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IRS Police Force For Health Care Reform

2009-12-01T17:03:00Z

It looks like the IRS will be in-charge of policing the health care reform, when the legislation is past. By 2013 individuals will have to prove they have health insurance or face a tax penalty. The IRS needs to set up a matching program between all health insurers and all taxpayers to insure compliance. Filers that do not have health insurance will pay a penalty when filing their tax return.
The state-run health insurance exchanges, which is scheduled to provide health insurance for the low incomers will need to set up another system with the IRS to validate income requirements and exchange tax credits for the purchase of health insurance.
The IRS will also be collecting fees (penalties) for mid size - large companies that do not provide health insurance to its workers.
There will be a new excise tax on high level health insurance plans. Again the IRS is responsible for collecting and policing this new tax.
Finally the IRS needs to manage and enforce compliance on small businesses for tax credits claimed for providing health insurance to its employees.

If you think you have difficulties now in resolving an issue with the IRS, wait until they are in charge of policing the largest social welfare program in the history of the US. ...

Rounding Hours When Calculating Payroll

2009-11-27T16:50:00Z

A couple of clients have recently informed me that the NJ Department of Labor is requiring employers who track time with a time clock to report the EXACT time on payroll. If they report hours that round to, say, the nearest quarter hour, they are requiring the employer to go back through payroll records for three years and to compensate anyone who was not rounded in their favor. This can be a major administrative headache and it could cost you. It does not matter if you rounded down as many times as you rounded up. The rules state that an employee must be paid for time worked, period.

Bottom line: If you have a time clock, report the actual time worked. Keep the time sheet/card records for at least 6 years.

The Disconnect Between the Stock Market, The Recovery, and Government Statistics

2009-11-04T15:07:00Z

The stock market is up over fifty percent since the low of the year (in March). According the government statistics the economy improved third quarter and GDP was up to 3.5% fueled by consumer spending and the housing market. With all of this good news concerning the recovery why isn't the small business owner seeing these changes?

If we ignore the Wizard of Oz for a moment and "Pay no attention to the man behind the curtain" and look a little deeper we may find some answers. The stock market, more specifically, the S&P 500 is made up of 500 of the largest companies in the US. These large companies do a large percent of their business overseas. Most of the recent increased profits are from these overseas markets. This overseas market is not just the sale of goods but also the manufacturing of goods. So while the stockholders are enjoying the increase of the stock price, it is not doing any thing for the US economy since jobs and spending is being increased in India or China not in the US.

The housing market and consumer spending has recently increased. But has it really, or is the government really doing the spending? The housing market recent increase can be attributed to the $8,000 tax credit given to first time home buyers and consumer spending increase is directly related to the cash-for-clunkers program. So in reality the government is subsidizing and in a way manipulating some of the recovery news that we have been hearing.

For the small business owner, revenues are not necessarily increasing they just aren't decreasing. Although I am not jumping on the recovery band wagon, business stabilization is the first step to a better economic environment. Small business still need to endure another twelve months of stagnation before reality can catch up with the headlines.

The Recession is Over!?

2009-10-13T15:17:00Z

According to high level economists and Federal Chairman Ben Bernanke the recession is over. Really? Are your sales increasing? Are you hiring any new employees? Are your profits increasing? Are you looking at growing your business rather than cost cutting measures? If you answered yes to any of these questions then maybe the recession is over but if you are like the rest of us I don't see it yet.

High unemployment isn't expected to end until the latter part of 2010. So the recession is over but 10% of workers are still out of a job and will be for another year. Doesn't make much sense. That is where the disconnect is between government, large business and small businesses. Government looks at GDP to ascertain if the country is on the road to financial health (or at least repair). Small businesses look at their check book. If there is money left over after they pay their employees and all of the bills then it was a good month. Government looks at TARP funds given to big banks to keep them afloat and states it is working. Small businesses still can't get credit without given up their first born and secured dollar for dollar by a CD.

The recession has ended? You tell me.

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Work Place Conflict

2009-10-07T14:51:00Z

Conflict in the work place is not necessarily a bad thing. Debates, fresh ideas and alternatives concerning various work related issues can bring about innovative solutions. The problem of conflict is often in the process not necessarily due to the disagreement of handling the issues.

