Employee/Independent Contractors/ NORTEC Receives $3.5 million grant

Trying to figure out who is an independent contractor and who is an employee can be difficult and confusing. It can also have some serious financial ramifications if you mistakenly classify someone as an independent contractor and you get audited by the IRS or EDD.

Our good friends at the California Employers Association have put together this very informative newsletter and given you a great link to help you make the determination. For those of you looking for help in dealing with Human Resource issues I highly recommend you consider joining their organization.

Why is this so difficult for employers?

(Read time less than 3 minutes)

A recent report from the Treasury Inspector General For Tax Administration (TIGTA), said they found weaknesses in the IRS's procedures for ensuring taxpayer compliance with worker status determinations.

"The misclassification of employees as independent contractors is a nationwide problem affecting millions of employees," J. Russell George, Treasury Inspector General for Tax Administration stated. "Left unchecked, it will continue to grow and contribute to the tax gap. The IRS should do more to ensure that the burden of uncollected taxes is not shifted to compliant taxpayers."

The IRS allows both employers and workers to request determination letters from the agency regarding the worker's tax status as an employee or independent contractor. While this determination is binding, TIGTA reported that employers often fail to withhold taxes even though the IRS has stated that the worker is properly classified as an employee. The IRS created Form 8919 so that employees in these circumstances could report their personal liability for Social Security and Medicare wages. Nevertheless, TIGTA found that employees may be abusing Form 8919 in order to avoid payment of employment taxes and estimated that 74,068 taxpayers avoided $26.2 million in Social Security and Medicare taxes, and the IRS could lose $131 million in Social Security and Medicare taxes over the course of the next five years as a result.

The IRS disagreed with TIGTA's valuation of this amount, pointing out situations where a taxpayer could receive relief when the taxpayer could be ruled an independent contractor by a court and would not have an employment tax liability.

What is really intriguing is why it is so difficult for employers to determine whether someone is an independent contractors or an employee? There are several EDD resources out there and the best one's we’ve found over the years is a simple yes and no questionnaire.

Answer too many questions with a “yes” and you know you’ve got an employee on your hands no matter how much you’d wish the person could be classified as an independent contractor.

Both forms are on the CEA website under the Resources/Government Resources, or click here.

http://www.employers.org/800 399-5331

Small Business California Board member Ginne Mistal sent me this note about NORTEC. Ginne is also serves on the Board of NORTEC. Small Business California has worked closely with NORTEC over the years and know they are a great resource for small businesses in the Redding/Chico . They have a unique philosophy in Job Training. Their philosophy is that if you serve the employer they will provide the jobs.

For more information go to http://www.nortec.org/

Congratulations to NORTEC! NORTEC was awarded $3.5M, a 'Green Innovation Challenge' grant, with the emphasis on 'Renewable Energy Generation'. They were one of six to be awarded a grant. The grants that were awarded totaled $19M. This is under California Labor & Workforce Development Agency, News Release No: 10-04.

Secretary Victoria Bradshaw said that she was impressed with NORTEC's application with respect to working with small businesses.
One for small business!


Scott Hauge

President

Small Business California

2311 Taraval Street

San Francisco, CA 94116

shauge@cal-insure.com

415-680-2188

Text and Summary of the Small Business Jobs Act

Please see information on the Small Business Jobs Act.

Small Business California has been asked to comment on this bill. Caroline Bruckner in Senator Landrieu’s office is looking for your comments and support (Caroline_Bruckner@sbc.senate.gov).

Note one of the provisions is to allow full deductions for the self employed purchasing health insurance. We have worked on that for years and Senator Landrieu has always been there for us.

I have received a call from Caroline advising that she may not be able to respond to your email but know she appreciates it.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188



For Immediate Release
June 29, 2010


BAUCUS, LANDRIEU UNVEIL BILL TO CREATE JOBS
AND HELP SMALL BUSINESSES GROW

Finance and Small Business Chairs Release Small Business Jobs Act

Washington, DC - Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu (D-La.) today released the Small Business Jobs Act, a bill to help small businesses access capital, stimulate investment in small businesses and promote entrepreneurship - all of which will help small business create jobs.

"Small businesses are the engine of our economy and need to be a critical focus of our job-creation efforts. Helping small businesses helps get Americans back to work," said Baucus. "Working together, we crafted our bill to promote entrepreneurship and investment in small businesses and provide small businesses with the vital access to capital they need to create jobs."

"Every day, headline after headline goes to big business layoffs and losses, but in reality it is the small businesses and their employees that are bearing the brunt of this crisis," said Landrieu. "Since the start of the economic downturn, 80 percent of the country's job losses came from small businesses. It is time to turn our attention to the small businesses and entrepreneurs to get Americans back to work. By providing some cost-effective and commonsense changes to lending, contracting and technical assistance programs, we can build on successful programs implemented in the Recovery Act to help small businesses keep their doors open. Ranking Member Snowe and I have crafted this package to include provisions that we have both advocated for, and I am very pleased with the finished product. As we finalize our package, I look forward to working with my colleagues on both sides of the aisle, as well as the other committees, to ensure the swift passage of this legislation."

