The Affordable Care Act, the health reform legislation passed into law a year ago, is giving small businesses important tools to help them compete, create jobs and drive economic growth. It’s critical that small businesses take full advantage of the new benefits and consumer protections of the law and understand the positive impact health reform will have on their operations. The SBA and the entire Administration is committed to working with the small business community to ensure that they know about tools in the Affordable Care Act that will help small businesses start-up, succeed, and grow.

Already, the Affordable Care Act is providing tax credits of up to 35 percent of employee premium costs, helping small business owners reinvest thousands of dollars to grow their business and create jobs at tax time.

Eligibility for Tax Credits

Generally, tax credits are available for small business owners who:

· Have started or continued health insurance coverage for employees in 2010

· Contribute at least 50 percent of employee premiums at the single coverage rate

· Have fewer than 25 full-time employee equivalents (part-time employees are counted proportionately)

· Pay their employees an average of less than $50,000

The IRS has provided a simple three-step worksheet (below and at www.irs.gov/pub/irs-utl/3_simple_steps.pdf) to help determine your eligibility:

Four million of the nation’s six million small businesses that employ workers could be eligible for these credits. For small businesses, the maximum tax credit is 35 percent of the business’ premium costs, and for small nonprofit organizations, the maximum credit is 25 percent. On Jan. 1, 2014, these rates will increase to 50 percent and 35 percent, respectively. These credits phase out for firms with average wages over $25,000 and for firms with the equivalent of more than 10 full-time employee equivalents.

Effectiveness of Tax Credits to Date

While nearly all firms with more than 200 employees offer health insurance benefits, smaller U.S. firms are much less likely to offer coverage because their premium costs are about 18 percent higher than the same coverage for larger employers. They also have less purchasing power in the health insurance marketplace. Early signs show that these tax credits are stimulating activity in the health insurance market.

A Los Angeles Times report of increased market activity in the small group market at the end of 2010 included three examples of how these tax credits show initial signs of promise:

• UnitedHealth Group (Minnesota) added 75,000 new customers who work for businesses with less than 50 employees
• Coventry Health Care (Maryland), an insurer that focuses on small businesses, signed contracts to cover 115,000 new workers, an increase of 8 percent.
• Blue Cross Blue Shield of Kansas City reported an increase of 58 percent in the number of small businesses buying insurance.

Also, a report from the Lincoln Journal Star in February noted:

• Blue Cross and Blue Shield of Nebraska reported a 34 percent increase in health insurance sales to small businesses for 2011.

In addition, other insurers such as CareFirst Blue Cross Blue Shield of Maryland have announced that they are specifically marketing their products to small businesses due to this credit.

Small businesses themselves have also reported on how these tax credits are helping them provide coverage to employees. Just a few examples from around the country include:

• Mark Hodesh, owner of Downtown Home and Garden in Michigan, was able to claim $15,000 on his tax return this year and hire an additional employee.
• Kiersten Firquain of Bistro Kids in Kansas City was able to start providing coverage to her chefs last year for the first time.
• John and Angela Sweet of Niedlov’s Breadwords in Tennessee had been wanting to offer insurance for some time, and when these tax credits made it more affordable, they “jumped at the opportunity.”

If you are interested in learning more about various health insurance plans that are available in your area, I encourage you to visithttp://finder.healthcare.gov where you can quickly compare them.

2014: Higher Credits and “Exchanges”

In 2014, the tax credits for small employers who provide coverage will increase from 35 percent to 50 percent. At the same time, small business owners should be aware that states will simultaneously roll out small business “exchanges” that will allow employers with less than 50 employees to band together to leverage their collective buying power, reduce administrative costs, and negotiate fairer rates from insurance companies. These exchanges will be available online, and an independent study suggests that they will help reduce costs and increase competitive pressure on insurers, driving down premiums for small businesses by up to 4 percent.

Repeal Efforts

The President supports eliminating a bookkeeping provision that would unfairly burden small businesses. The Administration continues to work with Congress to repeal the expanded 1099 reporting requirement, which is too big of a paperwork burden on small business owners. Repealing the entire law or preventing key provisions from being implemented, however, would hurt small businesses by:

• Raising taxes on up to 4 million small business owners who provide employees with health insurance coverage
• Preventing the formation of a marketplace where insurance companies compete for your hard-earned dollars
• Stifling the ability of entrepreneurs to break out on their own to help America compete in the 21st century

The Affordable Care Act uses market based incentives, such as tax cuts and cost savings, to make quality, affordable health insurance available to all Americans. There is no requirement, mandate, responsibility, penalty or fee of any kind for small businesses with less than 50 workers who choose not to provide insurance, which represents 96 percent of all U.S. firms.

