Thursday, January 31, 2013

State is taking tax break back

Seems pretty outrageous to me.Comments?

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


State is taking tax break back

SACRAMENTO — About 2,000 small business owners and investors across California are being forced to retroactively pay the state four years of assessments totaling $120 million plus interest, based on a decision by the Franchise Tax Board.

In December, the state agency that administers personal income and corporate taxes ended a nearly 20-year-old tax incentive designed to spur investment in startup companies and small businesses, citing a court ruling. The benefit allowed small business investors who sold their stock at a gain to exclude half the profits from their income taxes.

Bruce Hansen, who cofounded ID Analytics in San Diego and led the company as chairman and chief executive until its sale to LifeLock for $195 million in 2012, said the biggest heartache was discovering that the state was changing the rules dating back several years. It’s a decision that he says will cost him several hundred thousand dollars.

“I don’t mind paying taxes,” Hansen said. “But California has just gone over the top. This is no way to do business in my mind.”

The agency decision is estimated to affect about 500 small business owners and shareholders for taxes to be paid this year and each of the past four years. The estimate of $120 million plus $8 million in interest only covers the four past years, as taxes this year are not due until April.

The decision was made at the staff level, not by the three members of the Franchise Tax Board — John Chiang, state controller; Jerome E. Horton, chairman of the Board of Equalization and Ana Matosantos, state finance director.

The central issue is that a legislative policy decision was found unconstitutional, and the Legislature must determine the next course of action, said Jacob Roper, a spokesman for Chiang, chairman of the tax board.

“In the meantime, the controller can sympathize with any taxpayer who faces shifting rules and applications of the law,” Roper said. “Complex and changing tax rules add to a taxpayer’s burden, and this is just one reason the controller thinks a broad tax reform package is overdue.”

The court case at issue was brought against the Franchise Tax Board by Frank Cutler. Cutler sought to take advantage of the tax break but was denied because the law only gave that consideration to small businesses with 80 percent of assets and payroll in California. The Second District Court of Appeal held that the statute violated the commerce clause of the U.S. Constitution because it discriminated against out of state businesses.

The Franchise Tax Board says it had little choice but to invalidate the exclusion after the August ruling.

“In treating all taxpayers the same — because the statute is now null and void — we are issuing tax assessments for the open years saying you can’t have this exclusion,” spokeswoman Denise Azimi said.

Marty Dakessian, an attorney representing Cutler, questioned why the tax board’s decision to seek back assessments from investors was made at the staff level rather than by tax board members or elected lawmakers. He said the financial incentives to small businesses are critical as the state works its way through the economic recovery.

“These are incentives that encourage the growth of small business and creation of jobs and all the things that people in Sacramento like to talk about,” Dakessian said. “And when you have Franchise Tax Board bureaucrats making decisions based on revenue, without regard for whether this helps or hurts our job-creating climate, that’s a problem.”

“For this decision to not be in the hands of people directly accountable to voters frankly is wrong,” he added. “This is a black eye for California.”

Brian Overstreet, the cofounder and president of AdverseEvents in Healdsburg, blogged about the impact of the decision on his former San Diego-based company.

“This didn’t have an opportunity to have a discussion or go through legislative action,” Overstreet said. “This largely came to light over the holiday break when nobody was around and nobody noticed it until I started screaming from the hilltop.”

Overstreet cofounded an enterprise-focused data company in San Diego in 1999. Last year, he sold Sagient Research Systems in a private transaction he described as positive for everyone involved. He said he had looked forward to the partial state income-tax exclusion. He expected to pay about half the regular rate on the gain from sales of stock (4.5 percent instead of 9 percent).

When the sale closed, Overstreet paid his state and federal estimated taxes with the exclusion, and assumed he was all caught up. He learned last month the program was invalidated.

“I felt angry, confused, upset,” Overstreet said. “Now, I am more resigned to the reality but I am not going to stop making noise about it.”

