Good News for Small Business

As you probably know by now, President Bush signed the economic stimulus package into law yesterday.  Here’s a press release from the Small Business Administration on the new legislation"

WASHINGTON:  Steve Preston, Administrator of the U.S. Small Business
Administration, made the following statement today on the signing of HR 5140,
the Recovery Rebates and Economic Stimulus for the American People Act of
2008:

"This bill is a win for small businesses in three major ways: tax rebates will
stimulate short term consumer spending
, some of which will flow to smaller
companies; a 50 percent bonus deduction on new equipment that normally
would be depreciated over the long term
; and, it increases the limit on
expenses that small businesses can deduct from annual income.

"€œSmall businesses create  2/3  of  the  new  jobs in our economy and account 
for  half  of  non-farm  GDP. It is vital for the nation that small businesses
stay healthy and growing.
  HR 5140 will give them a much-needed boost which
will enable them to expand their companies and create new jobs.

"€œOn behalf of small business, I applaud the President for his leadership and
Congress for moving with such swiftness and bipartisanship. 

"€œWe continue to urge Congress to proceed with other vital small business
issues such as permitting health insurance pooling and deductibility, opening
up new markets with Colombia, Peru and South Korea, and guaranteeing that
taxes on small business earnings and investment don’t rise."

Six Resources to Help with Your Taxes

Irs
I know you hate to think about it, but April 15 is just 2 1/2 months away.  In spite of all the talk about tax relief, Americans still have to go through the annual ritual.  This year the big day falls on a Tuesday so we don’t get an extra day like we did in 2006 and 2007, when the 15th fell on the weekend.

To help make an unpleasant job just a little easier, Mine Your Own Business has put together a list of helpful links to tax preparation resources. 

First up is the site of the IRS itself.  Their small business section offers a number of publications and on-line forms for your tax-paying pleasure.

At Inc.com, you’ll find links to a number of "How to Guides".  One in particular, "Tax Strategies" might be just what you’re looking for.

DHL (yes, that DHL) has a "Business Resource Center" with helpful articles on lots of business topics.  Under "Financial Management", there are several links to articles that apply to the tax season, including one on 2007 changes.

A search of the Small Business Administration web site for "tax tips" will take you to more articles than you can possibly read, so chances are good that you’ll find something there that you can use.

Small Business Notes is a nice site with a lot of good links, both to articles on the site and to outside resources.  Check it out.

The Business Owner’s Toolkit covers the subject of taxes with a lot of links to specific tax issues.

Finally, if the idea of doing your own taxes makes you want to hide under the bed until April 16, Entrepreneur.com offers advice on how to select a good tax preparer.

If you know of any other good tax-paying resources, let us know.

President Bush’s Economic Stimulus Plan

President_bush
The President has just presented his proposed economic stimulus plan.  He says he’s confident that the plan will get bipartisan support from both houses of Congress.  As the day goes on, I’m sure we’ll hear plenty of analysis and commentary, but in a nutshell, here’s what he said.

  • The stimulus package must be big enough to make a difference.
  • There has to be immediate, broad-based tax relief.
  • There should be no tax increases.

He’s calling for tax incentives for businesses to increase capital investment.  He particularly singled out small business.

He also wants direct, rapid income tax relief for the American people. "Let Americans keep more of their own money."

He also called on Congress to maintain the current "temporary" tax reductions which are set to expire in 2010.  He believes that uncertainty about the tax cuts is hindering investment.

Finally he said these are temporary stimuli to jump start our "fundamentally strong economy".

Now we’ll see how "bipartisan" our elected employees in Washington really are.

An Excellent Resource for Small Business

From a press release from the Small Business Administration:

"WASHINGTON – Business.gov, the official business link to the U.S.
government, has launched new search features and expanded content that
make it easier for small business owners to find essential information they need
to run their operations, including forms, licenses, permits and regulatory
information from federal, state and local governments.

In addition to federal government resources, business owners now have
access to over 9,000 state, territory, county, and city government Web sites
providing information on starting and managing a business while complying with
regulations from all levels of government."

