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Dear Mark,
Welcome to Northland Pioneer College SBDC's newsletter, Small Business Success. We named it this because that is the role of the SBDC - to help local businesses achieve success. We hope you get something useful from this issue. -Mark Engle, Editor
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THANKS FOR THE MEMORIES
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By Mark Engle, Director
Unfortunately, this is "my" last issue of the NPC-SBDC email newsletter. I am transferring to the Maricopa SBDC as their Director, starting in March. I will be helping hire my replacement here, and will still be around in that interim, but I leave the NPC-SBDC with a heavy heart, and so many fond memories of the work we do with local small businesses!
I have been with the Northland SBDC since July of 1994, and am so proud of the many, many local small businesses that I have had the priviledge to serve over the years. One of the high points of my life was working with a Navajo businessman, who realized his dream of starting a hotel and restaurant in St. Michaels. For the grand opening of his Denny's Restaurant, I was invited to a standing room only celebration, sparked by 100 Navajo youth, decked out in their Dennys uniforms, running through the restaurant in jubilation to the loudly playing theme of the Rocky movies. Small business success can be a real boost to human morale, but I was also there to experience the tears shed from the untimely death of his son, and to see him complete the dream for his son, creating jobs for his people, despite enormous odds.
Seasons change and so does the landscape of the region that growth brings. In the White Mountain region we have been recently struck with the untimely death of Jerry Croney, owner of White Mountain Entertainment, our local theatres. Jerry took a small five screen theatre business, and more than doubled the size of that business, offering our local movie- goers better entertainment options (and shopping adjacent) than for those in the metropolitan areas. His spirit and love of movies and the region will live on, however. But he will be sorely missed.
My new position is with our State's flagship SBDC in the Phoenix metropolitan area. I'm young enough to accept the challenge, which will be daunting. But I'm old enough to remember the lessons I've learned, and believe I can make an even bigger impact there.
Thanks for letting me reminisce. I have left the area before, having moved to the big city of Albuquerque, New Mexico a few years back (in a two year haitus), so, in closing, I will not say goodbye, but "until then"! And thanks for the memories!
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Do you hire Independent Contractors?
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You must read this article by HR Consultant John Perkins
Both the DOL and the IRS are stepping-up investigations into the possible misclassification of workers (who are employees) as independent contractors.
Attached is information about how to differentiate a worker who is an employee from a worker who legally is an independent contractor.
Will "Misclassification Initiatives" Reduce Employers' Use of Independent Contractors?
Employers' use of independent contractors instead of traditional employees has been on a steady incline over the past 20 years. Some employers feel that they can save money by using independent contractors instead of full-time employees. The contractors themselves may value the autonomy and economic perks that the status provides. Also, the specific skills and knowledge that independent contractors can bring to a short-term project can be critical and, therefore, worth a premium but not sustainable in the long term. But the use of independent contractors is not as perfect as these mutually beneficial points may seem.
A report prepared by the U.S. Government Accountability Office (GAO) in the Fall of 2009 concluded that employee misclassification is a significant problem with adverse consequences because it reduces tax revenues flowing to the government. In fact, the misclassification of employees as contractors is estimated to cost the Treasury Department over $7 billion in lost payroll tax revenue over the next ten years. So the theory goes, since independent contractors are, by definition, self-employed, they are not considered employees and thus not covered by various tax withholding laws. Independent contractors also are not subject to most employment laws, so in addition to avoiding taxes, some employers may reclassify employees as independent contractors in order to avoid payment of overtime and benefits, and workers compensation liability. And, thus, the crackdown on the misclassification of employees as independent contractors began. he U.S. Department of Labor (DOL) has made the proper classification of employees and independent contractors one of its "top priorities." The agencys 2011 budget includes an additional $25 million for what it calls the Misclassification Initiative designed to target misclassification of independent contractors. Approximately 100 additional DOL enforcement personnel will be added to investigate employers.
The Internal Revenue Service (IRS) is in the middle of a similar misclassification crackdown. Beginning in February 2010, the IRS will commence intensive audits of randomly selected employers. One of the focal points of the audits is whether the employers are improperly misclassifying workers as independent contractors to save on taxes and employee benefits.
Theres also new federal legislation on the horizon. Congress is expected to take up legislation that will penalize employers for employee misclassification. One proposed piece of legislation, known as the Independent Contractor Proper Classification Act, was sponsored by President Obama when he was a member of the U.S. Senate.
