Tag Archive | "small businesses"

7 Tips for Small Businesses to Attract and Keep Top Talent

Workers are showing an increasing willingness and ability to leave their jobs for other opportunities. According to the Bureau of Labor Statistics, the number of employees who quit their jobs rose by more than 400,000 from January 2014 to January 2015, reported ADP. Because of the competition for talent, it can be difficult to attract and retain skilled workers.

Consider the following tips to help your business find and keep top performers:

  1. Build a strong company culture. Shared values and practices can shape employee behavior and foster loyalty and commitment. Assess your current culture by conducting employee satisfaction surveys and speaking with supervisors. If it differs from what you want, develop a plan for moving toward your desired goal. Reinforce your culture and values through communication, rules, procedures, and management style.
  2. Be a leader people want to follow. Part of being a leader is earning employees’ respect and trust. To do this, openly communicate the company’s accomplishments and challenges. Give employees an honest assessment of their performance. Additionally, reward and celebrate team wins.
  3. Target the right talent. Elevated turnover rates may point to a problem with hiring practices. Look at your hiring process to make sure you’re able to find candidates with the best company fit. Do you have accurate job descriptions? Are you looking in the right places? Are you properly screening applicants? Are you getting employees started on the right foot?
  4. Create an attractive compensation package. An attractive compensation package can put your company ahead of its competitors. The right mix of direct compensation (wages, salaries, commissions, and bonuses) and indirect compensation (health insurance, paid time off, retirement plans, etc.) is key. Decide on a total compensation mix that balances attracting and retaining top talent with keeping labor costs under control.
  5. Recognize and reward top performers. A clear connection between performance and recognition is a powerful motivator for many employees. Recognition can come in the form of an “Employee of the Month” program, an announcement in company communications, or a note from a supervisor or head of the company. Rewards can be monetary (merit-based pay raises or bonuses)or non-monetary (special privileges like parking in the CEO’s spot).
  6. Offer cost-effective perks. Perks, such as paid time off, commuter assistance, and employee discounts, may be more affordable than you think. Flexible work arrangements, such as working from home, are also attractive for many employees. Consider using employee surveys to determine which perks employees value the most and develop a program that aligns with your budget.
  7. Train and develop employees. Provide employees with training and development opportunities to promote retention and commitment. Engage employees on a regular basis to determine their training needs and career development interests. Consider internal and external training opportunities, mentoring, job shadowing, and professional development classes. Tuition reimbursement is also an attractive perk.

For a small business, the loss of even one employee can have a significant impact on success. With the job market heating up, now is the time to develop and execute a plan for retaining your current employees—and attracting new ones.

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What a Ted Cruz White House Could Mean for Businesses

Sen. Ted Cruz has officially kicked off the 2016 race for the White House, announcing his candidacy for president Monday and taking the first leap into what’s expected to be a crowded and competitive field for the GOP nomination, reported The Washington Post.

Cruz has made quite a name for himself during his first two years in Washington. Championing a smaller government that doesn’t infringe on individual liberties, he has brazenly refused to back down from that call, even if it means infuriating his own party leadership or — in one instance — shutting down the government.

The Texas Republican has also been one of the loudest critics of what he likes to call the Obama economy, under which Cruz says the private sector has been overburdened by regulations and tax rules have been set up to benefit the rich. That combination has particularly plagued small businesses, he says — and that has to change.

“Every single time in our history that we have simplified taxes, reduced the burden, reduced the compliance cost, and simplified regulations so that small businesses, which create two-thirds of all new jobs, can do that, we’ve seen an economic boom,” Cruz said during an event in January, sharing a stage with Sens. Marco Rubio (R-Fla.) and Rand Paul (R-Ky.), both of whom are also considering a run at the nomination.

So, what else would a Ted Cruz White House mean for business owners? Here are five things entrepreneurs and small employers should know.

He favors a flatter, simpler tax code — but keep the deduction expensing

Cruz has repeatedly stumped for a total overhaul of the U.S. tax system that leaves the country with a “simple flat tax.” Currently, he says, the system favors large corporations and wealthy individuals over small businesses and middle-class Americans, the latter of whom don’t have an army of lawyers and accountants to help them navigate a tax code that Cruz recently noted has “more words than the Bible.”