Sen. Ted Lieu, D-Torrance, and Assemblyman Jeff Gorell, R-Camarillo, reached out to Overstreet after his post reverberated across the blogosphere.

In an interview, Lieu said he planned to send a letter to the tax board urging the agency to reverse its decision and allow past investors to claim the exclusion.

“I think it’s wrong to retroactively penalize taxpayers who relied in good faith on what the law was five years ago,” Lieu said. “On a going-forward basis, I am fine with them changing the rules. I just believe it is wrong to change the rules retroactively.”

Gorell said he also was prepared to act.

“This falls into the category of egregious activity in terms of holding taxpayers accountable for activities they had done many years in the past,” he said. “This is something we’re going to address.”

Matthew Portnoff, a tax expert in the Los Angeles law office of Manatt, Phelps & Phillips, said there was nothing compelling the tax board to seek back payments with interest.

“This was the most aggressive of the options available to them,” he said.

Azimi, the spokeswoman for the tax board, said the agency’s legal division researched case law, legislative intent and what was done in similar situations in determining that this was the best course of action going forward. She added that there is no provision in the law to waive interest.

Wednesday, January 30, 2013

Small Business California Survey/Tax Credit Resources Available to You and Your Members

On Monday February 4 Small Business California will be sending out its annual survey. I hope you all will complete this. For those of you that are connected with small business associations I would appreciate knowing if you will send to your members.

Please let me know if you will be doing so.

To see last year’s survey please go to

I received the email below from Lucas Communications. Last year in our survey 77% of the respondents did not know about the small business health tax credit With March 15 approaching please see information about the credit.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Dear Scott,

As a long-time Health Law Guide for Business Partner, we wanted to let you know we are sending the following email to business groups across the state to help them educate their members on the Small Business Health Care Tax Credit. Please free to use this information however it would be most useful to you and your membership.

Dear [Business Group],

As a respected leader among the business community, you know the importance of providing accurate and timely information to your members. As the March 15 corporate tax filing deadline approaches, we want to help ensure your small business members are aware they can reduce their federal tax burden if they provide health insurance to their employees.

The Small Business Health Care Tax Credit, a provision of the Affordable Care Act (ACA), also known as the health care law, is available now and was designed to encourage both small businesses and tax-exempt employers to maintain existing coverage or offer health insurance to their employees for the first time. In California alone, more than 500,000 employers may be eligible for the credit!

To be eligible for the credit, the business must have 25 or fewer employees, an average annual wage of less than $50,000 and pay at least 50 percent of the employees’ insurance premiums.

I encourage you to utilize the attached toolkit to help your small business members keep more of their hard earned dollars in their pocket. We’ve drafted suggested text for an email or newsletter insert and social media posts, a fact sheet about the credit and an easy to use work sheet to help employers determine if they’re eligible. Please let us know if we can help tailor any of this information for your members.

For more information on the tax credit and business-specific information about the implementation of the health care law, visit



Annie Han

Lucas Public Affairs

T 916-492-2707 ext 215

C 916-541-4230

Monday, January 28, 2013

SBA Launches Affordable Care Act Web Page & Blog

Some of you have asked for information on the Affordable Care Act. I have sent information to you but maybe this new SBA cite would be of value.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116



From: VanEs, Christopher J. []

Sent: Monday, January 28, 2013 7:56 AM

To: VanEs, Christopher J.

Subject: SBA Launches Affordable Care Act Web Page & Blog

Good Morning – Today, SBA launched, a page that aggregates all of SBA’s information for small business owners on the Affordable Care Act. SBA is also launching a blog, Health Care Business Pulse, to cover a series of topics related to the Affordable Care Act throughout the year.

Additionally, small business owners can sign up for marketplace enrollment updates at

Please pass this information along to interested parties, and let me know if you have additional questions.