Employees may be disheartened in disagreeing with peers or superiors since past conflicts resulted in unpleasant results. The unpleasant results vary from being constantly beaten down, or ends up in emotional turmoil. The process must include a professional atmosphere and attitude along with a strategic thought process. Emotions should take a back seat in the process. Home work should be done to back up suggestions that may counter the current trend. Build on areas were there is agreement and build your case from there. It is easier to begin a debate from common ground then go into areas of controversy then to jump right into conflict. Listen to the other opinion. There may be merit in truly understanding the opposing point of view. Be willing to compromise creating a solution that contains both sides of the argument. ...

Be Leery of Temporary Taxes

2009-10-05T14:32:00Z

In an attempt to quell the public's fear of increased permanent taxes, the government sometimes initiates temporary taxes. These temporary taxes are anything but temporary. More times than not, these taxes become a permanent increase in our tax structure. By the time they become permanent the taxpayer has already accepted the new tax therefore there is not much fanfare or press given to temporary taxes that are extended indefinitely.

An example of this is the Federal Unemployment Tax. The FUTA tax covers the administration of federal unemployment funds and assists unemployment programs in all states. In times of high unemployment the program the fund permits states to borrow from the Federal Fund. Assuming a state has an unemployment program, FUTA tax is an employer only tax of 0.8% of all payroll per employee up to $7,000 of wages per year. The 0.8% includes a temporary surtax of 0.2% enacted by Congress in 1976. Every time this surtax was about to expire Congress would extend it for another specified time period. Most recently the surtax was supposed to expire in 2009, but it was once again extended through 2010. So from 1976 to now 2010 (34 years) we have had a temporary FUTA surtax. ...

Metropolitan Commuter Transportation Mobility Tax (MCTMT)

2009-08-27T14:46:00Z

New York has imposed a new employer payroll tax. The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a .34% (.0034) rate on all payroll retroactive to March 1, 2009. The tax is imposed on all employees who work in New York City (the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island), and the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester.

The first payment to the State will be due October 31, 2009 for the retroactive period from March 1, 2009 through September 30, 2009. After the initial period the new tax will be paid quarterly unless the employer is a mandated PrompTax filier (over $100,000 in NY Withholding liability for a calender year) then the tax is paid with every withholding payment.

For More Information Go to MCTMT

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Costs of Health Care Reform Bill to Small Businesses

2009-08-12T13:17:00Z

As the Health Care Reform Bill is temporarily stalled it is likely that some sort of bill will be passed by the end of the year. It looks like, at a minimum, small business will be faced with either forced employee health care coverage or a $750 tax per worker. The scaled down version initiates this tax on payrolls over $500,000 per year (originally is was set at a lower $250,000 threshold).

We can argue the merits of a Health Care Reform all day, but the question is why are small businesses again being hammered with additional mandates and taxes. This is after the government stimulus package practically ignored any subsidies going the way of the small business. It seems the new legislative mantra is take from the small and give to the very large. ...

Workers Getting More Done in Less Time

2009-08-11T20:06:00Z

According to the Labor Department release on Tuesday regarding worker productively, workers are getting more done with less people. The Labor Department statistic indicated that there was an increase of 6.4 percent in goods and services produced compared to the same quarter last year. The clincher is the total cost of the workforce by employers fell 5.8 percent. One of the reasons for the decrease in workforce costs was due to massive layoffs over the last year. So basically workers are getting more done with less people.
This is mainly a statistic of larger entities surveyed by the Department of Labor, but can easily be seen in smaller companies as well. Businesses just trying to survive were forced into lay-offs, but yet needed production of services or goods to continue. Therefore workers either stepped up to the plate or were let go.
If the recession is truly ending than does that mean companies will begin hiring back everyone they just let go? I don't think so. With high unemployment and consumer spending still in check it will be some time till we see the economy bounce back to what it was three years ago. This may mean more ingenuity by the displaced workers. Meaning that some may find themselves in alternative industries, careers and maybe even becoming entrepreneurs themselves. ...

Small Firms Getting Big Clients

2009-07-06T13:56:00Z

Big business are finally figuring out what small businesses have known all along. That small businesses do a better job, less expensively. According to a recent article in the Wall Street Journal (July 6, 2009 "Midsize Law Firms Pick up Clients from Pricey Giants") large companies are leaving the large law firms and going to small firms to save costs. The smaller firms are getting the job done for much less than their bigger counter parts.

Federal Minimum Wage Increase

2009-07-06T13:37:00Z

The federal minimum wage is scheduled to increase from $6.55 to $7.25 this month. For small businesses this cannot come at a worst time. Already struggling to cut costs, small businesses will now be forced to increase one of their biggest expenses, payroll. Many businesses base their hourly rates on the minimum wage. If an employee with more experience is currently receiving $7.25, after the increase will be boosted up to $8.00 while the newer workers are increased to the mandated rate of $7.25.