Business_dot_gov
This is more than hype.  In fact, the announcement is a little low-key.  This new site is an excellent resource for independent businesses.  As the release states, there are links to local agencies that you get to by clicking a map of the United States.  The links include local SBA offices, Small Business Development Centers, local SCORE (Service Corps of Retired Executives) offices, and more.

Under "Licenses and Permits" (left hand column of the home page), click on your state to see a description of everything you need to start and run a business including links to the appropriate agencies.  As they say on the infomercials, "But wait!  There’s more1"  There are "Small Business Guides" (tab at the top of the page) providing information on dozens of topics including "Human Resources", "Advertising and Marketing", and many more.

Under "Government Forms" you’ll find links to just about every form you’ll ever need to run your business including instructions for filling them out.  There are also links to archived transcripts of "Online Business Chats" featuring experts on small business issues.

There are also a number of free on-line courses specifically for small business owners which are listed on the home page under "Free Online Training".

All-in-all, this is an excellent web site for anyone who owns or is thinking about owning a small business.  Here at MYOB, there’s nothing we like better than free stuff and there’s a lot of it here.  We’ve added a link to the home page on the left and suggest you bookmark it for future reference. 

Year-end Tax Help from Your Uncle

From the Small Business Administration:

"Thomas P. Ochsenschlager, Vice President of Taxation with the American Institute of Certified Public Accountants, will host the December Web chat on "Year-end Tax Savings for Your Small Business." Chat participants will be able to get tax tips and answers to questions on year-end tax preparation for small business owners. Ochsenschlager will take your questions to help you learn more about the importance of year-end planning."

Check out the SBA’s web site for more information on this FREE web chat which takes place Thursday, December 20, 2007 at 1:00 p.m. Eastern Time.  You can submit questions in advance by clicking on this link.

The “T” Word

Here it is, just two days before Thanksgiving.  Here in the Midwest it’s a beautiful day.  The sun’s shining.  It’s almost sixty degrees with the high expected to be in the seventies.  Why would anyone pick such an otherwise glorious day to bring up the subject of taxes?

Sorry, but I ran across some good information today that you may find helpful.  And face it, as much as we’d rather not think about it, taxes are an everyday fact of life.

Work.com is a pretty good web site that offers what it calls "Guides" on a number of topics relating to business.  The site contains "user generated content" which means there are lots of different authors.  Frankly, some are better than others.  One of today’s Guides is called Tax Tools and Calculators for Small Business.  The author, Kay Bell, is a professional journalist who’s contributed to the site before.   Her articles are always good.

Ms. Bell offers some excellent tips that apply to both your business and your personal taxes, but the real value of the piece is in the links to places that offer free calculators and other tax helps.   I’d definitely check this one out and bookmark it for future reference. 

On Protecting Personal Information

There’s an interesting article on PC World.com about a provision of the 2008 federal budget that would require on-line businesses like eBay and Amazon.com to collect personal information on their customers and turn it over to the IRS.

Here’s the thing:  The Treasury Department is concerned that it’s losing tax revenue because of unreported sales over the online services.  If it passes, the new regulations would require the services to collect and report sellers’ information including name, address, tax payer ID, or Social Security number.  This information would be turned over to the IRS only if the seller conducted 100 or more separate transactions worth $5,000 or more.

Trouble is that there’s no way for eBay or Amazon.com to know, in advance, how much business a seller is going to to so most likely they would collect the information on every seller, regardless of their sales volume.  Since so many on-line sellers are individuals, not commercial enterprises, they don’t have tax payer IDs.  That means the creation of gigantic private databases of people’s Social Security numbers.   

Obviously it’s not a good idea to have such a huge underground economy of people selling merchandise on-line and not paying taxes.  It’s bad for the government and it’s bad for competition.  On the other hand, the fewer places my personal information is stored, the better. With so many stories of hackers getting into sensitive databases lately, there must be a better way.