Top Three Things Small Businesses Should Know About the Affordable Care Act

by Meredith Olafson, Community Moderator

The Affordable Care Act will help small businesses by lowering premium cost growth and increasing access to quality, affordable health insurance. Depending on whether you’re a small employer or a larger employer, different provisions of the Affordable Care Act may apply to you as described below.

1. Businesses with Fewer than 25 Employees- Small Business Tax Credits

The Affordable Care Act does not require that businesses provide health insurance, but it offers tax credits for eligible small businesses that choose to provide insurance to their employees. To qualify for a small business tax credit of up to 35% (up to 25% for non-profits), you must have:

• Fewer than 25 full-time equivalent employees

• Pay average annual wages below $50,000

• Contribute 50% or more toward employee health insurance premiums

Beginning in 2014, this tax credit goes up to 50% (35% for non-profits) and is available to qualified small businesses who participate in the Small Business Health Options Program (SHOP) Exchanges.

2. Businesses with 50 or Fewer Employees- Affordable Insurance Marketplaces

The Affordable Care Act does not require that businesses provide health insurance, but beginning in 2014, small businesses with generally 50 or fewer employees will be able to purchase coverage through SHOP , competitive marketplaces where small employers can go to find health coverage from a selection of providers. The SHOP Marketplaces and Individual Marketplaces for those who are self-employed open on January 1, 2014. Open enrollment begins on October 1, 2013. SHOP will offer small businesses increased purchasing power similar to that of large businesses.

3. Businesses with 50 or More Employees- Employer Shared Responsibility Provisions

Under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility to reform and improve the availability, quality, and affordability of health insurance coverage in the United States. Employers are not required to provide coverage to their employees under the Affordable Care Act. However, beginning in 2014, businesses with 50 or more full-time employees (or full-time equivalents) that do not offer affordable health insurance that provides a minimum level of coverage to substantially all of their full-time employees (and their dependents) may be subject to an employer shared responsibility payment if at least one of their full-time employees receives a premium tax credit to purchase coverage in an insurance Marketplace. A full-time employee is generally one who is employed an average of 30 or more hours per week.

If you meet or are close to this threshold level of full-time employees, it’s important to understand how these rules may apply to you and how the employer shared responsibility payments could be triggered. For more guidance on the employer shared responsibility payments, refer to this FAQ from the IRS.

Friday, January 25, 2013

Affordable Care Act/Exchange

Governor Brown yesterday filed a proclamation calling a Special Session January 28. The session will focus on implementation of the Affordable Care Act.

Small Business California will be watching this closely and working to make sure the voice of California small business gets heard.

This morning Colorado Public Radio came out with a piece saying that three nonprofit groups held discussions with 414 people in 8 regions of Colorado asking what they will need to shop on the Exchange[ In California it is called Cover California] . The feedback was that consumers know very little about insurance and will need a lot of customer support to use the Exchange. Few participants said they would be comfortable choosing a policy on their own.

For a while now we have heard that the Exchange would look like Travelocity in the purchase of airline tickets but it appears that it might actually look like Turbo Tax.

Some interesting results were that 162 of the participants said they would not trust insurance agents/brokers and only 47 said they would. The most trusted group were doctors with 138 saying they would trust them and 47 saying they wouldn’t.

What do you think? Who would you trust?

In the interest of full disclosure I have some interest in this being an insurance agent/broker .

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Thursday, January 24, 2013

Next 10/GoBiz

A report came out today indicating that Business Owner policies for small businesses are going to be increasing in 2013. This policy covers for many small businesses their property and liability coverages. You might want to talk to your broker when your policy renews

Please see link to see how California compares with the other states in the country. Economic growth seems to be about average of the other states but job growth is lagging

Link to “Compare economic performance in all 50 states” :

Governor Brown gave his comments about California economy. See below. He acknowledges that job growth is slow but coming back. Note comments about regulations and Enterprise Zones

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116




Governor’s Office of Business and Economic Development


Thursday, January 24th, 2013 916-322-0671

GO-Biz Accomplishments & Agenda Outlined in State of the State

Governor Brown highlights jobs created, regulatory reforms and his upcoming trade mission to China in April 2013

Sacramento, Calif. Governor Edmund G. Brown Jr. today delivered his annual State of the State speech to a joint session of the California legislature. In the speech Governor Brown mentioned the job creation accomplishments of the Governor’s Office for Business and Economic Development as well as outlining some of the office’s upcoming initiatives. These included a focus on regulatory reform and an upcoming trade mission to China in April.

