Virginia's Annual Sales Tax Holiday Begins Aug. 6

Virginia will hold its annual school supplies and clothing tax holiday from Aug. 6 through Aug. 8.

During this three-day period, purchases of qualifying school supplies selling for $20 or less per item, and purchases of qualifying clothing and footwear selling for $100 or less per item will be exempt from sales tax.


Retailers may also choose to absorb the tax on other items during the holiday period, but they are responsible for paying the tax on those items to the Department of Taxation, according to Virginia's web site.

Small Biz Group Launches Campaign to Stop 1099 Mandate

The Small Business & Entrepreneurship Council has launched a petition and action center devoted to repealing what it calls "a nightmarish paperwork mandate" that expands 1099-Misc reporting. 


SBE Council President & CEO Karen Kerrigan said small business owners are outraged by the provision, and want to know everything they can do stop it from taking effect in 2012. The group has launched www.stop1099.org.


"This expanded 1099 reporting mandate has really gotten under the skin of small business owners, and rightly so," said Kerrigan. "The burden of the new mandate will be tedious, time-consuming, and costly.  Business owners across the country are furious that Congress slid the measure in a massive health care bill without understanding its deep impact."


A provision (Section 9006) in the "Patient Protection and Affordable Care Act" signed by President Barack Obama in March mandates that all businesses issue a 1099 form for all vendor payments totaling $600 or more on an annual basis. This new mandate vastly expands current requirements, and is scheduled to begin in 2012.


The provision was included in the health care bill as a revenue raiser ($17 billion), but there has been no analysis completed to demonstrate how effective the measure will be at closing the "tax gap," Kerrigan said.


"I really don't know if Congress thought about the unintended consequences of the mandate, whether the IRS has the capacity to deal with hundreds of millions of new forms from 30 million businesses, the cost impact it will have on small business owners, and the economy-wide effect of this extensive paperwork burden," she said. 

Low and High Income Earners Less Likely to See Salary Changes

Earn a lot? Earn a little? Then you’re less likely to move up and down the income ladder than workers in the middle of income distribution, according to a new report  (pdf) from the Small Business Administration.

The SBA’s Office of Advocacy said workers in the top and bottom ranks of earnings distribution are less likely, or about 45 to 50 percent, to see significant changes in salary than middle-income workers, who are about 75 to 82 percent likely to move up and down the salary scale.

Some other interesting highlights:

*Income mobility among female workers at 73.2 percent was much higher than male workers at 69.8 percent in the 1990s;

*Female workers also experienced higher exit rates, or about 75 to 85 percent from the lowest ranks of income than their male counterparts;

*Self-employed individuals are more mobile, that is they have bigger salary fluctuations, than paid employees. The self-employed “experience more year-to-year changes and volatility in income than payroll workers.”;

*Whites are more likely to experience self-employment than minorities; and

*Workers in small firms have less formal education than their counterparts.

Next Year, Maybe the SBA Will Remember the Alamo

The Small Business Administration oversees the HUBZone Program designed to aid Historically Underutilized Businesses, and once again a government watchdog group has found the program rife with fraud (pdf).

The program has been staggering under charges for years that businesses are fraudulently or inaccurately representing themselves to get into the program. The Government Accountability Office did a test to see if the SBA has improved any of these perennial problems by creating four bogus businesses, one whose main address was listed as the national historic landmark the Alamo.

The GAO found that the SBA could have easily done online searches to determine the validity of these fake firms and while it's improved its process slightly for entering the program, it's still shamefully behind.

The SBA took about seven months to process each of these bogus applications and lost documentation, according to the GAO report.

Government Ruling Invites Everyone to Make an iPhone App

Anyone and everyone can now develop applications not approved by iPhone maker Apple, thanks to a government ruling this week.

The Monday ruling by the U.S. Copyright Office exempts iPhone application developers and others from being sued for breaking the encryption on the iPhone’s operating system in order to run third party applications not approved by Apple.