The President has also backed a bipartisan proposal to allow states to implement alternatives to the law beginning in 2014 if those alternatives are able to meet the shared goals of making health insurance affordable and accessible to all Americans, including those with pre-existing conditions.

Instead of re-fighting the battles of the last two years, let’s fix what needs fixing and move forward.

Access to affordable health care is the number-one concern for small businesses across the country. I have worked with many small businesses over the years that are looking at every possible option to offer coverage for their employees, who they often consider to be members of their own family. In 2009, I met a small business owner in New Jersey who said that the day she was able to provide health insurance coverage was the day she knew that her business was a success.

I encourage you to work with your tax adviser, accountant and/or bookkeeper to actively explore the tax credits, exchanges, and other provisions in the Affordable Care Act to help you grow your business and create jobs.

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Register Early!

For “SOURCE CONNECTION”
April 14, 2011

In conjunction with the
US Army Corps of Engineers/South Pacific Division 10th Annual Veterans and Small Business Training and Outreach Conference
April 12 – 14, 2011

John Ascuaga’s Nugget – Sparks, NV

• $150 – Three-Day Conference Registration, including “SOURCE CONNECTION”
• $30 –  “SOURCE CONNECTION” April 14th event only 8:30 – 11:30a.m., continuing 1:00 – 4:00 p.m. (No meals or refreshments included – you may purchase Lunch Ticket for $10.)
• $10 – Lunch Ticket for April 14th, 11:30 – 1:00 p.m., Exhibit Hall

Register at: www.implanners.com/veterans

Jonathan Ortmans is an author at www.entrepreneurship.org who wrote an article recently that recapped the role of entrepreneurship in 2010 and why it is important to economic recovery.  Here is a blurb and we suggest reading the whole storey.

This past year brought new, sobering data that defied conventional wisdom that all businesses contribute to job growth at least to some degree. “The Importance of Startups in Job Creation and Job Destruction” by economist Tim Kane documented that net job growth occurs in the U.S. economy only through startup firms. While older companies lose 1 million jobs annually, new firms add an average of 3 million jobs in their first year. Moreover, during recessionary years, job creation at startups remains stable, while net job losses at existing firms are highly sensitive to the business cycle. Simply put, entrepreneurs are the primary engines of job creation in the country. If you zoom in further, you will see new firms that scale—those that grow in revenues and jobs—are especially important. More precisely, the top 1 percent of all companies generates 40 percent of new jobs, and the vast majority of these firms are no more than five years old. If we look even closer at the most rapidly growing young firms (those between ages 3-5 years), they represent less than 1 percent of all companies in the economy, but account for 10 percent of new jobs created each year (see High-Growth Firms and the Future of the American Economy)….

read the full article here

By Dr. Elliott Parker and Dr. Tom Harris of UNR

Since Nevada has a very small government and was the fastest-growing state for decades, did the former cause the latter?

It’s not likely.

Examine the statistics comparing the real growth of a state’s GDP (gross domestic product) to the share of GDP provided by state and local governments for all states during the past 45 years, and you will find no correlation. States with relatively smaller governments have not tended to grow any faster than other states.

There is, however, a strong statistical relationship between a state’s real GDP growth rate and the lagged growth rate of its state and local government. A fall in state and local government spending in one year tends to be followed by lower economic growth in the next year.

Why is this? One way to look at it is that state and local governments provide essential public goods that cannot be adequately provided by the private sector, such as roads and education. While higher taxes might create some disincentives for private investment and growth, many of these public goods are necessary investments for the private sector to function.

Read the rest of this entry »

By Marcel Fernando Schaerer, University of Nevada, Reno

This past year was a rough year for many businesses. As we ring in the New Year, it’s important for business owners to first take time to celebrate and commend themselves and their employees for weathering the lingering economic storm, and to thank their loyal customers who helped keep them afloat.

Then, it’s time for business owners to plan for the New Year and make some “business New Year’s resolutions.” As with all New Year’s resolutions, it’s best to choose just a couple of concrete goals that can make the most impact, and focus your efforts on those. Here are some options that I have been suggesting to Hispanic business owners, with whom I work each week. Some are simple to implement, while others will take more time and effort.

– Data indicate that approximately 35 percent to 50 percent of utility expenses for small businesses are due to lighting. Energy consumption and costs can be decreased by simply changing lighting to LED and CFL bulbs.

– Explore other ways to incorporate energy-efficient technologies into your business by getting a free energy evaluation of your business, offered by the Business Environmental Program at the University of Nevada, Reno, 775-689-6676. An energy evaluation provided by an outside resource, and at no cost, is just a smart idea. Energy can be saved by assessing your furnace, air-conditioning units and appliances; replacing machinery and equipment; and investing time in training employees to be energy-conscious as part of your business culture.

