREDIT - SURPRISE!!

2010-06-24T08:39:00.000-04:00

J. Russell George

The Treasury Inspector General for Tax Administration said in the report that errors and fraud are continuing to plague the First-Time Homebuyer Tax Credit program, despite efforts to curtail previously identified problems. In addition, TIGTA estimates that 14,132 individuals received erroneous credits totaling at least $26.7 million, including 2,555 taxpayers who received inappropriate homebuyer credits totaling $17.6 million for home purchases made prior to the dates allowed by the law. Over 80 of the improper credits were claimed by IRS employees.

The report found that $9.1 million went to 1,295 prisoners who were incarcerated at the time they reported that they purchased their home. These prisoners did not file joint returns, so their claims could not have been the result of purchases made with or by their spouses. Further, TIGTA found that 241 prisoners were serving life sentences at the time they claimed that they bought new primary residences.

“This is very troubling,” said TIGTA Inspector General J. Russell George. “Congress created and modified the Homebuyer Credit to stimulate the economy and help taxpayers achieve the American Dream, not to line the pockets of wrongdoers.”

The IRS said it would take action to recapture the payments to prisoners. "In swiftly making the First Time Homebuyer Credit immediately available to more than 2.6 million homebuyers, a very small number of payments were made to prisoners incorrectly, which the IRS is now taking all steps to recapture and to prevent going forward," said the IRS in a statement.. "The IRS will follow up on every instance of an improper prisoner payment and take swift and appropriate enforcement actions."

The IRS noted that it does not have access to reliable, accurate data on all prisoners and wants Congress to enact legislation that would give it data on all federal, state and local prisoners.

TIGTA acknowledged that the IRS had curbed some abuses of the tax credit.

“The good news is that the IRS has made significant strides resolving problems associated with this program,” said George. “For example, no minors received the credit, according to our report. However, the bad news is that prisoners are allegedly improperly receiving the credit for buying homes while they are incarcerated. While the IRS has taken a number of positive steps to strengthen controls and help prevent inappropriate credits from being issued, our audit found that additional controls are necessary to address erroneous claims for the credit.”

Congress passed a series of legislative provisions that enabled first-time homebuyers to claim a refundable credit on their 2008, 2009 or 2010 individual federal tax returns. The credit is equal to 10 percent of the purchase price of the home, limited in most cases to $8,000. Initially, the credit served as an interest-free loan of up to $7,500 to be paid back over a 15-year period. However, subsequent legislation excluded the pay-back requirement. According to the IRS, 1.8 million taxpayers received $12.6 billion in Homebuyer Credits through the end of February 2010.

TIGTA issued an earlier report in September 2009 that found fraudulent claims for the tax credit, including by minors (see Audit Finds $636M in Bogus Homebuyer Tax Credits). While the IRS has taken steps to improve its oversight of the program since the earlier report, TIGTA’s new report found a significant amount of fraudulent and erroneous payments in the First-Time Homebuyer Credit Program.

In its new report, TIGTA found that 10,282 taxpayers received credits for homes that were also used by other taxpayers to claim the credit. In one case, TIGTA found that 67 taxpayers were using the same home to claim the credit. TIGTA auditors have not fully quantified the total of these erroneous credits, but all indications are that the total will be in the tens of millions of dollars.

Some of the improper payments involve IRS employees, TIGTA found. At least 34 IRS employees claimed the credit despite indications that they owned a home within the past three years. This is in addition to the 53 IRS employees that TIGTA identified in August 2009. TIGTA’s Office of Investigations continues to investigate all of these cases.

At least one lawmaker reacted with outrage to the report. “Last year, we learned that children and persons who did not purchase homes were fraudulently claiming the First-Time Homebuyer Credit,” said Rep. John Lewis, D-Ga., chairman of the House Ways and Means Oversight Subcommittee. “In response, we provided additional authority to the IRS to administer the program. Although I am pleased that the fraud identified earlier does not continue, I am concerned about prisoners claiming the credit. I am also disturbed by 67 people claiming the credit for a single address and millions of dollars claimed by people who purchased homes before the program started. The report highlights the need to remain vigilant in this area. We are committed to working with the IRS and TIGTA to address and eliminate fraud with respect to all federal tax provisions."

TIGTA recommended that the IRS conduct an analysis to identify multiple taxpayers claiming the same home for the credit and perform post-refund examinations to ensure that refunds for the invalid claims are recovered, and identify claims for homes purchased prior to the effective date of the legislation. In addition, TIGTA recommended that the IRS increase its scrutiny of questionable claims for the Homebuyer Credit on amended tax returns and improve the collection of data on the national prisoner population. The IRS agreed with the recommendations.

Maybe We SHOULDN'T Boycott BP Gas Stations!

2010-06-17T09:41:00.000-04:00

Protests and boycotts of the BP brand generated by the Gulf spill aren't likely to have a big immediate impact on BP PLC, but could threaten the thousands of entrepreneurs who have staked their livelihoods on the company's name.

Nearly all the 10,000 service stations around the U.S. flying the BP flag are owned by independent dealers that are obligated under long-term contracts to sell BP-branded fuel. Some worry that mounting anger over the spill's environmental and economic toll could turn the once-highly coveted brand into a liability.

But the actual gasoline the stations sell is a mixture of fuel from multiple refiners or importers, so the direct impact of any slowdown at BP-branded stations is minimal for the oil giant, which can sell excess supplies as private-label fuels to other retailers. Maintaining a brand presence is important to BP, but the marketing segment only represents a sliver of profit for the company.