“The evidence supports the contention that a technological measure is adversely affecting adding applications to the iPhone,” wrote Marybeth Peters, the copyright office's top lawyer, in her recommendations (pdf).

The ruling lays out that consumers can now break into "computer programs that enable wireless telephone handsets to execute software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications, when they have been lawfully obtained, with computer programs on the telephone handset."

The iPhone has spawned a cottage industry of application developers and small businesses. Some small firms sprouted up to help other small businesses develop their own iPhone app. I wrote a story about it for MainStreet.com.

The 1998 Digital Millennium Copyright Act says it's illegal to break the digital locks protecting copyright owners’ content unless it’s for a non-infringing use, which is something the Copyright Office and Librarian of Congress define every three years.

The Copyright Office said in its remarks that the record indicates that the total number of "jailbroken" iPhones constitutes up to 10 percent of all iPhones sold.

Members of wireless industry firms are cautioning users who jailbreak their mobile devices, saying tinkering around with the system could invite security breaches, malware and system instability.

SBA Looking for Proposals for Regional Clusters Initiative

The Small Business Administration recently announced its Regional Clusters Initiative, which aims to accelerate small business opportunities in existing business clusters by offering technical assistance, business training, counseling and other services.

The SBA is looking to work with 10 to 15 existing regional clusters nationwide in fiscal 2010. These clusters will create and follow roadmaps that enhance their region's ability to compete on a national and global scale, attract further business investments, and create sustainable job growth.

SBA will accept proposals from local and regional cluster initiatives for funding of up to $600,000 per cluster. SBA is launching two programs within the initiative: Regional Innovation  Clusters and Advanced Defense Technologies.

SBA support will be targeted toward the needs of entrepreneurs and small businesses. To access the agency's request for proposals to participate, frequently asked questions about the initiative and more information, go to www.sba.gov/clusters/index.html. More info on the RIC and ADT clusters is also available at www.fedbizopps.gov.

Beanetics. It's Cool Beans.

I took a drive out to the dog groomer last week. It's a fair distance to go to get a dog groomed, but one-third the cost of the going rate for the same services in my neighborhood as I talked about in an earlier post.

While my daughter and I were waiting, we thought we'd go explore the neighborhood and stumbled upon Beanetics, a coffee shop in Annandale. It's an espresso-sized little place with a few local artist photographs on the walls and when we paid a visit, two people were surfing away at their laptops thanks to free wi-fi. It's in a subdued strip mall, which like many similar malls in the United States, have hidden gems.

Beanetics is actually a little cramped, although we had a good time. What intrigued us the most was the enormous bright-red coffee roaster and scale that take up a significant portion of the shop's space - and what intrigued me the most was the excellent coffee.

I'm not an avid coffee drinker by any stretch of the imagination, but I spend a lot of time in coffee shops to file stories and meet contacts and usually try out a cup where ever I happen to be. People often suggest to meet at Starbucks because it's so widely known and prevalent. (In fact, there's so many, I've several times been in situations where someone I was supposed to meet has been sitting in a Starbucks half a block away because we weren't specific enough to say the exact address, only the neighborhood.)

Beanetics bills itself as Annandale's only independently owned micro-roasting facility, and it sells 15 different kinds of fresh-roasted coffee daily.

The company has a colorful brochure, which advertises that "customers can watch as we use a computer-controlled roaster in our glass-enclosed roasting room." That sounds a bit fancy, but it's true.

After we finished our snacks, which they brought to us, I asked the barista (who is also the roaster) if he could give us a "tour" of the roasting room. He took myself and my six year old into the room, explained how the massive, shiny machine worked and let her take home a few pre-roasted greenish-gray coffee beans. When we showed them to her younger brother, he was greenish-gray with envy.

I enjoyed our experience and applaud the employees for taking the time out to show us how things worked. It's also an experience we couldn't have had at Starbucks.