States are getting into the enforcement act as well. New York and Massachusetts have created task forces to locate employees who are misclassified. Other states such as Maryland and Colorado have enacted new laws that impose harsh penalties on employers who misclassify employees as independent contractors. In Delaware, the General Assembly passed its own law last year imposing stiff penalties on construction industry employers who improperly classify employees as independent contractors to save on business costs and avoid paying appropriate taxes. In addition to penalties of $1,000-$5,000 per misclassified employee, employers who fail to produce requested records can be issued a stop-work order by the Delaware Department of Labor and fined up to $500 per day for each day during which the requested records are not produced.
Compliance, though, presents its own difficulties. The tests used to determine whether someone is an independent contractor or an employee are fact intensive and differ among government agencies. In addition, each state may have its own unique test to determine a workers proper status.
Still, the penalties for non-compliance make this a treacherous area for the unwary employer. In addition to federal and state governments seeking unpaid payroll taxes and associated penalties, employment lawsuits in this area are becoming increasingly common. Claims from misclassified workers range from those seeking unpaid wages and overtime, to multi-million dollar class actions lawsuits. Misclassified employees have also successfully recovered retirement benefits, medical coverage for injuries they sustained on the companys property, and rights to employee stock options and bonuses. [Read the attached Vizcaino v. Microsoft case where Microsoft paid $97M in benefits to workers who were unlawfully classified as independent contractors.]
Given the increased attention to this area, the time to act is now. An internal review and audit of worker classifications should be a crucial component for any company that currently employs independent contractors.
Download IRS New Rules for Contractor vs. Employee Here
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Seven Tax Tips for Business 2010
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by Bernard B. Kamoroff, C.P.A.
Tax Filing Season is here, and there are still several things you can do to reduce your taxes for 2009. Here are Seven Tax Tips that can possibly save you a lot of money on your 2009 taxes. Remember, It's not how much money you make, it's how much money you keep!
Tip #1. For businesses on the cash accounting system (most small businesses), expenses are usually deducted the year paid. However, if you charge any business expenses to your bank credit card (VISA, MasterCard, American Express, or Discover) you can deduct those expenses the year incurred even though you pay them in the next year. Go through your December charges and add them to your December expenses.
For the entire article click here
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Northland SBDC Spring Workshops
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Working On Your Business through Quality Training
Build Your Own Web Page Workshop
This is an intensive, 2-day training on developing a small business site. The first day consists of creating a web site, using your own server or using free tools available on the Internet. The second day will be spent perfecting your site, and learning how to "optimize" your web site and get found! The program runs each day, Friday March 19 & Saturday, March 20th, from 9:00 a.m. until 5:00 p.m. The cost is only $100, but preregistration is required by calling the SBDC at 532-6170.
Time Management
As a busy small business you never seem to have enough time! Learn from our Organizational Expert what it takes to stretch more time into your day, prioritize activities, and get more done! Cost-FREE, Date-Thursday, March 18th, 6:00 until 8:00 p.m. Reservations are required by calling the SBDC at 532-6170.
For more information on the schedule download a pdf here
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The Big Picture Behind the Numbers New EEOC Data Continues a Heightened Trend
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From the law firm of Littler Mendelson
With the recent release by the Equal Employment Opportunity Commission (EEOC) of its charge statistics for fiscal year 2009, the realization emerged for many that an increased number of employment- related claims may be more than a blip on the radar screen. Indeed, 2009 saw the second highest level of workplace discrimination complaints ever filed with the EEOC 93,277.1 This number is up 12.7% from 2007 and is just slightly lower than the record amount filed in 2008 (95,402).
According to EEOC officials, there is little relief in sight. From an enforcement perspective, the commission has never been more active. For example:
o more charges alleging unlawful harassment were resolved in 2009 than ever before; o resolution of charges alleging Title VII violations were similarly at historic levels;
o a record high of $294 million was recovered through administrative enforcement and mediation; and
o the total amount recovered through all enforcement measures, including EEOC litigation $376 million has never been higher.
For the rest of the article click here
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Free Book from The Planning Shop and Intuit!
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Hire Your First Employee - By Rhonda Abrams
Get a copy of this book for free, by going to the link below. No purchase of an Intuit Payroll solution is necessary. But this is a limited time offersupplies will definitely run out.
For your free copy go to
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