BP stations in Florida immediately saw consumers turning away after the leak began in late April. Total sales at BP stations there declined 8%-10% in May compared with last year, while competitors benefited from additional traffic, said Jim Smith, president of the Florida Petroleum Marketers and Convenience Stores Association. The magnitude of the sales declines "means that we are going to have a lot of small business owners going out of business," he said.

Hundreds of Facebook pages and Twitter accounts have sprung up dedicated to the spill coverage, and some have organized protests. Some BP station owners are hearing complaints from customers about the spill or motorists yelling as they drive by. But station owners and independent distributors, who bring fuel to the stations, say it is more difficult to quantify the silent protesters who simply drive to other stations to fill up.

"People are kind of melting away," said Jay Ricker, chairman of Ricker Oil, noting that same-store sales across the company's 35 BP stations in Indiana fell 5.4% last week, the first decline seen this year.

Independent fuel distributors, known in the industry as jobbers, are worried about the reduced demand for BP-branded fuel. Station owners are concerned that a drop in motorists filling up their tanks will clip purchases for items such as chips and sodas at attached convenience stores, which account for less than a third of sales but two-thirds of profits.

"The distributor and retailer communities have really become the lightning rod of the consumer backlash, easy targets," said John Phelps, president of Carroll Independent Fuel Co., which supplies 110 BP stores in the Baltimore area. Carroll acquired most of them in the past five years in an effort to bank on BP's strong brand name and its push toward an environmentally friendly image, he said.

Some BP-branded fuel retailers say there has been a noticeable change in consumers' attitudes since the start of June, when images of oil-blackened wildlife and tar balls on beaches heightened the public's anger about the spill.

"It really coincided with the oil coming ashore," said Jeff Miller, president of Miller Oil Co., a family-owned distributor based in Virginia Beach, Va., that supplies about 50 million gallons of BP gasoline annually and owns 16 stations. He has seen gasoline sales fall 2%-3% this month at four BP stations in tourist areas.

BP employees are working with local fuel retailers to launch grass-roots marketing campaigns and are visiting sites to talk to concerned consumers, said John Kleine, executive director of the BP Amoco Marketers Association, an independent organization representing independent distributors. The company's support includes full reimbursement for advertising costs normally split with jobbers. The money frequently goes to on-site promotions at service stations.

"BP looks at what they are doing now as a long-term investment for the brand and knowing that investment will play out over time if you are doing the right thing," Mr. Kleine said.

So far, jobbers and retail stations are largely sticking with BP rather than switching to other brand names, which could require buying out expensive contracts, said Dan Gilligan, president of the Petroleum Marketers Association of America, an industry group.

Write to Naureen S. Malik at naureen.malik@wsj.com

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

Money runs out for small business loan breaks

2010-06-17T09:32:00.000-04:00

NEW YORK (CNNMoney.com) -- In the middle of the federal government's National Small Business Week, two of the most successful Small Business Administration programs are about to run out of money -- again.

The SBA announced Wednesday that it is opening up its Recovery Loan Queue for the fourth time.

For more than a year, the SBA has used money first allocated in last year's Recovery Act to temporarily reduce fees for borrowers and increase the guarantees banks receive on loans made through the agency's lending programs. The SBA's loan volume has picked up sharply in that time, a turnaround agency officials attribute to the stimulus incentives.

But the funding for them ran out in November. Since then, the agency has relied on a series of temporary extensions to keep the loan sweeteners in place. Every time the money runs out, the SBA opens up its Recovery Loan Queue to track applicants hoping to collect the last few remaining dollars.

The latest authorization for some of the loan incentives expires at the end of this month, and the money for them is likely to be exhausted even sooner.

President Obama and many in Congress say they want the loan incentives extended for at least the rest of this fiscal year, which runs through September. But the two chambers of Congress haven't yet agreed on legislation to do that. Result: A series of emergency bills that so far have kept the funds flowing, but only after several brief expirations.

"The stopping-and-starting is problematic," said SBA spokesman Jonathan Swain. "It is a complicating factor for our lenders and our borrowers."

When the funding pool starts to go dry, lenders scramble. Seacoast Commerce Bank, a community bank in Chula Vista, Calif., had pushed five SBA-backed loans through by midday Wednesday.

"It certainly puts a lot of strain on the whole process," said David Bartram, an executive vice president in the bank's SBA division.

It also throws borrowers into limbo. Losing the SBA's fee waiver can make a loan thousands of dollars more expensive for the borrower -- and there are some loans banks are only willing to make if they can get the higher SBA guarantee. Without it, those loans become too risky.

"There are some customers that we are not going to be able to help," Bartram said.

Members of both the House of Representatives and the Senate are pushing for another extension, but it's unclear whether legislation can make it through before the Memorial Day break.

"Nothing gets through Congress easily these days, even bipartisan legislation," said Lynn Ozer, executive vice president of government lending at Susquehanna Bank.

SBA lending is one of the few bright spots in an otherwise barren credit landscape, but it's still a small part. A recent government report estimated that SBA programs account for just 4% of all small business lending.

President Obama this week renewed his push for a new, $30 billion loan fund to seed small banks with capital to boost their local business lending. In a report issued Tuesday, the Congressional Budget Office estimated that the measure would cost the government $3.3 billion over the next five years.