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Staying Employed

2009-06-04T13:58:00Z

by By Ariane de Bonvoisin and John Kilcullen--Business Week (Excerpts taken from)

Skills are not the number one reason for job retention in a time of massive lay-offs. In invterviews with employers the following are the major reasons why one employee retains their job and another employee receives the pink slip.

1. Remember: It's not about you right now
Force yourself to focus with laser accuracy on your company's success, not your own. In challenging times, the last thing your employer wants is to cater to you and your fears. They want you to be a selfless, highly collaborative team player who meets and exceeds your commitments. Your presence can't be an energy drain or create work.

2. Become a black belt at change
The most important skill to develop right now is finesse at navigating change. That means flexibility and open-mindedness. Accept whatever is thrown your way. If they change direction (again), shuffle the product mix, add new goals, or refine strategy on the fly, say yes to all of it. Resisting change only makes life more difficult for management and for everyone.

3. Everything is your job
Demonstrate your commitment to the overall success of your team and your company by taking on tasks that fall outside your job responsibilities. Pitch in on packing up the trade-show booth. Manage your own schedule/address book/travel plans. Offer to take notes and follow up after every meeting.

4. Walk away from the water cooler
When straits are dire and headlines scary, the last thing your company needs is negative, gossipy employees who polarize colleagues into an us-vs.-them dynamic. Employers value passionate overachievers whose uplifting attitude contributes to a more energizing team culture. Whatever it takes, keep the negative mindset out of the office. This is your mantra: No complaining, no blaming! Dwell on what can be rather than what can't.

5. "Unwritten Rules" are now engraved in stone
Show up early, stay late. Everyone notices people who leave on the dot of 5 (or before) or take very long lunches or excessive coffee/smoking breaks. Don't get a reputation for being one of those people who takes forever to respond to an e-mail, voicemail, or a simple question. Vigilantly follow up on all assigned action items.

6. Step up — and wear very big shoes
Don't wait for someone else to solve your problems. Your manager needs to hear how the organization can trim costs, manage the supply chain better, find a new client, improve processes, motivate the workforce, and deliver the next big thing. Observe what your competitors are trying and testing, read everything relentlessly, and ask people how you can improve what you do.

Your goal here is to make sure there'd be a gaping hole if you were no longer around. Make the choice every day to do work that really matters to the success of the team and the company. Put yourself in a position that is crucial to the success of a new initiative, or dig in to solve a vexing, long-neglected problem. Maintain a bias for action in every meeting.

7. Transparency is your new trump card
You must be totally transparent as to what you're working on and how it fits with management objectives. There can be no hiding, and no withholding information. If you don't have enough on your plate, say it. Ask to take on more—or better yet, suggest projects you can spearhead that have killer ROI.

The more honest your superiors believe you are, the more likely they are to trust you and keep you close. Being authentic builds relationships, even more than just hard work. Stop hoping no one finds out who you are or what you really do all day. Let people in … or they'll be showing you the door. Employers are likely to keep you around if they see you as a vital associate.

8. Make friends in new places
Human resources and finance are two departments that can have a significant impact on your career whether you realize it or not. They know a lot about you that can influence how you're perceived. Respect those folks, socialize with them, ask for their advice, and make sure you carefully do a little self-promotion. When cuts need to be made, you won't be an unknown quantity to them.

9. Start Tweeting or start packing
Look at the Millennials and see how they work, how they make decisions, and what technology and tools they use. No time for "I don't do Twitter or Facebook." Acquaint yourself with social networks, mobile applications, and commerce platforms to remain relevant. Let them intimidate you and you give your boss reasons to replace you with someone younger and more in the game. Ask a family member to help, take a course, read a book … and dive in.

10. Fit club
Healthy people tend to have better outlooks and are easier to be around. They take good care of themselves, which in turn earns them the respect of others. Fit people often set high standards for themselves both at work and at play. And they just have more stamina, so they tend not to get tired when on deadline, and they don't call in sick as much. They have incredible endurance when others are reaching for that 10th Coke or itching to make that next trip to Starbucks. They are also calmer and more productive. So get your sleep, eat well, exercise, stay hydrated, and avoid excessive caffeine and alcohol. This is an investment that will pay dividends for you and your employer. And yes, your employer does notice.