“California lost 1.3 million jobs in the great Recession but we are coming back at a faster pace than the national average,” said Governor Brown. “The new Office of Business and Economic Development — GO-Biz —directly assisted more than 5,000 companies this past year.”

Of specific note in the Governor’s jobs highlights was Samsung Semiconductor, an industry leader in high tech manufacturing. Governor Brown highlighted GO-Biz’s efforts in persuading Samsung to locate a research and development facility in San Jose that will employ at least 2,500 people in high skill, high wage jobs. Also mentioned was internet retailer Amazon and the three new California distribution centers in Patterson, San Bernardino and Tracy. The centers will generate over 1,000 new jobs across the state.

The Governor also emphasized a need streamline regulatory procedures, including CEQA (the California Environmental Quality Act) as well as a need to change both the Enterprise Zone Program and the Jobs Hiring Credit which he referenced as not working.

“Our approach needs to be based more on consistent standards that provide greater certainty and cut needless delays,” said Governor Brown.

Those elements were part of a larger theme of fiscal discipline by Governor Brown who criticized California’s cycles of “stop and go, boom and bust” budgeting and stressed that success for the state meant “living within our means and not spending what we don’t have.” It was a message welcomed by GO-Biz Director Kish Rajan.

“The Governor’s speech today says exactly why business continues to grow here in California” said Rajan. “Continuing our state’s fiscal discipline adds to our state’s long term financial stability and smart reforms of outdated regulations will give all businesses additional tools to accelerate their growth in the Golden State.”

The Governor also promoted his upcoming trip to Shanghai to encourage trade with the Chinese economy and as well as to open the new GO-Biz trade office.

“California’s exports are booming and our place in the world economy has never been stronger,” said Governor Brown. “This year we will take another step to strengthen the ties between the world’s second and ninth largest economies. In April, I will lead a trade and investment mission to China with help from the Bay Area Council and officially open California’s new trade and investment office in Shanghai.”

The new trade and investment office in Shanghai is a public-private partnership between the Bay Area Council and GO-Biz. It is funded through private sources, not taxpayer dollars, and represents the first foreign trade office for California in almost a decade.

“Greater China has the potential -- and the drive -- to become our largest trading partner and source of new foreign direct investment over the next 10 years,” said Paul Oliva, Deputy Director for International Affairs and Business Development at GO-Biz. “It’s already growing toward a two-way trade relationship of $200 billion per year, and the Asia Society estimates we could win $50 billion or more in new investment. We are focused on growing this opportunity for businesses large and small across California.”

The Governor’s Office of Business and Economic Development (GO-Biz) serves as California’s single point of contact for economic development and job creation efforts. GO-Biz offers a range of services to business owners including: attraction, retention and expansion services, site selection, permit streamlining, clearing of regulatory hurdles, small business assistance, international trade development, assistance with state government, and much more. For more information visit:


Tuesday, January 22, 2013

All Chains Are not Alike/ Workers Compensation Claims Cost

Last week I sent out an email on chains and how much they recirculate money back to the community versus how much independents recirculate.

I received this email from John Withers of Great Clips basically saying not all chains are the same.

Please see his comments.

Well, I agree that we are "different". Franchisees are sort of a hybird.

To answer his questions, we don't control the logos or the store design. We pay a 6% royalty which is pretty standard and it well worth it for what we get in return. We control our prices and we donate to the Redwood Empire Food bank, Children's Miracle Network, numerous high school programs such as Art Quest (for music drama etc) and we support at least a half dozen little league teams around the north bay.