IRS Releases Proposed Regs to Charge Fee for Tax Preparers

The Internal Revenue Service has released proposed regulations that would establish a fee for individuals who apply for a preparer tax identification number, or PTIN. 

Proposed regulations that were issued in March would require some tax return preparers to obtain a PTIN.  The IRS is working to finalize those proposed regulations, which are the first of a series of steps planned to increase oversight of federal tax return preparation.

The proposed regulations (REG-139343-08) would establish a fee of $50, payable to the IRS, to cover technology costs, as well as compliance and outreach efforts associated with the new PTIN program.

The proposed regulations also ask for an additional fee that the IRS says is expected to be substantially lower than $50 to be charged by the third-party vendor chosen to operate the new online system. That fee amount is expected to be announced soon, as well as additional details about the launch of a new online application system, according to the tax agency. These fees could change in future years as program costs are reevaluated.

Agencies are directed by the Office of Management and Budget to charge user fees to recover the cost of services that convey special benefits beyond those available to the general public, such as the authority to prepare federal tax returns for compensation.
    
Tax professionals and others have until Aug. 23, 2010, to submit comments regarding the proposed regulations. The official publication date of these proposed regulations is July 23.

In January, IRS Commissioner Doug Shulman announced the results of a comprehensive six-month study of the tax return preparer industry, which proposed new registration, testing, and continuing education of tax return preparers.

"With more than 80 percent of American households using a tax preparer or tax software to help them prepare and file their taxes, higher standards for the tax return preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term," according to the IRS.

We're Happy When Busy, But Want to be Lazy

We're happier when we're busy, but our instinct is to be lazy, according to researchers whose data was published in the British Psychological Society's Research Digest blog.


When given a choice between executing a task for 15 minutes or waiting quietly for 15 minutes, most people chose inertia. But the students who worked on their task reported that they were subsequently much happier than those who chose inactivity.

Researcher Christopher Hsee did a couple of studies, including one asking students to evaluate a bracelet and then were given the option of either spending 15 minutes lolling around or 15 minutes disassembling and rebuilding the bracelet. Those given the option to reassemble the bracelet into a new design tended to take up the challenge over those who just had to rebuild the same thing. Those who took up the challenge reported feeling happier than those who sat idle.


Hsee's team say there is a case for encouraging "futile busyness" or "busyness serving no purpose other than to prevent idleness. Such activity is more realistic than constructive busyness and less evil than destructive busyness."


In most small businesses, there is not a lot of opportunity for lazing around. It's more of a mentality addressing "how many of these tasks can I realistically get done on my to-do list today while addressing multiple unexpected situations."


But I think it is food for thought. While most of us crave "down time," in reality we feel good when we are asked to offer new ways to create things (like rebuilding a bracelet into a new design) and are busy. I think it's also an indicator that it can help to include all levels of employees in some of the decision-making process that goes on at a company. It's empowering and allows growth.


By the way, according to the study, airports have tapped into this "futile busyness" concept. Some airports have deliberately increased the walk to the luggage carousel so as to reduce the time passengers spend waiting around for luggage to arrive.

SBA Seeks Your Input on Its Web Site Redesign

As a journalist covering small business issues, I visit the web site of the Small Business Administration quite often. If you're a small business owner, I hope you visit it too. It's got a lot of great information on how to grow your business, loan types and many other topics. The problem is that this awesome information is often hard to navigate.

But the SBA now plans to overhaul it's web site. The agency recently launched The NEXT SBA.gov, a transition site dedicated to sharing its redesign progress with employees, small business owners, agency partners and other agency stakeholders.

The site is www.sba.gov/NEXT and includes a link to Frequently Asked Questions about the redesign.

It's also accepting comments and suggestions using the "What Do You Think?" box at the bottom of the site. I heartily urge you to participate in helping upgrade this resource.

Sports Stars Become Attainable for the Smallest of Firms

Celebrity endorsements help sell products, but let’s face it, most celebrities don’t team up with the smallest of businesses that have the shallowest of pockets.