– Reduce unnecessary inventory. New systems and just-in-time inventory control can find useful applications in small businesses.
– Reduce specific costs, such as cell phones, postage, paper, copying, and vehicle expenses, by establishing more efficient control systems. New technologies are available that make these systems fairly easy to establish and maintain.

– Focus on improving customer service. Train your employees to greet every customer with warm expressions, go out of their way to please each customer, and always finish each interaction expressing gratitude for their business.

– If you’re not already doing so, explore the world of social media, using Facebook, Twitter and other social media to market your business.

– If appropriate, consider offering online purchases if you’re not already doing so. More and more, people are gravitating toward the convenience of online purchasing, for both business-to-business and personal shopping.

– Read about global market trends and try to differentiate your products based on these trends. You may find that your company offers some unique products, and that by putting some time and effort into exporting a few of these products, you could considerably increase your profits.

Marcel Fernando Schaerer is the Hispanic business development manager at the Nevada Small Business Development Center in the University of Nevada, Reno College of Business. As part of his outreach, he hosts and co-hosts with Sandra Rentas call-in radio programs that focus on tips for Spanish-speaking small business owners. In Reno: Radio Innovacion, 1590-AM, 2 – 3 p.m., Tuesdays. In Las Vegas: Radio La Voz de la Comunidad 1340-AM, 3 – 4 p.m., every other Monday (Jan. 10 and Jan. 24).

It’s a sign of the times when, as counselors at the Nevada Small Business Development Center, we either remind our clients of the importance of a strong online presence or are approached as to how to tackle this challenge. While businesses seem to understand the need for a website and social media profiles, they don’t often have the in-house knowledge to build or use them effectively. Thankfully the tools currently available make building and managing a website much easier than it’s been in years past, but there’s still a knowledge gap to overcome.

With the rise of social media as a viable communication and advertising tool, companies have changed their marketing campaigns to include (and sometimes rely upon) social media and interactive blog websites. This paradigm shift in advertising and communication takes advantage of nearly free advertising tools and, perhaps more importantly, does well to satisfy the two biggest “recommenders” out there – Google and your friends.

We survive on recommendations

We trust Google to recommend the right websites. We tell them what we’re looking for and (after a few milliseconds of complicated algorithms) they serve up what they think we’ll like, and they do a good job. Remember they’re a business too, and if they didn’t do it well we’d all have switched to another search engine. Thus it’s important that we make Google happy with the information on our websites so that Google will choose to present our site to a searcher when related search terms are used.

Making Google happy is simple, but it takes work. Because Google knows that what people want is valuable information, your site better have that. There are techniques to do this, but providing consistent value is the essence of “organic” search engine optimization (rather than artificially increasing your search result rank by playing with keywords and meta tags).

Apart from Google, we trust our peers (especially our friends but even people we don’t know) to give us personal insight into the value of a product based on their thoughts and experiences. In fact, we trust peer reviews much more than traditional advertising. Social media allows for this desired exchange of information by providing everyone who signs up with the ability to connect, chat, comment and recommend.

Theory in practice

So while all the tools are there, the understanding required to use and run a website and social media profiles comes with practice. We felt like while we could continue just talking to our clients about how to use a program, we didn’t get traction if they weren’t physically doing it themselves.

So we developed a Digital Marketing Workshop to teach the basics and give people hands-on experience. The class is two hours per week for four weeks, and we walk our students through the entire process of purchasing a domain name, hosting, and building a WordPress driven blog-capable website. We show them how to integrate their social media profiles to drive traffic to their sites, and then how to satisfy visitors once they get there.

It has worked really well (we’ve taught four series over the last year), and many of our students are actively using their websites and social media profiles for their businesses. And while you can’t expect to be an expert after eight hours of class time, you can understand the basics and run your own site to achieve significant improvement in consumer awareness and communication. Additionally, we’ve given our students insight into the web-building process so that if they choose to deal with web designers they can have a better chance to not only get the website they want (with the features and style they prefer) but save money as well.

Here’s the link to the workshop.

If you have any questions, feel free to call the NSBDC (784-1717) and ask for Ben or Chuck.

Are you interested in contracting with the Federal Government to support wildland firefighting efforts? Plan now to attend a workshop in the Spring of 2011.

The Bureau of Land Management and it’s partner agencies are hosting a series of workshops across Nevada starting in February.

• February 10, 5-7 PM, Winnemucca BLM office
• February 12, 10-12 AM, Elko BLM office
• February 17, 5-7 PM, Las Vegas BLM office
• February 19, 10-12 AM, Ely BLM office
• March 9, 5-7 PM, Carson City BLM office
• March 23, 5-7 PM, Reno Forest Service Office

This is all the information we have available at this time, as more details, addresses etc. become available we will update this post.