The reason I am sensitive to the subject is that I have seen protectionism against "chains" in several towns around here. I've seen letters to the editor saying "chains drive out the mom and pops" All I want people to know is that you can be part of a chain and still be a "mom and pop" retailer.

Thanks for passing my comments along to those folks.

John Withers. Great Clips

Do you have an experience modification on your workers compensation policy. If so and if you have claims do you know the cost to you on those claims.

My company CAL Insurance has just purchased a program that evaluates the cost of claims. You would be amazed. In our evaluation of one of our clients had $2857 in claims and it cost the client $12987 over three years.

There are so many reasons to have a culture of safety in your business but certainly one is that claims are expensive. It is why you should thoroughly understand first aid claims and pay for these claims yourself. The caveat is that you need to make sure you do this properly.

Another suggestion for all of you with an experience modification is to make sure you get your experience modification worksheet from your broker

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


ACA/Independent Business vs. Chains

Please see below impact on communities of how independent businesses recirculate revenues back into the community versus their chain competitors.

Highlight-Nationwide local retailers and restaurants recirculate 52.3% of revenue, while chains recirculate 15.8%. Thank you Hut for sending your newsletter

I just received the American Academy of Actuaries magazine Contingencies which provided data on the impact of the Affordable Care Act on health insurance premiums. According to their analysis ACA premiums for people 20 to 29 will go up 42% assuming no subsidies, 31% for people 30 to 39 assuming no subsidies and 1% for people 60 to 64 assuming no subsidies. These are individual polices. The increases for 40 to 49 are about 14%assuming no subsidies and about 4%.for those 50 to 59 assuming no subsidies. If you want the full report please let me know as I don’t send attachments on this email. Thank you David Burton at the National Small Business Association for sending

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116



Indie Impact National Summary: Indies Give Back Over Three Times as Much as Chains

By Dave Grogan on Thursday, Jan 17, 2013

Communities as different as Las Vegas, New Mexico, and Louisville, Kentucky, have at least one thing in common: Their independent businesses recirculate a substantially greater proportion of their revenues back into the local economy than do their chain competitors. This, according to a national study, The Indie Impact Study Series: National Summary Report, a summary of 10 localized studies conducted by Civic Economics, in partnership with the American Booksellers Association, over an 11-month period from 2011 - 2012.

For the Indie Impact series, Civic Economics worked with small business organizations in 10 American communities to survey independent, storefront businesses engaged in the retail trade or food and beverage services.

As with previous studies in Austin, Chicago, San Francisco, Phoenix, Grand Rapids, and New Orleans, Civic Economics compared the recirculation of revenue in the local economy for participating independent businesses with that of major chain competitors. In total, 106 retailers and 28 restaurants answered the survey. Reports were compiled for each community, as well as an aggregated national study summary.

Among the national study’s findings:

• Nationwide, local retailers and restaurants for all completed surveys recirculate 52.3 percent of revenue locally, while chains recirculate just 15.8 percent. This means indies keep 3.3 times as much revenue in the local economy as do their chain competitors.

• Looking at just retailers, local businesses recirculate 47.7 percent of revenue locally, compared to 13.6 percent for chains, meaning indie retailers keep 3.5 times as much revenue in the local economy.

• Nationwide, by retail segment, sporting goods, book, and music stores combined recirculated 39.1 percent of revenues locally.

“Each Indie Impact study further drives home the point that we’ve been making for years that shopping at your local, independent retailer is better for the fiscal health of a community,” said ABA CEO Oren Teicher. “At a time when many cities and towns are faced with budgetary and job creation challenges, these figures simply provide yet another great reason for shopping local.”

For each study, Civic Economics asked local businesses to provide the proportion of revenue expended in five categories: Profits paid out to local owners; Wages paid to local workers; Procurement of goods and services for internal use; Procurement of local goods for resale; and Charitable giving within the community.