I was intrigued to see that Brand Affinity Technologies, a California start-up pointed out by news service Springwise, is offering advertisers of all sizes the ability to launch endorsement campaigns using its own “endorsement platform.”

I got my first whiff of sports and money when I was in kindergarten. My school was having a reading contest in which the winner of reading the most books in a month would get to go to lunch with a Washington Redskins football player. Each student asked neighbors and others to contribute money for each book that he or she read. I won the contest. I read the most books. But I didn’t get to go to the lunch. That honor was bestowed upon a fellow kindergartner who had collected the most money. I was catching on.

Sports endorsements are powerful. Most Americans follow some kind of sports team closely. BAT’s database includes more than 3,300 contract athletes. Advertisers can browse talent based on geography, branding and targeting considerations; included in the platform are detailed talent profiles with photos, videos and personal information — such as the type of cell phone they use or proprietary metrics that help compare talent by region, sport and status.

Obviously a sports endorsement isn’t for every business. But if it works for yours, BAT might be worth checking out.

Endorsement offerings include digital, radio, outdoor, print and TV advertising along with appearances and virtual memorabilia that advertisers can provide to consumers as incentives and rewards. Pricing is on a pay-for-what-you-use, CPM or flat-rate basis.

Separately, if your business is in an area that plans to host an upcoming Super Bowl - like North Texas or New Orleans, check out this story I wrote on a small business contracting program with the National Football League.

U.S. Exports Increase 18% in First Five Months of 2010

U.S. exports of goods and services increased 17.7 percent during the first five months of 2010, according to data released by the Census Bureau and the Bureau of Economic Analysis.

"This data reinforces the strong growth to date in U.S. exports in 2010," said Export-Import Bank Chairman and President Fred Hochberg. "Ex-Im Bank financing has supported an estimated 150,000 U.S. jobs in the fiscal year to date. The bank will continue to use all of its resources to support the president's goal by reaching out to even more U.S. businesses, especially small businesses, to help them export and, in the process, create more American jobs."

Data highlights include:

U.S. exports totaled $739.5 billion during the January-through-May period of 2010, up 17.7 percent from the same period of 2009;

The May export figure is the strongest year-to-date, as well as the strongest monthly performance since September 2008;

Among the major export markets, the largest percentage increases in goods exports occurred in Taiwan (68 percent), Korea (56 percent), Malaysia (51 percent), Singapore (45 percent), Philippines (45 percent), Czech Republic (44 percent), Indonesia (42 percent), Thailand (41 percent), China (39 percent) and Colombia (38 percent);

Ex-Im Bank, an independent, self-sustaining federal-government agency, provides export financing that helps strengthen U.S. exports. The bank provides financing mechanisms, including working capital guarantees to help small and medium-sized U.S. businesses, export-credit insurance to protect against nonpayment by foreign buyers, and loan guarantees and direct loans to assist foreign buyers of U.S. goods and services.

In fiscal year 2009, overall Ex-Im Bank financing totaled $21 billion, and authorizations supporting small-business exports reached a historic high of $4.4 billion, nearly 21 percent of total authorizations.

Number of Minority-Owned Firms Jumps 46% Between 2002 and 2007

The Minority Business Development Agency and the Census Bureau today announced that the number of minority-owned firms increased by 46 percent to 5.8 million between 2002 and 2007, according to data from a Census survey.

“It is encouraging that the minority business community is growing and making progress relative to all U.S. firms, but economic parity remains elusive,” MBDA National Director David Hinson said. “While the number of minority-owned businesses continues to grow, they are still smaller in size and scale compared to non-minority-owned firms.”

In 2007, average gross receipts for minority-owned firms increased to $179,000 from $167,000 in 2002, but that's still well below gross receipts for non-minority-owned firms, which had average gross receipts of $490,000.

“We must continue to close this gap,” Hinson said. “It is unacceptable, particularly during an economic crisis that disproportionately affects the minority business community, to have this ongoing disparity.”