Vendor Sponsors for this event include: Bureau of Land Management, Humboldt-Toiyabe National Forest, Nevada Commission on Economic Development, and the U.S. Small Business Administration.

The Reality of Lending – “The New Norm”

A feature article re-posted from the online edition of  Nevada Business – The Decision Makers Magazine.

A Nevadan needs $120,000 to open a used sporting goods store but can’t get a loan from a bank. Either he gives up the idea or resorts to creative financing, if possible. In the end, he puts up $40,000 of his own money, gets his landlord to cover $15,000 of tenant improvements, and obtains a $40,000 loan from the state’s micro-loan lender and a $25,000 loan from a Florida bank.

“In that situation, we’re looking at four sources. That’s what we have to do,” said Rod Jorgensen, who is director of counseling for the Nevada Small Business Development Center (NSBDC) and helps small businesses find and obtain funding.

Lending to start-up, early-development and existing businesses is happening in the Silver State but far from the level it was at three years ago….

READ THE ENTIRE ARTICLE AT NEVADABUSINESS.COM

Are you wondering how health care tax credits will affect your business?

Join SBA’s Web Chat:

Tips on Health Care Tax Credits for Small Biz Owners

Thursday, August 12, 2010, from 10:00 p.m. to 11:00 p.m., Pacific Time

WASHINGTON – The SBA’s Web Chat will highlight small business health care, with a focus on how the Affordable Care Act will benefit small business owners through available tax-saving incentives.  Participants can learn about the newest tax credits they can take advantage of, and additional tax provisions to be implemented during the next several years.

WHO: John Tuzynski, chief of Employment Tax and Specialty Programs for the Small Business Self-Employed (SB/SE) Division at the Internal Revenue Service, will host the August web chat on “Health Care and Small Business.”

WHAT: SBA’s Web chat series provides small business owners with an opportunity to discuss relevant business issues online with experts, industry leaders and successful entrepreneurs.  Chat participants will have direct, real-time access to the Web chats via questions they submit online in advance and during the live session, with instant answers.

WHEN: August 12, 2010, 2010, 1 p.m. ET
Tuzynski will answer questions for one hour.

HOW: Participants can join the live Web chat by going online to www.sba.gov, and clicking “Online Business Chat.”  Web chat participants may post questions before the August 12th chat by visiting http://web.sba.gov/livemeeting/Aug10/ and posting their questions online. To review archives of past Web chats, visit online at http://www.sba.gov/tools/monthlywebchat/index.html

By Jeanne H. Yamamura, University of Nevada, Reno

Recently an office manager for a local veterinary surgeon was sentenced to eight years in prison for embezzlement. She stole more than $200,000 over a four-year period. During that time, she took lavish vacations, remodeled her home, and bought herself expensive gifts. During the same time, the surgeon worked longer and longer hours, struggling to keep his business afloat.

Small businesses lose money due to fraud every day. In fact, the Association of Certified Fraud Examiners reported in 2008 that small businesses (defined as businesses with less than 100 employees) suffered a greater percentage of frauds AND a higher median loss than their larger counterparts. The median fraud loss for small businesses was $200,000, the largest amount for any size company.

Small businesses often lack fraud-consciousness and tend to have weak or nonexistent internal controls. Their owners feel that internal controls are only for big companies with many employees. But, even small businesses have assets that others might try to steal. They are also particularly vulnerable due to their size and the nature of their operations. As a result, internal controls are not only desirable for small businesses, they are essential.

Internal controls are checks and balances that are intended to prevent fraud, limit losses and reduce errors. Here are three internal controls that any small business owner can implement today:

1. First, improve fraud-consciousness. There is no such thing as the perfect, trusted employee. Most frauds are committed by first-time offenders. A lack of internal controls invites frauds to be committed. All it takes is one personal financial emergency or unshareable personal problem, and the trusted employee may step over the line. In the beginning, there is usually an excuse, such as “I’m just borrowing the money and I’ll pay it back.” But once started, frauds are very difficult to stop.
2. Second, remember that cash is king and directly monitor cash activity. Receive the bank statement directly, preferably unopened. Open the statement and look at the activity. Does it make sense? Ask questions about anything that seems odd.
3. Third, personally approve all new vendors. Fraudulent billing was the most common fraud suffered by small businesses. It involves billing the company for nonexistent services or using company funds for personal purchases. Fraudulent billing can be prevented by approving all vendors and monitoring cash payments.

Internal controls will enable better management of operations, greater control over cash flow and reduced risk of loss due to error or fraud. Implement essential internal controls today.

Jeanne H. Yamamura is professor of accounting emerita at the University of Nevada, Reno College of Business.