For chain competitors, the aggregate value of these was estimated from public records.

Northern California Independent Booksellers Association (NCIBA)

Presidio National Park

1007 General Kennedy Avenue

PO Box 29169

San Francisco, CA 94129

415-561-7686, 415-561-7685 (fax)

Treasury Notes: Helping Small Business Owners and Home-Based Employees Claim the Home Office Tax Deduction

For small businesses operating out of your home this should be good news for you. See below information

There seems to be some momentum building to increase the minimum wage over time[9.25] and include a cost of living increase[AB 10]. Last year legislation was introduce providing for a cost of living increase only and it got stopped in Appropriations. It very well may have had a cost to the state but I don’t know for sure. If there is anyone in the Sacramento area that has thoughts on this one way or the other and would be willing to talk to the media please let me know.

Scott Hauge

Small Business California

2311 Taraval Street

San Francisco, CA 94116



Helping Small Business Owners and Home-Based Employees Claim the Home Office Tax Deduction

By: Deputy Secretary Neal S. Wolin and SBA Administrator Karen G. Mills


Today, many taxpayers who qualify for the home office tax deduction are not claiming it. The reasons often cited are that businesses and filers do not fully understand the provisions or find it too complicated to calculate the amount.

That is about to change.

As part of ongoing efforts by the Administration to reduce paperwork burdens, the Internal Revenue Service (IRS) announced today that it is providing a new, simpler option for calculating the home office tax deduction, allowing small business owners and employees who work from home and who maintain a qualifying home office to deduct up to $1,500 per year.

The IRS also expects taxpayers to save more than 1.6 million hours per year in tax preparation time from this simpler calculation method.

The new option allows qualified taxpayers to deduct annually $5 per square foot of home office space on up to 300 square feet, for as much as $1,500 in deductions. To take advantage of the new option, taxpayers will complete a much simpler version of the current 43-line form.

The announcement builds on the President’s commitment to streamline and simplify the tax code for small businesses and to reduce the burden for tax compliance. It is part of broader efforts to make interacting with the federal government easier and more efficient for businesses of all sizes.

These new rules help our tax code better reflect the needs of America’s 21st Century workforce and especially small businesses, which play a vital role in our economy. Today, more than half of all working Americans own or work for a small business. An estimated 52 percent of small businesses are home-based, and many of these small businesses have home office space that would qualify for the deduction. And as technology improves, more businesses – large and small – are going virtual and recruiting employees from across the country, many of whom work from home offices.

Since he took office, President Obama has signed into law 18 tax cuts for small businesses. And the recently signed American Taxpayer Relief Act of 2012 includes extensions of several additional small business tax incentives designed to spur innovation, support capital investment and make it easier to hire new workers.

Today’s announcement also is part of a broader effort by the President’s Office of Information and Regulatory Affairs (OIRA) to reduce paperwork burdens for small business owners and individual taxpayers across all government operations. Agencies have posted paperwork burden reduction updates on their OpenGov websites, which also have more information on agencies’ regulatory “lookback” efforts.

The new option for the home office deduction will be available starting with the Tax Year 2013 return, which most taxpayers file early in 2014. In addition, the IRS is accepting comments for improving upon this new option.

Current restrictions on claiming the home office deduction, such as the requirement that a home office be used regularly and exclusively for business and the limit on the amount of the deduction tied to income derived from the particular business, still apply under the new option.

Neal S. Wolin is the Deputy Secretary of the U.S. Department of the Treasury and Karen G. Mills is the Administrator of the Small Business Administration.

Tuesday, January 15, 2013

Enterprise Zones/ Proposition 30

Last week I sent an email about the tax breaks for small businesses in Enterprise Zones. Please see below link to an Enterprise Zone may which allows you to determine if you are in an Enterprise Zone. If you find you are and would like to see if you qualify and how you go about applying please let me know. I have people I work with that can help you apply. This can mean serious money to you.