Study highlights:

Between 2002 and 2007, the number of minority firms grew by 46 percent, compared to 18 percent for all U.S. firms, and compared to 13.7 percent growth for the minority population age 18 and older, during the same period;

Minority-owned firms employed approximately 5.9 million people in 2007, up from 4.7 million in 2002;

Asian-owned firms grew 41 percent to 1.6 million from 2002. Asian-owned firms continue to generate the highest annual gross receipts at $510.1 billion in 2007, increasing 56 percent from 2002;

Hispanic-owned businesses totaled 2.3 million in 2007, up 44 percent from 2002. Receipts for Hispanic firms increased 55 percent to $343.3 billion;

Black, or African-American-owned businesses grew to 1.9 million firms in 2007, up 61 percent from 2002 - the largest increase among all minority-owned companies; and generated $135.6 billion in gross receipts, up 53 percent from 2002;

There were 237,203 American Indian and Alaska Native-owned businesses in 2007, up 18 percent from 2002, generating $34.2 billion in gross receipts, an increase of 27 percent;

Native Hawaiian- and Other Pacific Islander-owned businesses totaled 38,854 in 2007, up 34 percent from 2002. While these firms’ reported the largest increase in receipts among all minority-owned firms in 2002 (63 percent), the total amount reached only $7 billion; and

Minority-owned firms employed approximately 5.9 million people in 2007, up from 4.6 million in 2002.

IRS Taking Public Comments on New 1099 Regulations

Here's an update to my post earlier today about new 1099 requirements for goods and not just services, like those provided by independent contractors. The IRS is taking public comments "on how to most effectively carry out" that law change that takes effect in 2012. 

The IRS said in a statement that these comments will help the agency "issue guidance that implements this provision in a manner that minimizes burden and avoids duplicate reporting."

Under a proposed regulation, many business purchases made with credit or debit cards would be exempt from the new reporting requirement because they are already reported by banks and other payment processors. The IRS wants your thoughts on additional circumstances in which duplicate reporting might otherwise occur and on rules that would prevent duplicate reporting.

There are three ways to submit comments.

• E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Notice 2010-51" in the subject line.

• Mail to: Internal Revenue Service, CC:PA:LPD:PR ( Notice 2010-51), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044

• Hand deliver to: CC:PA:LPD:PR ( Notice 2010-51), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

Health Care Bill Requires 1099 for Goods, Not Just Services

A provision in the health care reform law could significantly increase tax recordkeeping requirements and costs for the  self-employed, small businesses and charities, the IRS' national taxpayer advocate said Wednesday in her annual report.

The report expresses concern that a new reporting requirement in the Patient Protection and Affordable Care says that beginning in 2012, all businesses, tax-exempt organizations and federal, state and local government entities will be required to issue Forms 1099 to vendors from whom they purchase goods totaling $600 or more during a calendar year. 

To meet this requirement, these businesses and entities will have to keep track of all purchases they make by vendor.  For example, if a self-employed individual makes numerous small purchases from an office supply store during a calendar year that total at least $600, the individual must issue a Form 1099 to the vendor and the IRS showing the exact amount of total purchases.

Businesses currently are required to provide Form 1099s for services, such as payments to independent contractors, but not for goods.

According to an analysis of 2009 IRS data, about 40 million businesses and other entities will be subject to the new requirement, including roughly 26 million non-farm sole proprietorships, 4 million S corporations, 2 million C corporations, 3 million partnerships, 2 million farming businesses, one million charities and other tax-exempt organizations, and more than 100,000 government entities. 

Are Start-Ups the True Job Generators?

I think a lot about jobs. Since I was a kid I've liked to help people find jobs and to talk about what they like to do at work. Maybe that's why I enjoy my own job so much as a journalist, which allows me to learn about new perspectives and different careers from business owners and entrepreneurs.