An emergency small business boost that fizzled

2010-01-26T16:44:00.001-05:00

An emergency small business boost that fizzled

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13 tax changes you need to know before filing your 2009 returns

2010-01-23T15:20:00.000-05:00

13 tax changes you need to know before filing your 2009 returns

4 smart fixes for your 401(k)

2010-01-18T13:00:00.001-05:00

4 smart fixes for your 401(k)

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Homebuyer tax credit: No e-file and four-month delays

2010-01-16T14:48:00.001-05:00

Homebuyer tax credit: No e-file and four-month delays

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Working From Home

2010-01-04T13:05:00.002-05:00

By COLLEEN DEBAISE
Adapted from THE WALL STREET JOURNAL COMPLETE SMALL BUSINESS GUIDEBOOK (Three Rivers Press).
So maybe 2010 will be the year that you finally break out on your own. Voluntarily or not.
As we continue to dig ourselves out of the deepest recession since the Great Depression, many of us have lost corporate jobs. Others worry that layoffs are lurking. We're taking on free-lance assignments, contract work and short-term projects -- and getting them done in the extra bedroom, eat-in kitchen or spare corner in the utility room.
Flexibility -- and Distractions
The home is the new hotbed of entrepreneurial activity.
For those who have temporarily joined the ranks of the self-employed, a home office is the natural (and cheapest) place to get work done. For others who are using severance packages to take a shot at entrepreneurship, the home can be an ideal incubator to test out ideas. Many a successful venture began life in a garage (Hewlett-Packard, in 1938) or launched from a living room (LinkedIn, in 2003).
In many cases, it makes sense to grow the business at home before moving into a separate physical location. Other times, your new venture, career or sideline is simply well-suited to be run out of your home. And in a tough economy, a business owner who has rented office space might return to a home office to trim costs.
About 52% of all small businesses are home-based -- representing a broad swath of industries, from software development and mail-order sales to plumbing and general contracting -- according to statistics from the Small Business Administration's Office of Advocacy.
Is it Right for You?
If you're thinking about a new career as a home-based entrepreneur, consider these questions first:
1 Am I passionate about my product or service? The start-up phase is stressful. You'll need zeal to get through the rough patches, especially in the early days when hours are long and initial profits (if any) are lean.
2 What is my tolerance for risk? There's no guarantee of success -- or even a steady paycheck. If you're risk-averse, entrepreneurship probably isn't the right path for you.
3 Am I good at making decisions? No one else is going to make them for you. Consider how you might handle these early decisions: Do I incorporate? Do I advertise? Do I borrow money from friends or family?
4 Am I willing to take on numerous responsibilities? A start-up entrepreneur must juggle many roles -- from chief salesperson and bookkeeper to head marketer and bill collector.
5 Will I be able to avoid burnout? Many entrepreneurs find it hard to step away. You'll need to develop a work/life balance to avoid working seven days a week, losing touch with friends and upsetting loved ones.
What are the advantages of working from home? The easy commute, for starters, followed by the flexibility and the informal dress code. There also are tax write-offs: As long as you use a portion of your home exclusively and regularly for business, you can deduct a percentage of your rent or mortgage interest, utility bills, repairs and other costs.
Yet there are some distinct disadvantages, too. Most frequently cited is the lack of social interaction. For others, the home is one giant distraction. A pile of dirty dishes, a screaming child or even a sunny patio might compete for attention. Often, friends and family who don't understand you are truly working might call or stop by.
The home can be a difficult place to meet customers or clients, especially if you don't have an extra room or an appropriate place for a business discussion. When it comes to hiring employees, some home-based entrepreneurs say there isn't enough space or that it feels too invasive to have staff in the house. Most home-based businesses (about 93%) don't have employees, according to SBA statistics. Often, it's the need to hire employees that forces home-based entrepreneurs to rent space elsewhere. Lastly, the line between work and personal life can easily blur when working from home.
The Ground Rules
As such, it's important to come up with a set of practices to maintain some degree of separation between your work and personal life. Here are some ways to do so:
Have a separate office space. Ideally, your work space is in a separate room, with a door that closes, good ventilation and lighting. The bedroom is the worst place for a home office, as work becomes the first and last thing you see each day. If you don't have a spare room, screens or cabinets can help divide your work and living spaces.
Install office equipment. Make sure you have a phone line and a computer (with high-speed Internet access) dedicated to your business. Install any necessary business software on the PC, and consider other office-grade equipment as needed: copiers, scanners, work desks, filing cabinets and the like.
Set a timetable. Keeping regular business hours (such as 8 a.m. to 5 p.m., Monday through Friday, with weekends off) will assist you in dealing with clients, customers, suppliers and vendors -- and make it easier for you to have a social life.
Fashion work hours around logical periods of productivity, such as when a spouse leaves for work or kids go off to school. If you live by yourself, set a finite end of the day.
Take breaks. A big challenge for home-based business owners is setting aside time for small breathers or lunch. Short breaks can reduce stress, improve productivity and prevent burnout.
Limit household tasks. Be disciplined about not letting household errands and chores interfere with your work day. Consider getting housekeeping help to free up more time and energy for work.
Get child care. While many parents choose to be home-based to be closer to their kids, young ones can easily distract you from work. Consider getting full- or part-time child-care help, or sharing responsibilities with a spouse or family members.
Communicate to others that you are really working. Make sure those close to you respect your decision to work at home. Ask friends and family not to call or stop by during the day, or if they do, to keep it brief.
Chris Russell, founder of the job-posting site AllCountyJobs.com in Trumbull, Conn., says even his wife, who works outside the home, sometimes forgets that he's trying to work. "My wife will say to me, 'Can you go to the dry cleaners for me? Can you start dinner early?' " he says. "I give her a little friendly reminder: 'I'm working, dear.' "
—Adapted from "The Wall Street Journal Complete Small Business Guidebook" by Colleen DeBaise. Copyright 2009 by Dow Jones & Co. Published by Three Rivers Press, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York. Used with permission.
Write to Colleen DeBaise at colleen.debaise@wsj.com