“We should let taxes become so simple that they could be filled out on a postcard,” Cruz wrote in a recent editorial column. Once that’s the case, he added, “we should abolish the IRS and end its abuse of power and violation of Americans’ constitutional rights.”

That said, there appear to be some permanent additions he would make to the tax code, including one that is intended to help small businesses but expired at the end of last year. In short, the rule allows small companies to immediately expense investments in, for example, buildings and large equipment. It’s one of several so-called “tax extenders” that tend to disappear at the end of every year, only to be retroactively reinstated by Congress months later.

During the forum with Rubio and Paul, Cruz identified that expensing rule as one of several “critical elements of the tax code.”

“Things like deducting business expenses that go right to small businesses. … I couldn’t in good conscience vote to strip away that tax treatment,” he added.

He wants to repeal Obamacare, rolling back regulations

Not a shred of gray area here. Cruz has spearheaded several attempts to defund the president’s signature legislative achievement, including a failed attempt in 2013 that eventually led to a 17-day shutdown of the federal government. And while some in his party have since shown a willingness to try to improve the law, Cruz hasn’t wavered from his pledge throw it out altogether.

In part, his distaste for Obamacare stems from its effects on small companies.

“Half of small businesses say they will either cut hours to reduce full-time employees or replace full-time employees with part-time workers to avoid the mandate,” Cruz said last year on the Senate floor, citing Chamber of Commerce surveys about rules that require some companies to provide health insurance to their employees. He later called the Affordable Care Act “the biggest job killer in this nation.”

Though recent data don’t quite support that level of hyperbole, the numbers don’t look good for small businesses under the health-care law. Surveys released last week by the National Federation of Independent Business suggest that premiums have continued to soar for small businesses, and one in 10 say they have had their plans cancelled as a result of new coverage requirements in the Affordable Care Act.

While Cruz has pointed to the health-care overhaul as the most egregious example of the Obama administration sticking its hands too far into the private sector, he says it’s hardly an anomaly.

“Over the last six years, federal regulators have been on small businesses like locusts,” Cruz said during a speech earlier this month in New Hampshire. He later emphasized that “the most effective levers the government has to facilitate the private sector and small business creating jobs are tax reform and regulatory reform.”

“If small business is prospering, growing and creating jobs and opportunities, that lifts all ships,” Cruz added.

He’s adamantly opposed to a higher minimum wage

One of several issues that have divided small-business owners is raising the minimum wage. Many employers have said that lifting the wage floor, as President Obama has fought so hard to do, would force them to pull back on hiring and even shrink their workforce. Others believe that consumer spending would tick up if workers had more money in their pockets, leading to stronger sales for their companies and an overall healthier economy.

Cruz, on the other hand, isn’t the least bit split. He has staunchly opposed raising the minimum wage.

“I think the minimum wage consistently hurts the most vulnerable,” Cruz said during the event with Rubio and Paul in January. When asked about raising the minimum, Cruz has repeatedly said that it would make it harder for Hispanics, African Americans, and young Americans — groups already facing high unemployment rates — to find work. That’s because companies that employ low-skill and entry-level workers may be forced to cut back on the number of minimum-wage employees they can afford to pay.

Cruz also takes the opportunity, as he did in New Hampshire, to tell the story of his father, who immigrated to the U.S. from Cuba and took a job washing dishes for 50 cents an hour (his father later became a small-business owner and is now a pastor).

“If we had come in and made the minimum wage $2 an hour, you know what would have happened?” Cruz asked the moderator. “They would have fired my dad and they would have bought a dishwasher.”

He’s a big fan of the Keystone XL Pipeline

Ahead of the midterm elections last fall, Cruz penned a column in USA Today outlining 10 priorities he believed a Republican-led Congress should focus on in 2015. At the top of the list was a pro-jobs energy agenda — starting with the Keystone XL pipeline.

“A Republican Congress should immediately help Americans get more jobs by embracing America’s energy renaissance,” Cruz wrote. “This means passing legislation to make it easier to build energy infrastructure, such as the Keystone pipeline.”