Enterprise Zones Map:

Yesterday I received a copy of Jan Normans piece about small business reactions to Proposition 30. See below. Is the passage of Proposition 30 going to change your business plans? Are you thinking of moving out of California? Are you holding back on expansion or expanding outside of California because of Proposition 30?

Prop. 30

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Monday, January 14, 2013

Enterprise Zones

Please see release below on Enterprise zones. Note only 4% of the money goes to businesses with less than $10 million in assets.

Are you in an Enterprise Zone? If so have you taken advantage of the significant tax credits available to you? Do you know about the Enterprise Zone tax credit?

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116



Date: January 11, 2013

Contact: Colin Parent

Director of External Affairs

(916) 445-4775

HCD Releases Enterprise Zone Reforms

Sacramento – The California Department of Housing and Community Development (HCD) today released a package of reforms that will reign in abuses and simplify the state Enterprise Zone program.

Today’s new rules will end retroactive vouchering, a practice that generally rewards employers for past hiring decisions rather than new job creation. New data shows that 30 percent of all Enterprise Zone voucher applications have been retroactive, costing the state millions of dollars and not encouraging new job growth.

The new program rules are expected to increase General Fund revenue by $10 million in 2012 13 and $50 million in 2013 14. The reforms are projected to save taxpayers $310 million over the first five years of implementation.

“These common sense reforms will eliminate waste and improve accountability for the State Enterprise Zone program,” said HCD Director of External Affairs Colin Parent.

As detailed in the Governor’s January 2013-14 budget, the new rules will accomplish the following reforms:

• Limit retroactive vouchering by requiring all voucher applications to be made within one year of an employee’s date of hire.

• Streamline the vouchering process for hiring veterans and recipients of public assistance.

• Require third party verification of employee residence within a Targeted Employment Area.

• Update Zone audit procedures and procedures for Zones that fail audits.

The new regulations will also ease the vouchering process for employers who hire veterans and recipients of public assistance. The old regulations created unnecessary paperwork burdens for participating companies.

Between 2008 and 2012, the number of Enterprise Zone vouchers has almost doubled from 69,236 to 133,326. Sixty-four percent of Enterprise Zone tax credits have been claimed by corporations with more than $1 billion in assets, while only four percent of credits are claimed by small businesses with less than $10 million in assets. Without today’s reforms, the Franchise Tax Board estimated that Enterprise Zones would cost California $700 million in FY 2013-2014.

More information on Enterprise Zone reforms, including a complete package of the proposed rules, is available at:

# # #

-- ************************************************************************ This email and any files attached are intended solely for the use of the individual or entity to which they are addressed. If you have received this email in error, please notify the sender immediately. This email and the attachments have been electronically scanned for email content security threats, including but not limited to viruses. ¬¬

Thursday, January 10, 2013

New Requirement of employers to make employee personnel records available/ Special Interest

Please see California Employers Association blog providing information regarding new requirements on employers to make available to employees and former employees, their personnel file. This took effect January 1 2013 with the passage of AB2674.

Also on the blog is requirement , if you provide group health insurance, to let employees know about the Children’s Group Health Insurance Program.

Lastly you will also see on the blog the new mileage rates put forth by the IRS for 2013

Many people think the impact on elected officials of special interest is something new. Well Henry Fountain Ashurst , one of the first Senators from Arizona, said around 100 years ago

“When I have to choose between voting for the people or special interest, I always stick with special interest.. They remember. The people forget”

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Monday, January 07, 2013

AB1396 Commissioned Employees/ New Pregnancy Leave Laws

AB 1396 went into effect Jan 1 2013. The new law requires employers in and out of California who pay commission to:

1. Have a written agreement in place

2. Include a method for calculating and paying commissions

3. Are signed by employees and

4. Are documented with an employee acknowledgement form

The California Employers Association recommends

1. Keep it short

2. Avoid expiration dates

3. Copies of the commission agreements and acknowledgement of receipt should be kept in employees file.

4. Consider attaching a job description

Include the following

Employees name, title and date agreement was signed.