Lately I've been talking to a lot of start-ups and so found it fascinating that a new study by the Kauffman Foundation reveals that established firms are on a track of losing 1 million jobs annually while in their first year, new firms add an average of 3 million jobs. Of course, let's just hope those new firms stick around.

The study shows that during recessionary years, job creation at startups remains stable, while net job losses at existing firms are highly sensitive to the business cycle.

On average, one-year-old firms together create nearly one million jobs, while 10-year-old firms generate 300,000. I recently interviewed the CEO of Groupon, a 20-month-old global company that is now worth $1.35 billion and employs more than 1,000 people. Yes, I see where this study is coming from.

“These findings imply that America should be thinking differently about the standard employment policy paradigm,” said Robert Litan, vice president of research and policy at Kauffman. “Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies, when, in fact, policy has little effect on net employment growth. Instead, job growth best would be influenced by focusing greater attention on policy that supports startup firms.”

Because startups that develop organically are almost solely the drivers of job growth, job-creation policies aimed at luring larger, established employers will inevitably fail, said study author Tim Kane, a Kauffman senior fellow. Such city and state policies are doomed not only because they are zero-sum, but because they are based in unrealistic employment growth models, he added.

Everybody Loves a Parade, and Small Businesses Should Too

I hope you had a good July 4th celebration. I've loved fireworks since I was a kid, and don't tell the police but I lit a few sparklers (non-commercial fireworks are illegal in Virginia.)

Living in the D.C. area, I'm used to the fanciest of parades. The kind that attract participants from around the globe, but I've got to admit the small neighborhood parade is just something special.

I went to one on Sunday morning. Neighbors were handing out red, white and blue balloons. Kids had decorated their bikes with streamers around the spokes and handlebars, Some people had gone all patriotic with their strollers. One golden retriever came dressed as a dalmation (white T-shirt with magic marker black spots.)

The parade of several hundred people started. There were really no onlookers because, well, the neighborhood was the parade. It began. Kids fell off their bikes because they had to pedal too slow at its crowded start. Dogs barked. Babies cried. It was sweltering hot. I got beamed in the forehead with a gumball. Somehow it was really fun.

A couple of old Model Ts drove by, although the last in line was a Toyota Scion whose driver insisted he was a Model A. The best disguise ever!

I've been to many of these parades which range from tens of people to thousands. It's a great time for small businesses to participate with their community - and even join the parade. The smaller ones are somewhat free-for-all and don't require much to participate.

1. It's the original social marketing. Remind your neighbors you have a small business;
2. You're in front of a captivated crowd;
3. Cost is low;
4. Offer some freebies;
5. Offer to donate some food for the parade-end picnic; and
4. You might be going anyway.

Get out the company car, bike or running shoes and stick your logo on the side. Throw some candy out the window, hand out some coupons, put your logo on water bottles. These are your shoppers. These are the people that want to know about you. I'll save a space for you next year. (Just jump in line right next to the dancing journalist who's wearing a placard that says "Reporter for Hire.")

I'm gearing up for my next favorite parade on Halloween. I've made some pretty hokey costumes, but they had heart. I hope you will too.

Sen. Snowe to Offer SBA Loan Bill

Sen. Olympia Snowe, the top Republican on the Committee on Small Business and Entrepreneurship, plans to offer an amendment to the Senate’s version of small business jobs legislation that would pay for the temporary fee reduction and increased guarantee rates associated with Small Business Administration 7(a) and 504 loans.


These provisions originally were part of the American Recovery and Reinvestment Act, and were credited with boosting SBA lending by 90 percent from passage of that law through the expiration of the fee reductions on May 30.  The Senate’s current version of the bill includes language to reinstate and continue these provisions through Dec. 31.

“Given the critical role SBA lending has played in bolstering affordable credit to our nation’s small businesses, we must reinstate these provisions as part of the small business jobs legislation the Senate will again take up after the July 4 recess,” said Snowe of Maine. “It is essential that we pay for these provisions so that we are not risking future economic growth by increasing the deficit.”