Small-business groups have largely lined up in favor of the controversial pipeline, which would create a network capable of transporting oil from Canada to the Gulf of Mexico. Most Republicans are behind the proposal too, earlier this year pushing a measure to complete construction of the project through Congress. Obama vetoed the legislation, arguing that its environmental harm would likely outweighs any economic windfall.

He’s not such a fan of the Ex-Im Bank

On the economic policy section of his campaign Web site, Cruz touts several actions he has taken to try to get the the economy back on track. Not surprisingly, the first item mentioned is that he led the charge to dismantle Obamacare.

Next on the list? His attempts to eliminate the Export-Import Bank.

Not widely discussed outside of Washington, the Ex-Im Bank, as it’s often called, provides relatively low-cost financing to foreign buyers of American products and services. It’s programs are meant to make American goods more attractive overseas, helping U.S. companies export. However, there’s debate over whether those programs support small or large businesses.

Cruz is firmly in the latter camp.

“The Export-Import Bank is big businesses’ big-government bank backed by U.S. taxpayers,” Cruz wrote in another column last year. The agency’s current charter expires in June; without renewal from Congress, it will be eliminated.

That wouldn’t bother Cruz, who added: “There’s nothing inherently wrong with big businesses … but they don’t need special handouts from government.”

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A Dozen Deductions for Your Small Business

Small-business tax rule No. 1: Don’t mess with the IRS, reported Bankrate.

But that doesn’t mean you should cheat yourself. Take every legal deduction you can. Here are a dozen that even savvy small-business owners and entrepreneurs sometimes forget.

1. Home office

Concerned that claiming a home office deduction is tantamount to sending an engraved invitation to an IRS auditor? Don’t be, says Jan Zobel, author of “Minding Her Own Business: The Self-Employed Woman’s Guide to Taxes and Recordkeeping.”

The deductible dozen

  1. Home office
  2. Office supplies
  3. Furniture
  4. Other equipment
  5. Software and subscriptions
  6. Mileage
  7. Travel, meals, entertainment and gifts
  8. Insurance premiums
  9. Retirement contribution
  10. Social Security
  11. Telephone charges
  12. Child labor

“I don’t agree that chances of getting audited are greater with a home office deduction,” says Zobel, a San Francisco Bay-area tax expert who specializes in serving the self-employed. The key is that you use the term “home office” the same way the IRS does. The tax agency says it must be a space devoted to your business and absolutely nothing else. Deducting the den that houses the family computer and serves as a guest bedroom won’t fly with Uncle Sam.

“If you only have one computer and you have a child over 4, the IRS is going to be pretty certain that the child is using the computer,” says Zobel. “And the burden of proof is on you.”

The deduction, however, isn’t limited to a full room. Your home office can be part of a room. Just how much of the space is deductible? Measure your work area and divide by the square footage of your home. That percentage is the fraction of your home-related business expenses — rent, mortgage, insurance, electricity, etc. — that you can claim.

There’s also a newer way to claim a home office deduction. Read “Use newer, simplified home office deduction” for details.

2. Office supplies

Even if you don’t take the home office deduction, you can deduct the business supplies you buy. Hang on to those receipts, because these expenditures will offset your taxable business income.

3. Furniture

When your office supplies are more than just pens and paper, you have another tax-cutting opportunity.

Office-furniture acquisitions provide a couple of choices. Deduct 100 percent of the cost in the year of the purchase or deduct a portion of the expense over seven years, also known as depreciation.

To take the whole cost in one tax year, you’ll use the Section 179 deduction (named for the part of the tax code where the law appears). Recent tax-law changes have made this deduction even more attractive. H.R. 5771, the Tax Increase Prevention Act of 2014, which was signed into law Dec. 19, 2014, retroactively reinstated the $500,000 deduction limit for Section 179. (That law also included the expired package of tax extenders.) However, unless Congress acts again, the Section 179 limit for 2015 will be just $25,000.

If you choose instead to depreciate the desks and filing cabinets, you can’t simply split the cost into equal portions over the depreciation period. Instead, you must use an IRS chart to make separate calculations each year.