House approves $125M boost for SBA

2009-12-18T15:45:00.000-05:00

Last night, by a wide margin, the House of Representatives passed a $626 billion military spending bill. And tucked deep within that legislation — on page 149 of a 161-page document — is $125 million to resurrect the Recovery Act provisions that bolstered Small Business Administration lending.
Those provisions, which eliminate fees for the major S.B.A. loan guarantee programs and increase the guarantee for the 7(a) program to 90 percent, ran out of money in late November. According to the S.B.A., they’ve been responsible for $14 billion in loans to small businesses and have increased the weekly S.B.A. loan volume by more than 75 percent since last February. The defense bill extends them through February 2010.
The S.B.A. provisions are paid for by rescinding $128 million from the stimulus package to pay for digital television converter box coupons, a program that is now winding down.
As I mentioned, the bill passed overwhelmingly, 395-34 — no doubt in large part because the House then adjourned for the holiday last night. As National Public Radio’s Andrea Seabrook reported today, Republicans who might normally oppose such add-ons (among others: extensions of unemployment insurance and Cobra health insurance subsidies for people who’ve lost their jobs) did not object. “We think that that is perfectly acceptable,” said Bill Young, a Florida Republican. “In fact, I think it’s a good idea in some of the cases.”
In fact, more Democrats than Republicans voted against the measure — and curiously, among the 23 Democratic naysayers was one Nydia Velázquez, the mercurial chair of — wait for it — the Small Business Committee! An aide to Ms. Velázquez said she has “consistently opposed funding for the war,” but that wouldn’t explain why she voted in favor of the original defense appropriations bill, back in late July, which had much the same war funding but no S.B.A. funding.
The bill now heads to the Senate, which also passed an earlier version of the bill, and appears poised to pass this one as well. “The House is out, so essentially we have to pass the bill unamended,” said a spokesman for the Senate Appropriations Committee, noting that current funding for the Defense Department expires Friday at midnight. Look for a vote in the Senate by early Saturday morning at the latest.
With the House now on holiday, action on Mr. Obama’s broader proposals (see here and here) to bolster small-business lending will have to wait until next year.

Are You Sure You Want a Business Credit Card?

2009-12-17T14:30:00.000-05:00

Are You Sure You Want a Business Credit Card?
By Lee R. Phillips

I have students asking about establishing business credit. It’s a myth. As a small business, real estate investor, or general entrepreneur you don’t have a prayer of establishing “business credit.” You will always sign personally for any “credit” your business gets.

The major competitor I had in do-it-yourself asset protection packages went bankrupt a couple of years ago. (Beware! His products are still out there being sold by a half dozen groups. The products are out of date and there is no support – in spite of what you are told.) His company was a ton bigger than mine. It was doing tons of seminars, and the back end sales were huge (ruthless). He had signed personally for all of the company credit cards. That’s the only way you will ever get a business credit card. When his company went bankrupt, he was on the hook for over $10 million. NOT HAPPY! (Not a good asset protection technique either.)

You actually shouldn’t have a business credit card. They are dangerous. Just use a personal card for everything and then pay it each month the way the IRS wants you to.
Your personal credit card is governed by the Credit Cardholders Bill of Rights, but those laws don’t apply to business credit cards. BIG RED FLAG!

Business cards are subject to the whims of the credit card company. The interest rates can be raised at will, even retroactively. Billing cycles can be changed at will. The rules just aren’t the same at all. The real threat a business card represents is the liability of fraud. You lose your card, and you are toast. With a personal card you are liable for $50, but with a business card there is no liability limit. You’re stuck, as a business and personally, because I will guarantee you have signed personally for the card.

So, don’t use a business card. Use a personal card. You will charge everything (personal and business) on the one card. But wait, you can’t comingle money and expect your corporate (LLC) shield to protect you. Comingling money is the number one no no. You’re not comingling money by charging the card. How you make the payment to the card is the issue.

When you get your credit card statement, go down the list and check each charge. (You should always do that anyway.) By each charge, write whether it is business or personal. In my case there are a number of companies, so I have to designate which company the charge applies to. Then add up the business and personal charges. Enclose two checks in the payment envelope; one from your business account and one from your personal account. The credit card company will cash each check and apply it toward the monthly bill. Sometimes we write half a dozen checks and put them in the same envelope.

The IRS actually wants to see the money coming out of each account. If you do it that way, there is no question you are not comingling money. Your asset protection shield is safe. Yes, you could cut one check to the credit card company and then reimburse yourself from your company, but just do the multiple check thing. You can follow the same concept if you pay online. You now have the protection of a personal card, your asset protection shield is intact, and the IRS is happy. Don’t you love a happy IRS?

For other asset protection information and articles of interest, check out my website at www.phillipsassetprotection.com.