The Small Business Jobs Act will:

Help Small Businesses Access Capital

· The legislation encourages investment in small businesses by allowing investors to exclude the gains from the sale of certain small business stock from their income for tax purposes if the stock is held for more than five years. This policy helps small business owners access more private capital to finance an expansion and hire new workers.

· The legislation reduces the tax burden for small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous five years. Small businesses will also be able to count the general business credits against the Alternative Minimum Tax (AMT), freeing up capital for expansion and job growth.

The legislation establishes a Small Business Lending Fund of $30 billion to provide capital investments to small community banks to increase small business lending. The fund is limited to only the smallest banks, those who hold less than $10 billion in assets, and the performance-based program would incentivize only those lenders that extend new credit by decreasing the dividend rate banks pay as they increase lending.

The legislation establishes the State Small Business Credit Initiative to provide $900 million in grants to existing successful state small business programs that help private lenders extend more credit to small businesses.

The legislation raises the cap on small business loans to increase lending by $5 billion in the first year after enactment, and refinances commercial real estate debt into long-term, fixed-rate loans, provisions that are expected to be budget neutral and could create or save 200,000 jobs.

Building on successful initiatives we put in place through the Recovery Act, by making simple and cost-effective changes to the SBA's two largest lending programs and to its microloan program, we were able to pump more than $20 billion into more than 40,000 businesses in our economy. This legislation calls for an extension of these lending provisions through December 31, 2010.

Increase Small Businesses' Ability to Make Investments

· The legislation allows taxpayers to write off more of the cost of purchases for their business, such as equipment and machinery, in the year the purchase is made. The legislation also expands the types of purchases that would qualify for special expensing to include some types of real property, such as leasehold, retail and restaurant improvements. When small businesses are able to deduct the cost of purchases more quickly, they have more cash on hand to create jobs.

Promote Entrepreneurship

· The legislation doubles the amount of start-up expenditures that may be deducted by someone starting a small business, making it easier for new businesses to open.

· The legislation increases resources to support the Office of the United States Trade Representative's small business export promotion and trade enforcement activities. These efforts help U.S. small business exports grow in foreign markets and ensure small businesses compete on a level playing field.

· The legislation allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax.

The legislation improves the Small Business Administration's (SBA) trade and export finance programs, elevates the Office of International Trade within the SBA and adds export finance specialists to the SBA's counseling programs.

The legislation establishes the State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export.

The legislation allows the SBA to waive or reduce the state-matching share of its funding requirement for up to one year to continue providing technical assistance to underserved communities to start and grow small businesses.

Promote Equity

· The legislation promotes tax fairness by preventing small businesses from incurring large tax penalties aimed at large corporations and wealthy individuals investing in tax shelters.

The legislation removes the red tape and closes loopholes that too often put government work into the hands of multinational corporations, instead of Main Street businesses.

The legislation makes clear that no single contracting program receives priority over another program when competing for federal contracts.

The legislation is fully paid for, closes unintended tax loopholes and reduces the tax gap.

Grandfathered Health Plans

On June 14 regulations were put forth explaining how health plans can be grandfathered. It appears that the regulations as written will mean very few businesses will be able to keep their current health plans. My personal comment is that this is very disappointing.

Plans in effect on March 23, 2010 and plans maintained pursuant to one or more collective bargaining agreements ratified before March 23, 2010, are “grandfathered” in certain respects.

For individuals and small business, who are more likely to significantly change the plan design (such as increase out of pocket expense or copayments) and/or change carriers, will lose their “grandfathered” status.

In order for a plan to not lose “grandfathered” status, it cannot do any of the things below:

Cannot Significantly Cut or Reduce Benefits.

Cannot Raise Co-Insurance Charges.

Cannot Significantly Raise Co-Payment Charges.

Cannot Significantly Raise Deductibles.

Cannot Significantly Lower Employer Contributions.

Cannot Add or Tighten an Annual Limit on What the Insurer Pays.

Cannot Change Insurance Companies.

There will be thousands of regulations written in the coming years and many will define what the health bill really is.


Scott Hauge
President
Small Business California
2311 Taravel Street
San Francisco, CA 94116
415-680-2188
shauge@cal-insure.com

Doug Urbick's Comments

Five and a half years ago I founded Small Business California. My goal was to give small businesses a voice in Sacramento. A couple of weeks ago we presented our sales tax bill SB 1373 to the Revenue and Taxation Committee.