Which is better for you? Anticipate the times that your business will need these deductions the most. Both options are reported on IRS Form 4562.

4. Other equipment

Items such as computers, copiers, fax machines and scanners also are tax-deductible. As with furniture, you can take 100 percent upfront or depreciate (this time over five years).

5. Software and subscriptions

The increased Section 179 provides another tax break in this area of business expenses. Previously, a company had to depreciate the cost of computer software over three years. Now, off-the-shelf software a business buys can be fully expensed in the year purchased. Again, this option must be renewed for the 2015 tax year and beyond.

The rules for deducting business and industry-related magazine subscriptions weren’t changed. You can continue to take the total costs as a full deduction in the year spent.

6. Mileage

If you drive for business, the IRS wants to give you some of your money back. But Uncle Sam loves documentation, so keep a notebook in your vehicle to record the date, mileage, tolls, parking costs and the purpose of your trip.

At the end of the year, you have two choices. You can total the mileage and add in the tolls and parking to calculate your deduction. Once you have your mileage total, multiply it by 56 cents for your 2014 deduction. For 2015 business tax purposes, the rate increases to 57.5 cents a mile.

Or you can measure your business usage against your personal driving and deduct that portion of your auto-related expenses, says Zobel. Remember to include gas, repairs and insurance.

If you are leasing, include those payments. If you are buying the car, factor in the interest on your loan and depreciation on your vehicle.

And if your company’s office is at your house, you get a bit more of a break. You can deduct the entire business-related mileage, from the minute you pull out of the driveway until you return home, says Gary W. Carter, CPA and author of “J.K. Lasser’s Taxes Made Easy for Your Home-Based Business: The Ultimate Tax Handbook for the Self-employed.”

If your business is not home-based, your mileage meter starts at your first business-related destination and ends at your last. You can’t include the drive to and from home, says Carter. In this case, try to schedule several business appointments on the same day to allow you to take the mileage between stops as a tax write-off.

7. Travel, meals, entertainment and gifts

Good news, small-business travelers. You might as well stay in a nice hotel, because the entire cost is tax-deductible. Likewise, the cost of travel — air, rail or auto — is 100 percent deductible, as are costs associated with life on the road (dry cleaning, rental cars and tipping the bellboy).

The only exception is dining out. You can deduct only 50 percent of your meals while traveling. So stay at the Ritz and eat at Wendy’s.

Once you get home, your on-the-job meals aren’t deductible — unless you bring along a client to talk business. In this case, you might consider splurging on a fancier meal because then you can write off half such work-related dining costs.

The 50 percent deduction limit applies to most other client entertainment expenses, too. But a direct gift to a client or employee is 100 percent deductible, says Zobel, up to $25 per person per year.

8. Insurance premiums

Self-employed and paying your own health insurance premiums? These costs are 100 percent deductible.

This break primarily benefits proprietorships, but there are limits. The deduction can’t be more than your business’ net profit. And it’s not allowed if you were eligible for other health care coverage, including that offered by your employed spouse’s medical plan.

Did your spouse work for you last year? Then, Carter says, you can get the full medical premiums deduction on your return. As an employee, your spouse’s premiums are 100 percent deductible; if you and the children were on his or her policy as dependents, so are those costs.

Two caveats: 1) Your spouse’s employment must be real, not in name only, and you must offer coverage equally to any other employees. 2) Failure to meet these requirements could result in a lawsuit, an audit or both.

You also can include some of the premiums you pay for long-term care insurance for yourself, your spouse or dependents.

9. Retirement contributions

Are you self-employed and saving for your own retirement with a SEP IRA or Keogh? Don’t forget to deduct your contribution on your personal income tax return.

10. Social Security

The bad news: If you’re self-employed or starting a small business, you have to pay double the Social Security contributions you would as an employee. That’s because federal law requires the employer pay half and the employee pay half. Self-employed workers are both, meaning the total will equal 15.3 percent of your net profits.

The good news: You can deduct half of the contribution on your 1040.

11. Telephone charges

You can deduct the cost of the business calls that you make for business from home. When your bill comes in, circle the business-related calls, total them up and keep a copy. At the end of the year, tally your 12 bills and deduct 100 percent.

