Obama Promotes Health Insurance Reform As Pro-Small Business

The political process has been working somewhat in reverse with healthcare reform: instead of selling the bill to the public first and then passing it, supporters are tasked with marketing legislation that has already become law.

President Obama is making his move, going on tour to stump for his plan nationwide. He is especially looking to appeal to small businesses. The constituency goes beyond business owners themselves; such firms are a key driver of economic growth. With Americans worried about jobs–and a stagnant unemployment rate of over 9%–Obama is trying his best to tie the two issues together.

Last week in Maine, he said that health insurance reform would save jobs. The bill offers an immediate tax credit to businesses with under 25 employees, which the administration predicts will save them $40 billion by 2019. Specifically, the credit will initially be for 35% of the portion of insurance premiums paid for by the employer. After 2014, they will receive tax subsidies for up to 50% of their group health insurance expenses.

Especially nowadays, health benefits and other perks are attractive to potential employees, especially those considering firms that would be eligible (average annual wages for the companies must be under $50,000). The tax credit may allow those businesses who don’t currently offer such benefits to hire more valuable workers, which could increase efficiency and profits. About four million small businesses could claim the tax credit between 2010 and 2013, as well as two years after they initially file for it.

According to Obama, small businesses will be able to hire more employees, despite an insurance mandate that will affect small businesses over the next decade. Many are worried that the requirement, which will first affect larger businesses and gradually impact smaller businesses over the next decade, will hurt employment by making employers provide affordable health insurance coverage to their employees or pay a fine.

Employers are also concerned about the possibility of minimum coverage standards as well as higher taxes, which may increase their net expenses. Small business administrations, such as the National Federation of Independent Businesses, are skeptical that healthcare reform will help them. Health insurance exchanges, which will allow small businesses to use collective buying power to get lower rates, could work in their favor.

Is Your Small Business Bookkeeping Ready For 2013?

It’s that time of year again. No, it’s not National Bookkeeper’s Day (no one has quite gotten consensus on when that is!) It’s time to get your financial statements ready for 2013. What are the signs you need to start prepping for the new year?

First, you see recipes for turkey everywhere. Then the lines wrap around big box retailers as people try to get the lowest price of the year on an iPad mini. Then it’s Christmas, Hannukah, lots of food, office parties. (We offer some tax tips for planning your big shindig here.)

Finally, it’s New Year’s Resolution time and then, right around the time fourth quarter estimated taxes are due in mid-January, it’s time to break those resolutions, especially if they involved things like stress eating or maintaining a positive outlook when it comes to financial planning.

Should Your New Year’s Resolutions Include Small Business Bookkeeping Help?

If handing over your financial statements to your tax accountant for year-end estimated taxes makes braving the Black Friday crowds look like fun, why not let 2013 be the year you finally get help with your small business bookkeeping and financial forecasting?

With a virtual bookkeeper, you’ll pay one monthly fee (usually lower than the salary of an in-house bookkeeping staff), and enjoy the benefits of a certified, trained bookkeeper who works when you work, keeps your business information confidential, and doesn’t waste time around the company water cooler because she works from home in a private, secure office space. You don’t have to pay benefits, unemployment insurance or social security taxes for your virtual bookkeeper. She will manage your daily, weekly and monthly small business bookkeeping needs so you can focus on your business.

When you line up your part-time virtual bookkeeper, they will first sit down with you and reconcile your books for the past quarter, if necessary. Then they will discuss your bookkeeping needs and custom design a bookkeeping package, which also includes a part time financial controller, to fit your small business bookkeeping needs and your budget.

Best of all, if you make the move now to hire a part-time virtual bookkeeper and financial controller, they can get it all straight in time to start 2013 fresh and to submit your Q4 tax statements accurately and on time. If that sounds even better than fresh baked pumpkin pie, give us a call or email us today.

Unemployment and Small Business – Our Economic Performance in 2012 and 2013

As of August 2012 unemployment in the United States was 8.3%. As bad as that was, it was much better than the European Union which is nearly 13% unemployment (average). Countries like Spain are now over 20%. One of the biggest challenges in the United States is overregulation of small business, and rather than attempting to reduce these regulations, unfortunately we’ve piled on more. Some of these regulations were meant for corporations, to keep them aligned with the ethics of our society, but nevertheless they do affect the little guy, often much more. Okay so let’s talk about this for second shall we?

Our economic performance in 2012 and 2013 will surely depend on the performance of our small business community throughout this great nation of ours. If every small business in the country merely hire one more person, we would have easily created more than enough jobs to satisfy our employment goals. Some say that companies should start hiring people first, therefore more people will have a paycheck, therefore they will spend more money buying the products and services of all the other businesses, therefore the economy will be hyper accelerated.