Testifying for our bill was Doug Ubrick from Hazard Construction. Chairman Wolk asked if this issue had ever come up before the legislature. Here is Doug’s answer

Question from Chairwoman Wolk:

A) Has there been prior legislation proposed on this and if not, why not?

To the best of our knowledge, there has not. The truth is that paving contractors are a fairly disjointed and unsophisticated group. The trade associations like the AGC (Associated General Contractors) tend to be lead by the larger more sophisticated contractors, included many of those who are vertically integrated. Trying to ‘change laws’ is just something that seems way beyond the grasp of the normal paving contractor. Small Business California has brought the ‘know-how’ to this group to finally address this inequity.

While these are paving contractors we have done the same thing in one way or the other for all of small businesses around the state. If you are not a member please consider joining.

You can do so by going to www.smallbusinesscalifornia.org

I am frequently asked if small businesses are using social marketing. Quite frankly in my business I have not done so.

Are you? Do you use Facebook, You Tube, Twitter or Yelp to market your business? Does it help you? If you use any of these what advice would you give to other businesses in how to effectively use these social marketing vehicles?


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Support SB 1373/ 1099s

On Wednesday Small Business California sponsored bill SB 1373 will be coming before the Senate Revenue and Tax committee.

This bill will level the playing field between paving contractors and vertically integrated manufactuers/ contractors. Currently vertically integrated manufacturers/ contractors pay a sales tax based on the cost of materials that go into products like asphalt and paving contractors pay a sales tax based on the cost of the final product. This gives the vertically integrated manufacturer/contractor a 4% to 5% bid advantage.

Most of the paving contractors are small businesses and the vertically integrated manufacturers/ contractors are for the most part big business. We have seen many cases where these paving contractors have lost bids due to the sales tax advantage.

Many of you have sent emails to Senator Leno, author of 1373, supporting his legislation. Please see below members of the members of the Revenue and Tax Committee. If you are in one of the committee members district please send an email supporting SB1373. I know this probably doesn’t impact you directly but we need to show small business solidarity.

Lois Wolk (Sacramento, San Joaquin, Solano, Yolo), Chair: Senator.Wolk@senate.ca.gov

Mimi Walters (Orange, Tustin, Laguna Niguel, Laguna Hills) Vice Chair: Senator.Walters@sen.ca.gov

Elaine Alquist (Santa Clara): Senator.Alquist@sen.ca.gov

Roy Ashburn: (Bakersfield): Senator.Asburn@sen.ca.gov

Alex Padilla: (Los Angeles) Senator.Padilla@sen.ca.gov

Last week Harry Moos represented Small Business California and the Plumbing Heating and Cooling Contractors of California at a Dan Lungren press conference supporting Congressman Lungrens HR 5141.

As you have read here before the recently passed health bill had a provision that would require businesses to file 1099s on all businesses that you pay$600 or more to. Currently you only need to file 1099s for businesses that provide you services and who are not incorporated. What this means for my business, CAL Insurance, is that I currently file 25 1099s. Under the new law I will have to file about 700.

HR 5141 will repeal this requirement. Currently there are 70 cosigners on this bill. All are Republicans. The Democrats many of which recognize the burden this places on small business are not supporting this because the Congessional Budget Office has said this requirement will raise $17 billion over 10 years.

Write your Congressman and ask them to support HR5141.

One final comment. I don’t want anyone to think my above comments are a slap at Democrats. There is another bill HR 4302 which will provide for the waiver of fees on SBA loans, 90% guarantees on SBA loans and increase the size of SBA loans to $5 million. On that bill we have 63 Democrats and no Republicans. The partisianship in Washington is really hurting not just small business but the people of this country.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

HR4213 Arises from the ashes/ Prop 16 results

A surprise occurred Friday in that HR4213 passed the House after looking dead Thursday.

While funding of the SBA program to waive fees and extend the 90% guarantee on 7a and 504 loans is a very small piece of the bill it is critical for small business and its ability to access capital. The bill started as a $200 billion measure it got passed as a $113 billion measure.

Unfortuately the Senate did not take up 4213 as they were in recess so funding has run out for the waiver and the guarantee. Hopefully it will get taken up quickly when the Senators return but it is no sure thing it can get the 60 votes needed for passage.

I found the results of the question on Prop 16 interesting. This is the PG&E measure that would require a two thirds vote for Community Aggregation/Public Power. The Small Manufacturers Association of California supports the Measure and the Golden Gate Business Association opposes. Most associations that responded did not have a position.

What was more interesting is that of the 25 individuals that responded only two supported and 22 opposed with one undecided. This certainly is not a large enough number to make any conclusions but I was surprised how lopsided it was.

One would think that small business would be opposed to government getting into any business but it seems as though the two thirds vote is perceived by many as wrong.

Lets try one more time. If you didn’t respond what is your position on Prop 16?