Rate yourself. Which of these 10 areas are you excelling in, which are you doing O.K. in, and where do you need to change your behavior? The truth hurts, doesn't it? But take the steps to make sure that it's your career that gets rolling, rather than your head.

Chain Guards

2009-04-22T18:53:00Z

As we look around us as small to medium sized business operators, several of our brethren are folding. This is not always due to their own operational issues or financial strength. Supplier can be a major cause. Note some ideas cultivated from CFO.com Editor Josh Hyatt. This is good advice for large and smaller business:

With every link you add to your supply chain, the chance of a disruption rises. But you can take steps to reduce your vulnerability.

Identify Critical Suppliers. A company can't begin to mitigate against risk until it knows where it is most vulnerable. Which disruptions have the potential to do the most financial damage?

Cultivate Multiple Suppliers. Depending on the location, commodity or service; one backup might not be enough.

Form Cross-Functional Teams. Various departments need to be involved in planning for contingencies, including purchasing and logistics.

Check Out Your Supplier's Address. You can't afford to guard against every natural disaster. But if a supplier is situated in a precarious spot — four feet above sea level on the Gulf coast, say — you'd better be prepared. Or choose a different supplier.

Collaborate More. If a supplier makes anything other than a commodity, try to strengthen your ties with a joint venture of some type.

Rethink Logistics. Given what happened with fuel costs last year, it may be worth re-analyzing the total flow of goods in the chain. Price volatility (in food, for example) can also spark labor unrest and slowdowns. Remember to look below the first tier of suppliers.

Incorporate Technology. Managing information in a supply chain may be more critical than managing goods. Knowing where your goods are makes it easier to act strategically to avoid delays.

Keep Financial Tabs. As hard as it may be — especially for your suppliers based in, say, China — it's important to find out as much as you can. For instance, is a supplier paying its bills on time? Are its customers ordering less? Tightening credit lines and rising operational costs will drag some suppliers down. Others may run short on cash, leading them to skimp on quality or materials.

Credit given to: CFO magazine April issue Page 62, By Josh Hyatt Contributing editor of CFO.

What About Us?

2009-03-10T14:30:00Z

What about us? ...Seems to be the new mantra small businesses are chanting during the latest round of government stimulus. According to Treasury Secretary Timothy Geithner the government is not forgetting about small businesses. With the billions of dollars going to the Goliaths of Citicorp, GM and AIG small businesses are feeling left out. The White House stated that $730 million is going to the Small Business Administration to lower fees and is also supporting another $28 Billion in SBA loan guarantees. This may help free up the small business lending freeze. Giethner also suggested that he will expand this program to provide even more financing to small business.

Small Businesses are concerned under the proposed budget of higher income taxes, reinstated estate tax and possibly higher health care costs to encompass a larger percentage of the workers. ...

Save Money on the Gym and get $20 per month Tax Free

2009-03-06T19:58:00Z

Employees who commute to work by bicycle can be reimbursed for up to $20 per month, effective January 1, 2009. It is considered a qualified transportation fringe benefit.

According to IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits, commuters who travel to and from work by bicycle in a qualified month can be reimbursed by employers up to $240 per year for maintaining, repairing, storing, and buying bicycles. A qualified month is any month an employee “regularly uses the bicycle for a substantial portion of the travel between the employee's residence and place of employment.”

An employee who receives the biking reimbursement cannot receive other commuting benefits, including parking or transit benefits, in the same month.

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Avoiding Major Layoffs

2009-03-05T15:17:00Z

Whether it is a matter of pride, or gratification for the past years of hard work, small business owners use mass layoffs as a last resort in order to stay in business. According to an article in the Wall Street Journal by Raymund Flandez, small businesses are trying to buck the layoff trend of large companies. Small businesses rely on each of their individual employees to keep their business running.

An alternative to layoffs that some small business owners are using, is to cut the work week from 5 days to 4 days per week. In this way the businesses can shave costs and still retain their quality workers. Then when the business climate turns around they will already have their dedicated employees to once again work at maximum capacity.

Some perks may have to be cut, including overtime, company cell pone usage, company auto/truck usage and medical insurance reduced. Ask your employees how they would conserve the company's resources in order to save their jobs. A restaurant employee suggested to purchase stainless-steal glasses. In this way, the restaurant saved over $3000 per year in broken glasses. This team approach not only leads to creative solutions but also lends to employee empowerment of their own destiny.