While this is an interesting theory, and can mathematically be proven, you must understand that businesses are in business to make money, not throw it away. They must operate in a place to stay efficient and profitable. If we want businesses to hire more people we need to make it easier for them to hire people, cut the red tape, and therefore cut some of the risk out of the equation, but unfortunately right now we (as a nation, I’d personally never do anything like that) are doing just the opposite, which is my point here.

You see, the unemployment in our country and the success of our smaller companies and entrepreneurs are interlinked. We can’t have one without the other. Without healthy and strong entrepreneurial companies we can’t expect to have low unemployment figures, nor can we meet our economic performance goals allowing for more taxation funds into our government to provide all the services that these politicians have graciously promised.

The regulation issue is a sticky point with many people, however it’s time we looked at the regulations at all levels of government; municipal, county, state, and federal government levels. Until we make it easier to do business, and simplify the process, there is just too much chaos and risk, and cost for a business owner to choose to hire more people. Indeed I hope you will please consider all this and think on it.

How The Hidden Costs of Doing Business For Small Business Owners Works Against Business Growth

In one of my favorite all time business books, Corporate Canaries, the author Gary Sutton has one chapter entitled “You Can’t Outgrow Losses.” This chapter should be a must read for all small business owners to C Suite executive and even the ever growing ranks of independent contractors.

Today, all of these individuals may get a reprieve from a forthcoming piece of Federal legislation. Beginning in 2013, all businesses must not only report services using the 1099 form, but also purchases using the 1099 above $500 to a single vendor. This compliance requirement was bundled in the massive Health Care reform bill of which much was unread by those who voted to accept it. And may face repeal given the outrage by businesses who will be facing additional costs just to manage all the accounting and reporting.

The 1099 compliance is just one of many hidden costs of doing business. For example, the Small Business Administration (SBA) in 2006 revealed the average small business person spent $7,646 per employee in compliance costs specific to all government regulations. Compliance costs for US businesses are greater than any other country and help to keep them uncompetitive.

Since many US businesses have less than 25 employees, sometimes they forget to determine the hidden costs of doing business. These costs range from the obvious one of telephone and Internet charges to the not so obvious ones such updating customer databases or tracking inventory or compliance costs. What happens is these business processes become like the chair that has sat in the corner for many years, never being moved because it was always there.

Years ago I read a story about a young woman who asked her mother why did they cut the ends off the roast. The mother responded because that is how your grandmother cooked the roast. To satisfy her curiosity, the daughter asked her grandmother why the ends of the roast were cut off. Grandmother quickly responded with “To fit into the only roasting pan I had at the time.”

Awareness, as with the granddaughter, is part of doing business and helps to find all those hidden costs. Then a continuous improvement plan can be implemented to maintain or better yet reduce those costs which are much like a dripping faucet draining those much desired profit dollars.

Business is much more than the ever present goal to increase sales. Both factors of the business formula revenue less costs equal profits must be continually examined. By knowing the hidden costs can help you truly Be the Red Jacket in the marketplace.

Small Business Insurance Exchanges

One of the many provisions of the Affordable Care Act is the establishment of state based exchange programs for small businesses, known as the Small Business Health Options Program aka SHOP.

Every state is required to establish SHOP exchanges ready for the first open enrollment period in October 2013 for coverage that will be effective January 1, 2014.

SHOP Goals

SHOP will allow small businesses to pool together to increase their purchasing power to the same level as that of large corporations.

This will make it easier for them to review, compare and purchase health care plans that offer their employees choices in coverage at rates similar to those available to large corporations.

Each SHOP exchange must perform the following functions:

  • Selection and certification of the health plans that will be offered
  • Consumer education and assistance
  • Eligibility determinations
  • Plan enrollment
  • Premium billing and collection

What businesses are included?

SHOP exchanges will serve small companies, defined as those having no more than 100 employees, on average.

However, during the first two years, states may restrict participation in SHOP exchanges to businesses having up to 50 employees.

Beginning in 2017, states may elect to let larger companies participate.

Do you have to participate?

There is no requirement that small businesses use the exchanges. They will still have the option of buying insurance outside of the exchanges.

Employers may also choose to self-insure to avoid many market regulations and the requirement for community rating, which requires premium costs to be the same for everyone, regardless of their age or health status.

How will SHOP function?

Each state can set up a SHOP exchange as an executive branch agency, an independent government authority, or a nonprofit corporation.

Alternatively, states may partner with other states to form regional exchanges or they may create subsidiaries within a state as long as the geography of the entire state is covered.

If a state chooses not to establish a SHOP exchange, or if it’s determined that an exchange will not be fully operational in time, the federal government will set up and operate the exchange.

Tax credits for participating

One of the law’s provisions that have many small business owners happy is the small business health care tax credit.

This allows businesses with fewer than 25 full-time employees that pay at least 50 percent of total premiums to qualify for a tax credit of up to 35 percent of their premium contributions.

And that credit increases to 50 percent in 2014.

So, what about you? As a small business owner, are you optimistic about SHOP?