To Your Success,

Lee Phillips
LegaLees Corporation
556 East 1400 South
Orem, UT 84097
800-806-1998

Another $1 billion in small business credit vanishes

2009-12-17T13:56:00.000-05:00

By Catherine Clifford, staff reporterDecember 16, 2009: 5:42 PM ET
NEW YORK (CNNMoney.com) -- The small business credit crunch is still deepening: Major banks cut their small business loan balances by another $1 billion in October, according to a Treasury report released late Tuesday.
The 22 banks that got the most help from the Treasury's bailout programs have decreased their small business lending by a collective $11.6 billion since April, when the Treasury began requiring them to file monthly reports. The banks' total lending has fallen 4.3% in that six-month period, to $257.7 billion.

When loan and credit lines dry up, small businesses have trouble launching, expanding, and funding their daily operations. President Obama met Monday with CEOs from a dozen of the nation's biggest banks to pressure them to do more to rebuild the economy they helped blast apart.
"We expect some results," Obama told the bankers. "I'm getting too many letters from small businesses who explain that they are credit worthy, and banks that they've had a long-term relationship with are still having problems giving them loans."
President Obama is planning another banker gathering next week. On Tuesday, he'll host a discussion with representatives of several community banks, according to a White House spokeswoman. The White House has not yet made any additional details available about the meeting and its agenda.
'Wait till next year': Banks are beginning to respond to the heat they're getting from administration officials. Bank of America (BAC, Fortune 500), which whittled its small business loan balance down further every month since April, said Monday that it will loan $5 billion more in 2010 than it did this year.
In the past six months, the bank has reduced its outstanding small business credit balances by $2.6 billion, a 6% decline.
Wells Fargo (WFC, Fortune 500) also pledged to be more active next year.
The bank has clipped a bit more than $3 billion off its loan portfolio since April, a 4% drop. But at $73.5 billion, its small business loan balance dwarfs that of any other bank, and Wells Fargo was the top lender this year through the Small Business Administration's primary loan program.
Next year, the bank will increase its new loan originations by 25% over 2009 levels, to $16 billion, according to Marc Bernstein, a Wells Fargo executive vice president and the head of its small business unit. Wells Fargo is on track to make about $13 billion in new loan originations in 2009, he said.
Like many banks, Wells Fargo says it's had a tough time lately finding creditworthy borrowers. Sales are down for most businesses, and depressed property values means business owners have less equity to borrow against in their homes and other assets.
"It just wouldn't be responsible to lend more money to those people as they are struggling to make their existing payments," Bernstein said of his bank's shrinking loan portfolio. "We want to make as many loans as we possibly can, but we require a reasonable likelihood that it is going to be repaid."
The bank is forecasting a lending pickup next year because it's optimistic about economic recovery. "There have been very clear improvements over the last six months," Bernstein said.
JPMorgan Chase (JPM, Fortune 500) is also hopping on the bandwagon. The bank said last month that it will increase its small business lending by up to $4 billion in 2010 -- though much of that may come through its new Ink line of small business credit cards. The bank said it will hire 325 additional small business specialists to work with customers and source new business.
Other efforts in limbo: President Obama's administration has been trying all year to revive the small business credit market. Most of the initiatives are currently either stalled or out of gas.
In October, Obama unveiled a collaborative effort between the Treasury Department and the Small Business Administration to make capital cheaper for community banks. The administration wants to use the Treasury's Trouble Asset Relief Program (TARP) funds to make ultra-low-interest loans to banks that will use the money to expand their small business lending.
But nearly two months after Obama's announcement, the Treasury is still hashing out the details. "We expect the program to kick off very soon," Treasury spokeswoman Meg Reilly said.
Meanwhile, a popular Recovery Act measure to boost the Small Business Administration's loan programs has run out of money and awaits Congressional action to replenish its funding pool. More than 700 SBA loan applications, totaling $390 million, are in the queue and on hold.
Washington's policymakers are attacking the lending problem from multiple directions, but haven't yet gained traction.
"This is a very hard problem to solve," Treasury Secretary Timothy Geithner said at a small business lending forum in Washington last month. Speaking to a room filled with small business owners and lenders, Geithner was candid about the struggle.
"It's not something we can easily fix," he said. "It takes a coordinated mix of different strategies and policies."

First-Time Homebuyer Credit UPDATE!

2009-11-18T11:17:00.000-05:00

New Legislation
New legislation, the Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
Extends deadlines for purchasing and closing on a home.
Authorizes the credit for long-time homeowners buying a replacement principal residence.
Raises the income limitations for homeowners claiming the credit.
Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.
People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.
Several new restrictions apply to homes purchased after Nov. 6, 2009.
Purchasers must attach a properly executed settlement statement to their return.
No credit is available if the purchase price of the home exceeds $800,000.
The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
A dependent is not eligible for the credit.
The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer’s return. Known as math error authority, this authority applies, retroactively, to credits claimed on original and amended 2008 returns, as well as to claims yet to be filed.
Additionally, there are new benefits for members of the military and certain other federal employees:
Members of the uniformed services, members of the Foreign Service and employees of the intelligence community serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.
In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community.
More information on these new benefits for the military, Foreign Service and intelligence community serving outside the U.S. is available.
General Information
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:
Applies only to homes used as a taxpayer's principal residence.
Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using Form 5405, which you file with your original or amended tax return.
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.
For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the new Worker, Homeownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010. [Added Nov. 12, 2009]
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.