Use The Lull

2009-02-17T21:16:00Z

Small Business Tactical Ideas

While the media spreads the gloom, small business should be taking critical steps to improve their business prospects for the long run, for example:

1. Be a Maker not a Doer; step back from the tasks of the business and develop strategy and be “looking around corners” for the next opportunities that your business can capitalize on.
2. Network with industry players and peers more intensely.
3. Read, read and read some more (or listen to audio books). Develop new ideas and methods.
4. Visit your major customers and vendors personally to share ideas for the future.
5. Get closer to your financing sourcing to understand their current situation. Expand contacts for sources of capital for future growth so they have a sense of your business.
6. Upgrade your staff from the large pool of talent now available in the market place.
7. Expand training avenues for your team.
8. Use the lull to review and implement process improvements that have sat on the backburner.

Many of these do not require additional costs; only renewed efforts. Leadership and vision are key attributes now. Keep the business moving forward even if the top line in not. Challenge your team to focus on the improvements they have control over. Be ready for the upswing, whether in be 6, 9 or 12 months out.

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How Bad is Bad?

2009-02-16T19:21:00Z

Unemployment, industrial production, GNP, and consumer spending are all down. The US is in a recession. These are unfortunate facts in our current economic environment. We can compare this downturn to the 1981-1982 recession but it doesn't even come close to the Great Depression of 1932. According to an article in the Wall Street Journal By Bradley Schiller, an economics professor at the University of Nevada, Reno and author of "The Economy Today" (McGraw-Hill, 2007), Last year we lost 2.2% of our workforce, from 1930 to 1932 the job lost percentage were at 4.8%, 6.5% and 7.1%. Unemployment rates are currently at 7.6%, compared to 10.8% in 1982 and 25.2% in 1932. GDP is expected to decline by 2% in 2009 compared to 1.9% in 1982 and 13% in 1932. Auto production shrank by 25% in 2008 compared to 90% in 1932. There were approximately 24 bank failures in 2008 compared to 10,000 in 1932 and 3,000 in 1987-1988. The stock market declined by about 40% in 2008 compared to 90% in 1932.

Small businesses have enough challenges just trying to adapt to the quickly eroding business atmosphere. Exaggerated economic claims and the media hysteria exasperates the already declining consumer confidence that is needed for an economic recovery. ...

Stimulous Round 2

2009-02-13T14:20:00Z

The Senate is about to approve the second round of a stimulus package. The thought process is that it is better for the government to do something rather than nothing. So what is in it for the small business? Directly not much unfortunately. We have to go back to the old trickle down theory to get any kind of indirect benefit. If government funding helps large businesses retain employees, and if the government successfully creates jobs, and if the government helps free up credit among banks than maybe all this will have a positive affect on the economy and some of this will benefit small business. Most of the government backed job creations will go to larger business. So unless you are a contractor that builds bridges, or installs solar panels for government buildings the feds are not going to be your customer.

Goverment Bailouts

2009-02-13T14:18:00Z

I have recently been disturbed by the United States of America and the Americans who live here. Our country is treading down an irresponsible course with our decision to lend a hand to dieing companies. The most recent mindless extension of funds is to the lender GMAC. The terms in the GMAC bailout include 5 million preferred shares in stock for a 5 billion cash injection. GMAC stock closed recently at $3.50 a share. If you do the math the US Government is currently losing $4,982,500,000. The price of this stock will have to increase unimaginably higher to cover the initial investment. The entire country including the mainstream media is labeling this a government bailout. Unfortunately we are all blinded to the fact that this is a tax payer bailout not a government bailout. Personally if the government is just going to essentially give money away, let’s give it to a charitable cause that will do some good for this nation instead of pumping funds into dieing companies. The government is making investments for preferred shares in companies whose financial futures are wobbling on the brink of destruction. Does any of this make sense? I offer this option to our government, take the money you have been investing in bankrupting companies and dump it onto the Las Vegas casino floor. I would bet that your odds of creating a positive return are greater on blackjack than some of these companies. My only question is where does this end? Who is going to bailout the US Government? The truth of the matter is nobody needs to bailout the US Government because they hold the keys to the printing press and will fire up a new billion every time they need it. Of course, this will continue to drop the value of the dollar across global markets, but why should the US government care, the American people do not seem too. This is absurd, and needs to stop. Americans are not standing up against our government. Have we lost our will to fight? Have we lost our say in democracy? What gives the treasury department the right to spend our money to line the pockets of corporate CEOs. I have had enough of them, and I have had enough of the American people who sit back and say nothing about it. Write to your congressman, get involved, and stand up for your right to believe in an America who cares about its people.