The Juggling Entrepreneurs

NASE released an email today about a push by both the Senate and the Representatives pushing to add regulatory requirements for small business.

In efforts to minimize the federal deficit and acquire revenue for new

policy efforts, Congress and the Administration are looking to the tax gap.

The nation’s tax gap is the difference between what taxpayers should pay

and what they actually pay on a timely basis. According to the IRS, the tax

gap is approximately $353 billion.
To increase tax compliance and recover funds from this tax gap, numerous

proposals have been made to increase regulations and information reporting

which may be disproportionately hurtful to the micro-business and self-

employed communities.   One suggestion is to require businesses utilizing

independent contractors to obtain and verify, with the IRS, an accurate

Taxpayer Identification Number (TIN) for those contractors receiving

payments of $600 or more.

 Excerpt from email from NASE.

Let Congress know how this affects you as a business owner by filling out the form at the link below:

http://advocacy.nase.org/grassroots/story_tg3.asp 

Yes. Your letter is read.

Whether your Senator or Representative reads it personally is another question. It depends on the size of the population he or she represents. For this reason, a Representative is more likely to read your mail personally than a Senator. Many Senators ask their staff to filter out the more interesting ones for them to read.

This does not mean your voice is not heard. Most office staff filter all the letters, emails and phone calls and keep tallies on public opinion on issues and bills. This tally helps the Senator or Representative to decide how to vote.

So go ahead an write or call. This is especially important for micro businesses and the self-employed because we have very few lobbyists fighting for us.
Source: “Getting Your Voice Heard“, Association for Postal Commerce.

Find the address, email address and phone number of your local politicians at NASE’s Legislative Action page.

Friday, the Department of Labor released the lowest unemployment rate in 6 years at 4.4% unemployment rate, 180,000 new jobs.  The most important number to look at is how fast wages are gaining.  Although we have seen an economic expansion since 2002, it is only in the last 6 months that the wages were gaining faster than inflation.

In the report released on Friday, people are earning an average of 2% wage gains over the increase of inflation.

However, the overall economy is shaky.  The unemployment rate is a late economic indicator of what is actually going on.  To get a grasp on what is currently going on it is better to look at the housing industry and whether businesses are expanding.

Source: NPR, “What’s Up with the Drop in Unemployment?“, Weekend Edition Saturday, April 7, 2007.

Every year Business 2.0 releases what they interpret as the 101 dumbest moments in business.    It is a good time to freshen up your own business.

By reading some of these stories, you don’t just get a laugh, but a reality check.  Many of them could have been prevented.

• Hire an outside consultant to review the security of your servers and computers annually.   Think of it as insurance - it costs much less to do routine checks than to pay for the consequences of a security breech.
• Ask your friends and relatives for feedback on your marketing campaigns.
• Review how you handle customer or prospect calls.  Are you responding to them in a timely manner?
• Brainstorm the possible outcomes of a project - including the negative ones.
• Always remember the phrase:  “Bad news travels faster.”

Take a look.  Browse the worst moments in customer service or the top 10 dumbest moments.

Feel free to comment on other techniques to prevent bloopers such as the ones noted by Business 2.0.

The US Small Business Administration (SBA) released a study that showed while entrepreneurship is high in Silicon Valley, it is not unique.  The rest of California and several other major Metropolitan Areas had higher rates of entrepreneurship.

The study does indicate that there are several factors that contibute to the high rate of entrepreneurship in Silicon Valley.

• Entrepreneurship rates in Silicon Valley are higher now, after the dot com bust, than during it.  This is most likely due to higher unemployment rates after the dot com bust.  People created their own companies in order to continue working.
• Demographically, a person in Silicon Valley is more likely to be an immigrant.  During the dot com boom, companies needed to import workers from other country because there were not enough locally to fill the positions.
• Demographically, a person in Silicon Valley is college educated.  Technology companies, concentrated in Silicon Valley, require specialized workers with engineering, management, math and computer science degrees.

Source: “Entrepreneurship in Silicon Valley during Boom and Bust,” (Adobe PDF) by Robert Fairlie, US Small Business Administration, Office of Advocacy, March 2007.

Another important Microsoft Small Business Summit was the presentation by Wayne Best from Visa, about the economic outlook. Here are my notes.

He used statistical data of Visa transactions (”17 out of every 100 dollars in US is put on a Visa card”) as well as outside sources.

Overall, he states that economic growth is slowing because of decline of housing prices. In most parts of the country, there is a housing adjustment. Homes are losing on average 5% in value. This lose is higher in some areas that are economically depressed.

In the past, consumers have been borrowing equity from their homes or financing new homes 100%. They used this money to pay for improvements, durable goods, vacations, etc.

With the housing prices declining, we are seeing a switch from borrowed spending to income spending. The consumers are only spending what they take home in wages.

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Are you thinking about writing a book, but don’t know where to start.  Take a look at this Squidoo lens for books, associations, and ideas that may help you.

It’s time to talk or write your representative again.

A bill has been introduced in both the Senate and House of Representatives called the “Parent’s Tax Relief Act of 2007.”  This bill is geared towards families with a stay-at-home parent and hopes to increase telecommuting and home-based businesses.

The bill will:

• Extend the Dependent Care Tax Credit to stay-at-home parents.
• Make the Child Tax Credit permanent.
• Eliminate the Marriage Tax Penalty.
• Protect social security benefits for stay-at-home parents by not allowing the value due to reduced income to be deminished.
• Create a standard home-office tax deduction.

Source: Congressman Lee Terry’s Website.

These days, the tax gap is a significant issue that can have big effects on micro businesses like us.  The government would like nothing better than to implement more requirements on us.

Currently the tax gap is estimated at $353 billion.  Most of it is due to sole proprietors not reporting cash income accurately.  Some suggested solutions are:

• Requiring a business to fill out a 1099-Misc for every contractor they use.  Currently you are only required to do this for those that you do more than $600 in business with.
• Increase audits on small businesses.
• Breaking out income by cash, credit card, and check payments.
• Including a checkbox that states the business has complied and filed 1099-Misc forms for its contractors.

Source: NASE Washington Watch, “A Closer Look At Tax Gap Proposals,” February 22, 2007.

The House passed legislation to increase the hourly minimum wage from $5.15 to $7.25 Wednesday by a nearly 3-to-1 margin. The increase will take effect over the course of two years — broken up into three $.70 installments — if it passes the Senate and is signed into law.   CNN (Video, 1/11)