U.S. House Abandons Small Business in Midnight Vote

2009-11-11T18:19:00.000-05:00

FROM NFIB:

Late Saturday night, the House of Representatives passed H.R. 3962, "The Affordable Health Care for America Act," a deeply flawed attempt at healthcare reform.Lawmakers who voted "yes" for the bill supported Washington politics at the expense of supporting the small businesses in their communities.Click here to see how you member of Congress voted on H.R. 3962The bill fails to lower costs, increase choice or provide real competition for America's small businesses. Instead, this bill will actually make things worse, not better.Susan Eckerly, senior vice president at NFIB, said, "H.R. 3962 will punish small employers with mandates, payroll taxes and a new government-run insurance program paid for on the backs of small businesses."Read our statement on how the U.S. House Voted 'NO' on lower costs and 'YES' on higher taxes for small business.Spread the Word: H.R. 3962 fails Small BusinessGovernment mandates are a common theme in the Affordable Health Care for America Act. Download and share our H.R. 3962 worksheet to see if your small business passes the government's "healthcare test."What's next for Small Business? The healthcare debate now moves to the U.S. Senate. We must remain vocal and demand that the Senate address our needs for responsible insurance market reforms and increased competition in the small group and individual private market.As the stakes grow higher and debate becomes more intense, stay tuned for updates on how you can stay involved and make a difference.Sincerely,
The Solutions Start Here TeamP.S.
Read more on how the small business community reacted to the passage of H.R. 3962 in a recent Wall Street Journal article.

We Are HAPPY!

2009-09-18T13:09:00.000-04:00

September 16, 2009, 4:38 pm — Updated: 6:35 pm -->
The Self-Employed Are the Happiest
By Catherine Rampell
Peyri Leigh
Business owners are the happiest workers in America, according to Gallup-Healthways Well-Being Index poll data collected from January to August. Transportation and manufacturing workers have the lowest overall well-being.
Definitions for each of the job categories can be found here.
Some other observations:
The three occupations with the highest levels of well-being are those with the highest household income.
Self-employed workers also work the most hours per week.
Farm workers, fishers and forestry workers exhibit the healthiest habits — good diet, frequent exercise and low smoking rates.
Construction workers and managers/executives score the best on overall health, as determined by measures of chronic illnesses.
Now the question is: How happy are transportation and manufacturing workers in Hawaii?
Copyright 2009 The New York Times Company

Together We Can Do It!

2009-09-07T12:18:00.000-04:00

Let’s work together to boost entrepreneurialism

By Michael Gaiss

Michael Gaiss is a Senior Vice President at venture capital firm Highland Capital Partners. The opinions expressed here are his own.

More than ever, entrepreneurship will continue to play an instrumental role as geographic regions and small businesses contend with today’s rocky business landscape. While the entrepreneurial fire may be well lit, there are opportunities to better coordinate and amplify it into a raging inferno.

Marketing can help this along by playing a key role in nurturing innovation and entrepreneurship. For regions looking to weather the downturn, help small businesses get off the ground and improve their positioning in the long-term, here are a few tips to consider:

1) Connect and enable the next generation of entrepreneurs. Much can be learned from those who have already done it. Barriers preventing the next generation from connecting with the existing entrepreneur community, as well as each other, need to be removed. Gatherings and one-on-one mentoring can be orchestrated to bring entrepreneurs of all stages together to better enable the free flow of ideas and advice. The challenge is to leverage existing institutions such as associations, universities, venture and angel networks, and relevant service providers to get these off the ground, while encouraging the organic emergence of new networking & mentoring platforms over time. As entrepreneurship evolves, what started as forums for sharing insight and advice matures into a vibrant and proven support ecosystem that entrepreneurs can rely on to help get their startups off the ground.

2) Enhance the supporting infrastructure. People and ideas are key pillars of the entrepreneurial foundation. But access to capital, talented employees, and a supportive business environment are what help many to succeed. Creative programs for facilitating the flow of early capital and/or company-building expertise to entrepreneurs and small businesses can be essential through business development initiatives, active angel networks, and seed capital programs. Of course, not everything should be “just about the entrepreneur.” Top talent is continually needed to fuel the realization of the entrepreneurial dream, but to also propagate the exchange of “entrepreneurial DNA” and best practices to prime the pump with qualified entrepreneurs and employees for future endeavors. Open houses, job fairs & boards and proactive initiatives to recruit and retain talent in a region – both on a permanent and internship basis – are imperative.

3) Celebrate and brand success. Success breeds success. Fortunately, we’re not starting from ground zero here. Today’s young generation has grown up with entrepreneurial “hero” figures around them. Bill Gates, Steve Jobs, and Michael Dell have inspired for decades. Sergey Brin, Larry Page, and Mark Zuckerberg are some of the more recent examples of individuals who are showing the way. Putting the spotlight on entrepreneurs, startups and new innovative products is a good thing and must be more prevalent. Regionally focused PR and media can play a big role here. Word of mouth is also essential by bringing additional awareness and credibility for inspiring and encouraging the next generation.

People want to be part of the next big thing. The challenge is to capitalize and best channel this. Breaking down barriers, implementing a stronger supporting ecosystem and branding help to attract the best talent to entrepreneurial initiatives and better position small businesses for success, both now and in the future.

Quote for the Day

2009-09-01T15:39:00.001-04:00

In life and business, there are two cardinal sins.. The first is to act precipitously - without thought - and the second is to not act at all."
-Carl Icahn

Is Your Business Ready for the Flu?