The IRS assumes that you will have a phone in your house anyway, so Zobel cautions that regular fees and charges don’t count toward your deduction. But if you have a second line installed and use it only for business, all of these charges are deductible.

Many people now rely solely on a cellphone. If you use your cellphone for your business, you can claim those calls as a tax deduction. If 30 percent of your time on the phone is spent on business, you could legitimately deduct 30 percent of your phone bill.

12. Child labor

“It’s always good to employ your kids,” says Carter. Depending upon how much you paid them, they might be able to avoid income taxes. Plus, there is no Social Security tax when you hire your child who is 17 or younger and you can deduct the salary as a business expense. This break is available, however, only if you operate as a sole proprietor or as a partnership in which you and your spouse are the only partners. If your business runs as a corporation, then it, not you, is considered the employer and the corporation is not relieved of the tax liabilities.

Make the money go even further. Have your child contribute to a Roth IRA, says Carter. Not only have you gotten a nice tax deduction from the salary and trained your youngster to save, you’ve also helped establish a nest egg for his or her future.

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Cyber Hacks Against SMBs on the Rise – What You Can Do

Cyber-attacks are on the rise, that’s no surprise. Cyber-attacks directed at small businesses, however, are also increasing, according to new data, reported FoxBusiness.

In fact, according to Symantec’ 2014 Internet Security Threat Report, one in five small-to-medium-sized (SMB) companies were the victims of cyber breaches in 2013. Plus, per a NetDiligence survey, the most common cause of a hack is due to a lost or stolen device, not an actual hacker.

Miller Newton, CEO of PKWARE – a data and smart encryption company, predicted four major hacks would take place between this year and last, and two have: corporate espionage (Sony) and a health-care breach (Anthem). Miller also predicts massive breaches in a pro-sports franchise and an infrastructure hack.

“Unfortunately, we know that history repeats itself,” Miller told FOXBusiness.com. “It takes a significant security breach for businesses and government to get serious about securing critical systems and information.”

His remedy?

“Unilaterally, security focus needs to shift from networks and devices to protecting information by armoring the data itself … as businesses and individuals, strengthening security will require vigilance, expense and even some inconvenience,” said Miller.

According to Ponemon Institute’s 2014 Cost of Data Breach Study, hack attacks in the United States cost on average $200 per record compromised. That same study says each breach typically involves some 29,000 records – roughly $5.8 million to cover that cost alone.

Tim Francis, enterprise and cyber lead at Travelers, said “there’s an under-appreciation of how vulnerable an SMB might be to a cyber-event.” His advice to SMBs is to be vigilant in the “pre-breach environment,” covering all bases when safeguarding against hackers.

“For a small business, they may not spend billions dealing with a breach, but there’s a higher risk they’ll be crippled so severely they’ll have to close their doors [after a breach],” Francis said.

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The Future of Small Business Borrowing

One of the interesting business trends to have witnessed going back a decade is how small business owners have chosen a loan source. But the future trend should be even more interesting, reported FoxBusiness.

Looking back, there have been primarily three sources of loan funds for growing small businesses:

  1. Large, multi-state banks
  2. Community banks, locally owned and managed
  3. Credit unions, also locally determined

In a recent online poll we asked small business owners about their borrowing preference. One-sixth of our respondents chose “large bank,” which is down from a decade ago. Following the 2008 financial crisis large banks stopped lending to small business while they struggled with their own regulatory stress test. They’re lending to small businesses again, but are now in catch-up mode.

One-eighth of our sample selected “credit union,” which is higher than the past. Much to the chagrin of banks, credit unions have expanded their customer profiles to include small businesses, aren’t taxed like banks, and aren’t subject to community reinvestment requirements. I predict the credit union loan option will grow for small businesses going forward.

More than two-thirds of our small business audience told us they borrow from community banks. The Independent Community Bankers of America (ICBA) report they make almost 6 of 10 small business loans nationally, so our folks are a little more active with these lenders. Perhaps, since I’ve long espoused the natural symbiosis between Main Street businesses and community banks, I’ve influenced my polling audience to move this needle beyond the national average.