April 15…….

is a day that normally strikes fear into the hearts and minds of mortal men and women.  If you woke up this morning thinking "&#@^*!, it’s tax day!", you can relax.  Thanks to the calendar and your Uncle Sam, you have another day to put it off.  This year taxes must be postmarked by midnight TOMORROW, April 17.

For those of us who are dedicated procrastinators, this gift from the government is at least equal to the three extra weeks of Daylight Savings Time we received just last month.   Hopefully this unprecedented  show of generosity from our employees in Washington D.C. is just the beginning of a kinder, friendlier government.

Or not.

 

Have a great Monday!

Tax Reform?

There’s an article posted this week on Small Business Review that you should take a look at.  The U.S. Treasury Department has proposed sixteen items as part of its 2008 budget.  Seven of them will increase reporting requirements for business. The object is to raise revenues but the resulting paperwork could be a nightmare for small operations.

For example, businesses are not currently required to file a form 1099 for payments to corporations.  That would change under the new rules.  It’s said that it could double or triple your paperwork requirements.  Another controversial proposal would require verification of Taxpayer ID Numbers of all contractors before payment can be made.

Another rule that could impact you is one that would require credit card companies to report your credit card sales to the IRS.  On the surface that might not seem terrible, but considering the time lag between the sale and the time payment is received, transactions that span the end of the year could make it appear that something is wrong, triggering unnecessary audits.  Also, the measure would be very costly for the credit card companies, costs that will most likely be passed along to their customers.  That would be you. 

Congressional approval of the Treasury budget is far from a sure thing.  According to the St. Louis Post Dispatch,  the current IRS regulations take up a whopping 67,000 + pages (That’s not a typo. The IRS regs really are more than sixty seven thousand pages long.) additional requirements may have trouble getting passed.  On the other hand, the federal deficit is huge and Congress is going to be looking for ways to increase revenues.

We’ll keep an eye on this for you and let you know what develops.

Signs of Spring

It’s spring!!  Flowers are blooming.  Birds are singing.  "Real" baseball starts this weekend.  The days are longer thanks to mother nature and the federal government.  What could possibly spoil a wonderful season like spring? 

Sorry to bring this up, but the same government that brings us an additional hour of evening daylight is expecting to hear from you in the next two weeks.  It’s time to make our annual contribution better known as income tax.

I truly believe that most Americans have no problem with paying taxes.  Politics aside, we live in a pretty great country and somebody has to pay the bills.  That’s you and me.  Unfortunately our tax system has gotten entirely too complicated.  And the cost of that complication hits small business particularly hard.

According to The Small Business Advocate, a publication of the Small Business Administration, "Small businesses with fewer than 20 employees spent $1,304 per employee to comply with federal income taxes in 2004.  This amount is almost two times as much (per employee) as businesses with more than 500 employees spent."

The reason for this disproportionate spending?  The level of complexity of the tax code.  Big companies spread the costs of record keeping and other compliance-related expenses over a large number of employees where the smaller employer, who has fewer workers, can’t do that.  Just keeping up with the year-to-year changes can be a daunting task, especially for someone  who wears as many hats as the small  business owner.

According to the article, "The lack of emphasis on simplicity in recent times has led to a bloated tax code where compliance costs have become a significant portion of many taxpayers’ overall tax burden."  The theory is that the more complicated the tax code becomes, the fairer it is.  Every time a new deduction is added, the code gets a little more complicated.

So, what if you wade through all the forms, figure out what you owe, and you can’t pay?  Is there an orange jumpsuit in your future?  According to an AP article in today’s St. Louis Post Dispatch, there are options.  Paying your taxes with your Master Card isn’t the best choice.  The interest rates are way too high.  Tapping into your retirement account or taking out a second mortgage on your home are also options.  These can also be dangerous. 

The IRS wants your money, not your freedom.  They want you to keep the business going so you can pay more taxes next year.  If necessary, they’re willing to wait for you to pay up.  They offer installment plans for taxpayers short on cash.  Of course there are costs involved, so weigh your options carefully.

Even more important, if you find yourself in such a situation, it’s critical that you get the help you need to avoid a similar situation in the future.