2009-08-31T15:32:00.000-04:00

Businesses weigh steps to shield staff, customers
By TUX TURKEL, Staff Writer August 30, 2009
FLU ADVICE FOR BUSINESSES
• Encourage workers to get vaccinated.
• Get out the word about proper hand washing, cough and sneeze etiquette (into the sleeve).
• Clean and disinfect workstations, doorknobs, other high-touch surfaces.
• Set up and communicate a plan for how to operate with high absentee levels.
• Protect workers at high risk of complications from the flu.
• Allow sick workers to stay at home, without fear of losing jobs.
CDC FLU GUIDANCE for businesses:
www.cdc.gov/h1n1flu/ business/guidance/
At Hannaford Bros. stores, antiseptic cart-wipe dispensers are being refilled more regularly, a basic step the supermarket chain is taking to help protect customers and workers from the potential spread of H1N1 influenza.
Behind the scenes, Hannaford has contingency plans that could outfit workers with gloves and masks, so they could keep stores open during a pandemic.
"We're not near that threshold, and no one's contemplating that will happen," said Michael Norton, a Hannaford spokesman. "But we're an important public institution, and we'd be prepared to do what we need to do."
Hannaford's actions show how, in small and big ways, Maine employers are gearing up to do business this fall and winter under the threat of H1N1 flu. They are contemplating how to deal with high absentee rates, reviewing sick leave and return-to-work policies and taking measures to keep employees and customers from spreading the virus.
No one knows how the swine flu threat will unfold, but a report released this past week for the White House said that half the U.S. population could be infected. That means that, beyond schools and child care centers, workplaces need to be prepared, especially those that provide essential services.
The need is being magnified by the lingering economic downturn, which has led companies to cut staffs and delegate more functions to remaining workers.
The cleaning crews at Kennebunk Savings Bank are doing a more vigorous job disinfecting door handles and ATM keypads. And the bank recently tested its pandemic planning, which would let it consolidate operations in a few branches, expand Internet banking and serve customers at drive-up windows.
"Customers want their money, and they need to have comfort that we'll be there for them," said Dennis Byrd, the bank's chief operating officer.
Much of the planning, not surprisingly, is being done by large employers with more resources. What's unclear is the preparedness of small businesses, those that depend on a handful of workers to keep operating.
"For a lot of small businesses, I suspect it's going to be a slow process," said David Clough, state director of the National Federation of Independent Business. "It may seem pretty theoretical and abstract to them."
COMMON-SENSE STANCE FAVORED
Workplaces of all sizes got some guidance this month when the federal Centers for Disease Control and Prevention released new recommendations for businesses. Many adults spend at least part of their day in the workplace, so public health officials want to focus on reducing the spread of the virus among staff members and protecting higher-risk workers, such as pregnant women, while maintaining business operations.
Specific measures include:
• Encouraging workers to get vaccinated.
• Improving hygiene and surface cleaning.
• Keeping sick workers at home and asking employees who get sick at work to go home.
• Being prepared for workers to be absent while tending to family members or responding to school or day-care closures.
The guidelines are based on a flu outbreak similar to the one last spring. If conditions worsen this winter, the CDC recommends additional measures, including screening workers each day for signs of illness, letting employees work from home and increasing "social distancing" in the workplace – keeping people at least 6 feet apart at most times.
The guidelines are meant to provide a framework that employers can adjust to suit their needs, says Dr. Dora Anne Mills, who directs Maine's Center for Disease Control and Prevention.
"We can tell everyone in society, 'Stay 6 feet away, wear a mask and stay home,' but it's almost laughable," she said. "It would just be too disruptive. So it's a matter of figuring out what makes sense."
L.L. Bean, which has 5,000 employees, 4,000 of them in Maine, is seeking that balance.
The Freeport-based company already offers seasonal flu shots and expects to offer the H1N1 vaccine when it's available. The occupational health department has active programs in customer service and distribution areas to remind workers to wash their hands and cough into their sleeves. Hand sanitizers are scattered around the workplace.
L.L. Bean has paid sick leave, which applies to workers who have to take care of family members. If the flu season is a bad one, the company plans to tailor the policy to cover situations in which ill workers might otherwise be penalized for staying home.
At the same time, Bean doesn't want sensational media reports and misinformation to guide decisions. So it plans to ramp up communication and educational efforts to keep workers updated.
"We're trying to look at it realistically and avoid any hysteria," said Carolyn Beem, a company spokeswoman.
Hannaford is leaning on its team of wellness professionals, supermarket managers and in-store pharmacies to provide information and find the right balance between protecting workers and maintaining operations.
It has 9,200 workers and 54 stores in Maine, and it plans to follow the latest CDC guidelines for sick workers: Anyone who appears to have flu symptoms should be separated from workers and advised to go home until at least 24 hours after their body temperature is below 100 degrees.
"We don't want anyone back unless they're fever- and symptom-free for 24 hours," Norton said.
Kennebunk Savings plans to let some people work from home through secure Internet connections, if necessary. All U.S. banks are now required to plan for operations during natural disasters and pandemics.
Kennebunk Savings got some real-world practice last spring, when the flu outbreak prompted schools and day-care centers in Kennebunk to close.
"The communication piece is key," Byrd, the chief operating officer, said. "It's like a snow day."
BIG CHALLENGE FOR SMALLER FIRMS
The CDC guidelines will be harder to follow for small businesses. Many don't have paid sick leave, which puts extra pressure on some workers to show up, even if they're not well or a child is sick at home, said Clough, the small-business representative.
"The issue for smaller companies is, there's a job that's got to get done," he said. "They don't want to let down other employees or customers, so they'll come to work, unless they're too sick."
That's a concern for Mary Allen Lindemann, co-owner of Coffee By Design in Portland. The company has 40 workers in four locations and can't afford paid sick leave.
She doesn't want sick employees to come to work, however, and is reviewing plans for well workers to swap shifts and cover for sick ones. In a worst-case scenario, she could limit hours at a coffee house, or even close one for a time.
Last spring, Lindemann posted public health signs circulated by Portland's Downtown District that told workers about the need to wash hands and other hygiene tips.
She posted them in restrooms and may put new ones on coffee house bulletin boards – a message for both employees and customers.
"It's definitely on our radar screen," she said. "We want to do what we can as a business so our people can stay healthy."
Staff Writer Tux Turkel can be contacted at 791-6462 or at:

Employer Sponsored Vegetable Garden - Cool Idea

2009-08-20T12:55:00.000-04:00

**It's a little late for us to do it this year - but next summer, maybe!

Vegetable Gardens Help Morale Grow

By RAYMUND FLANDEZ
Some small companies seeking an extra benefit for their employees are turning to their backyard for inspiration: a vegetable garden.
After laying off an employee, cutting hours and discontinuing raises, Sheryl Woodhouse-Keese, owner of Twisted Limb Paperworks LLC in Bloomington, Ind., invested $600 last fall to create a 1,500-square-foot garden outside the recycled paper-products company's office. Now, her four employees can take home their pick of 10 herbs and 22 vegetables.
Haberman
Fred Haberman with his son, Clayton, at his company's vegetable garden in Minneapolis.
"The garden really is a nice benefit, saving them on their food bills," said Ms. Woodhouse-Keese, who estimates the garden has meted out $2,400 in produce this season, from tomatoes to potatoes.
Employer-sponsored gardens can be a cheap and easy way to boost workers' morale, relate better to certain customers and expand a company's health and wellness program. It is unclear how many businesses have them, although the National Gardening Association projects a 19% increase in food gardening this year, as the recession motivates households to trim grocery lists.
For a small employer, a garden can encourage camaraderie among co-workers and become "a valuable asset the organization is offering," said Paul Teslak, a professor of organizational behavior and human resource management at the University of Maryland's Smith School of Business. It requires relatively few resources, can help in recruiting and differentiate a small business from its competitors, he said.
That has been the case for Haberman, a public relations and branding company in Minneapolis, which invested about $10,000 this year to set up a garden for its 30 employees. The company hires part-time help to tend the garden but its employees can work the soil and reap the benefits of beans and beets.
"It's creating that water-cooler effect," said Fred Haberman, the company's co-founder and chief executive. "People have a greater excitement [about] working at Haberman." The company has numerous clients in the organic-food industry, so time at the ranch also helps employees connect with them, he said.
For Lundberg Family Farms, a producer of rice products in Richvale, Calif., the two-year-old employee garden is part of the company's wellness program, which also includes health screenings, daily morning stretches and free flu shots. "We think that it's incumbent upon us to make our employees as healthy as we can," said Rhonda Turner, a human resources manager. "Employees that are healthier use their insurance less."
But it takes time and broad support from employees to make a garden live up to its potential.
Autumn Blum, chief executive of Organix-South Inc., of Bowling Green, Fla., learned that first-hand when an employee who took charge of the garden left the natural health-products company.
Weeds have sprouted. Her employees miscalculated planting time this summer season and had to pull rotting squash and tomatoes after three weeks of rain.
Ms. Blum has already invested about $1,000, and wants to continue the project, which started a year and a half ago. She's sought help from local gardening clubs. "We have to catch up and learn a little bit more," Ms. Blum said.
Write to Raymund Flandez at raymund.flandez@wsj.com

Tax Credits - Energy Efficient Home Improvements

2009-08-05T08:38:00.000-04:00

Who says you can’t get a break when buying green? The American Recovery and Reinvestment Act may give you the break you’re looking for – tax credits for certain energy efficient home improvements and electric vehicles.

Here’s what you can do to get a 30 percent tax break of up to $1,500. Add insulation, energyefficient exterior windows, doors or skylights, or heating and cooling systems. You also get a 30 percent tax break with no dollar limit for alternative energy equipment like solar water heaters, geothermal heat pumps and small wind turbines. And to spruce up your driveway or garage, youcould get a tax credit for buying certain electric vehicles. See how you can make your home more green and save some green in the process.

Visit www.IRS.gov/recovery

United Way Needs You!

2009-07-29T09:31:00.000-04:00

Week Of Caring

United Way of Butler County is accepting applications for its Week of Caring, in September.

This effort mobilizes volunteers to complete hands-on projects that benefit the non-profit community.

Last year, over three hundred volunteers completed seven projects by providing more than $31-thousand in free labor.

Non-profit groups, parks, schools, churches and municipalities can get applications from the United Way. The deadline is July 31st.

Free Legal & Financial Help

2009-07-29T09:29:00.000-04:00

Get Help Now
Butler News

Free legal advice on certain financial matters is available, Tuesdays and Thursdays from one to six, at the Butler County Bar Association office.

That office is in the Cornerstone Commons building, at the corner of Cunningham and Main streets, in Butler.

The counseling is part of the "Get Help Now Pennsylvania" program.

For more information about the program, call 1-888-799-4557 or visit pa.gov.