The big news of our poll is that crowdfunding popped up on the lending radar for the first time. The number was only 3%, but this credit source is very new.

Right now crowdfunding loans fit small businesses that aren’t bankable for one reason or another, but are strong enough to handle the associated higher interest rates. I predict over the next decade crowdfunding will claim a larger piece of the small business loan pie for three reasons:

  1. Crowdfunding rates will become more competitive
  2. It won’t have banking regulatory challenges
  3. The virtual, online aspect of crowdfunding will appeal to the next generation of entrepreneurs

Recently I attended a convention of bankers and asked several of them what they knew about crowdfunding. Most had not heard the term, only a couple of those who had heard of crowdfunding knew how it worked and none understood the future implications to their industry.

Bankers, call your office.

Write this on a rock …

Small business borrowing will be a lot different in 2025.

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Obama Administration Delays Another Health Care Rule for Small Businesses

One of these days, employers will experience the full effects of Obamacare — but not yet, reported the Washington Post.

In the latest in a long string of delays in enforcing the rules under the health care overhaul, the Internal Revenue Service and Treasury Department announced on Wednesday that they will wait until summer to start enforcing financial penalties on small businesses that provide so-called Health Reimbursement Arrangements to their employees.

Under HRAs, employers provide spending accounts that their workers can use to cover a portion of the cost of buying individual health plans. The arrangements, which give employers a tax-free means to help pay for their workers’ health costs, do not comply with insurance standards in the Affordable Care Act, commonly known as Obamacare, according to Treasury guidance issued in the fall of 2013. Consequently, employers who elect to continue offering HRAs could be fined as much as $100 per day per employee.

In a public notice, IRS and Treasury officials announced that those penalties (in the form of excise taxes) will not be levied against noncompliant small businesses until July, giving many employers a little extra time to adjust to the new rules.

“The Departments understand that some employers that had been offering health coverage through an employer payment plan may need additional time to obtain group health coverage or adopt a suitable alternative,” the notice reads. Officials also hinted at the fact that the new online health insurance exchanges set up under the law, which were meant to give small businesses more choices and more affordable health insurance options, haven’t quite delivered.

“The market is still transitioning and the transition by eligible employers to SHOP Marketplace coverage or other alternatives will take time,” they wrote.

In regards to the rules in the health care law, the delay is nothing new for employers. Most notably, the Obama administration has several times pushed back the start of penalties for business that do not provide adequate health insurance to their employees, first pushing the entire deadline back one year and then last year announcing an even more gradual, tiered (by company size) rollout.

A year earlier, the administration instituted a one-year delay in enforcing rules requiring companies to report their health insurances costs on employees’ tax forms. Officials also delayed additional rules requiring owners to provide equal coverage to all of their employees, and they later postponed fines on health plans that don’t meet certain coverage criteria in the law.

At this point, the small business community has had about enough of the temporary reprieves and is calling for permanent solutions.

“This temporary delay serves as an important immediate step to protect small businesses from costly penalties when trying to assist employees with the purchase of health insurance,” Amanda Austin, vice president of public policy at the National Federation of Independent Business, said in a statement responding to the announcement. “However, another delay to Obamacare does not fix the underlying problems – which the administration is conceding with these actions.”

Research by the NFIB, which has staunchly opposed the health care overhaul since it was being debated in Congress, suggests that one in seven small businesses that do not provide health care plans offer some type of reimbursement arrangement.

Katie Vlietstra, vice president for government relations and public affairs at the National Association for the Self-Employed, conveyed similar frustration, calling the short delay “welcome news for our community” but insisting that “a long-term, legislative solution is still urgently needed.” She added: “America’s smallest employers need the stability of a permanent fix in order to continue to utilize this critical tool to help provide health care coverage to their employees.”

Austin’s and Vlietstra’s groups have support in Congress. Reps. Mike Thompson (D-Calif.) and Charles Boustany (R-La.) in December introduced legislation that would do precisely what the small business groups are asking for, requiring the IRS to permit small firms to continue offering HRAs. Theirs is one of many proposed tweaks to the health care law that are expected to be considered and potentially put in front of the president by the new Republican Congress.

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