Name of company representative and date agreement was signed by this person.

Quotas and commission rate calculation. Include when commissions are earned. Impact of termination on commissions.

Please consult your attorney or human resource professional.

New laws have taken effect Dec 30 around employers requirement to provide pregnancy leave .

Among other things they have redefined the 4 month requirement and expanded the responsibility of employers.

If you have more information on how to comply with these new laws please let me know. This is required of all employers with 5 or more employees.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Thursday, January 03, 2013

Who’s the Enemy Results of Survey/ Fiscal Cliff

We hear all the time how dysfunctional Congress is and that they don’t represent the American people. That may be true to some degree but there is a counter argument that they are doing exactly what the people in their district want.

Gallop recently did a survey and asked people if they thought Government was too big. Overwhelmingly people said yes.

They then asked what programs should be cut. With the exception of foreign aid, which makes up about 1% of the budget, people responded that social security, Medicaid, the military, and other program should not be cut.

If you were in an elected official your primary job is to get elected. If you vote to eliminate everything but foreign aid there is a good chance you would not get elected. Maybe as Pogo said “we have met the enemy and he is us”

What do you think?

Yesterday I asked the question should the President and Congress be the same party making that party accountable. The overwhelming majority of you said no as it would be the tyranny of the majority. It will be interesting to see what happens in California with the Democrats having a super majority in both the Assembly and the Senate.

I received a number of emails from people asking how the fiscal cliff legislation effects small business. Please see below this great analysis by the National Small Business Association.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116


Please click here for a detailed outline of what the legislation means for your small business.

Take NSBA's Economic Survey

NSBA needs just a few minutes of your time to take our Year-End Economic Survey. Please click here today to take the survey. What the Fiscal Cliff Deal Means

The Senate and House yesterday passed legislation to try and stem the damage from the so-called fiscal cliff, however they missed a key opportunity to forward a meaningful solution to our unsustainable fiscal future. Although supportive of several tax provisions included, NSBA is calling for a long-term solution to address the massive national debt through broad tax and entitlement reform and pragmatic spending cuts.

Despite the failure of Congress to work together on a more responsible, long-term solution, there were a handful of tax provisions included that will impact many small businesses, including:

• A permanent estate tax exemption of $5 million, indexed for inflation, with a maximum rate of 40 percent;

• A permanent fix to the alternative minimum tax increasing the exemption to $78,750 for couples filing jointly, indexed for inflation;

• A temporary extension through 2013 for the increased Section 179 expensing limit of $500,000, the R&E (or R&D credit), 50 percent bonus depreciation, various energy efficiency tax credits and more.

The bill also will permanently extend the Bush tax cuts for families earning less than $450,000, as well as the 15 percent capital gains tax for earners under that threshold.

Wednesday, January 02, 2013

Renaissance/ Emails

I hope you all had a great New Year and looking forward to 2013. I returned last night from Renaissance weekend exhausted but full of new insights. It was truly inspirational hearing from Mark Kelly husband of Gabby Gifford about the impact on their lives of the tragic shooting two year ago. At the end she stepped to the stage and acknowledged the audience to a standing ovation. It sent chills down my spine to see this amazing woman and to hear about her courage.

Two interesting things I came away with at the event.

One a line attributed to Tom Daschle[ although I am not sure he was the originator] . He said

“when all is said and done more gets said than done”

The other was

“ I have loved

I have been loved

Everything else is background music.”

One topic that came up was a discussion of whether voters should elect the President and the Congress from the same party. The argument is that in doing the party in power can be held accountable.

The argument against this is you would have tyranny of the majority.

What do you think?

Lastly I want to make these emails as relevant as possible for all of you. What topics do you think Small Business California should be talking about in these emails. How can I make them better.

Scott Hauge


Small Business California

2311 Taraval Street

San Francisco, CA 94116