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge-cal-insure.com
415-680-2188

HR4213/1099s/Proposition 16

So it appears that the extender bill HR4213 filed in the House was defeated.

The Senate was expected to take this up today but clearly with no bill it appears nothing is going to happen until after recess. HR 4213 would have extended the waiver of SBA fees on SBA loans and the 90% guarantee. So that means the SBA will run out of money for the waiver and guarantee and a queue is being set up.

Keep in mind this bill was not defeated because of the SBA provisions but as usual small business gets caught in the cross fire between Democrats and Republicans over whether stimulus money should be going back to pay off the debt or if any spending can be provided without off setting revenue.

The bill had a cost of $134 billion of which our SBA funding was about $500 million. For those of you in SF this means there is no funding to continue Jobs Now.

Small Business California has been trying to get repealed the requirement that businesses file 1099s for all companies they pay $600 or more. House member Dan Lungren has introduced HR 5141 to do this. He will be holding a press conference June 2 and SB Cal will there. If you are in his district and interested in attending let me know.

We have 70 cosigners on the bill all Republicans.

SBA Administrator Mills in a letter to small business said that the IRS is working on eliminating reporting for providers of goods and services that are paid by credit card. This is a start but clearly not enough.

Proposition 16 will be on the June ballot. This would require a two thirds vote to set up public power. What are your thoughts on this - Support? Oppose? Undecided?



Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

SBA Loans

See below article on SBA loans.

I mentioned yesterday that there is an extender bill HR 4213 which would extend the waiver of SBA fees and 90% guarantee through the end of the year. I heard from some of you that you called to ask this get passed. Thank you.

It is expected that this bill will come up in the House tonight and the Senate tomorrow. The SBA portion of this bill is very small. The cost of the bill has been reduced from $200 billion to $144 bill making it much more likely to get passed.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188



Money runs out for SBA small business loan breaks

Catherine Clifford, staff reporter, On Thursday May 27, 2010, 9:07 am EDT

In the middle of the federal government's National Small Business Week, two of the most successful Small Business Administration programs are about to run out of money -- again.

The SBA announced Wednesday that it is opening up its Recovery Loan Queue for the fourth time.

For more than a year, the SBA has used money first allocated in last year's Recovery Act to temporarily reduce fees for borrowers and increase the guarantees banks receive on loans made through the agency's lending programs. The SBA's loan volume has picked up sharply in that time, a turnaround agency officials attribute to the stimulus incentives.

But the funding for them ran out in November. Since then, the agency has relied on a series of temporary extensions to keep the loan sweeteners in place. Every time the money runs out, the SBA opens up its Recovery Loan Queue to track applicants hoping to collect the last few remaining dollars.

The latest authorization for some of the loan incentives expires at the end of this month, and the money for them is likely to be exhausted even sooner.

President Obama and many in Congress say they want the loan incentives extended for at least the rest of this fiscal year, which runs through September. But the two chambers of Congress haven't yet agreed on legislation to do that. Result: A series of emergency bills that so far have kept the funds flowing, but only after several brief expirations.

"The stopping-and-starting is problematic," said SBA spokesman Jonathan Swain. "It is a complicating factor for our lenders and our borrowers."

When the funding pool starts to go dry, lenders scramble. Seacoast Commerce Bank, a community bank in Chula Vista, Calif., had pushed five SBA-backed loans through by midday Wednesday.

"It certainly puts a lot of strain on the whole process," said David Bartram, an executive vice president in the bank's SBA division.

It also throws borrowers into limbo. Losing the SBA's fee waiver can make a loan thousands of dollars more expensive for the borrower -- and there are some loans banks are only willing to make if they can get the higher SBA guarantee. Without it, those loans become too risky.

"There are some customers that we are not going to be able to help," Bartram said.

Members of both the House of Representatives and the Senate are pushing for another extension, but it's unclear whether legislation can make it through before the Memorial Day break.

"Nothing gets through Congress easily these days, even bipartisan legislation," said Lynn Ozer, executive vice president of government lending at Susquehanna Bank.

SBA lending is one of the few bright spots in an otherwise barren credit landscape, but it's still a small part. A recent government report estimated that SBA programs account for just 4% of all small business lending.

President Obama this week renewed his push for a new, $30 billion loan fund to seed small banks with capital to boost their local business lending. In a report issued Tuesday, the Congressional Budget Office estimated that the measure would cost the government $3.3 billion over the next five years.

Copyright © 2010 Cable News Network and Time Inc. and their affiliated companies. All Rights Reserved.

Calls to U.S. House Needed Today

Please see request of Trent.

He is the head of Health and Human Services in SF.This is important to all of you in SF that are receiving Jobs Now money.

It is also important to small businesses around the country because it will provide until the end of the year the stimulus money for the waiver of SB fee and the 90% guarantee. The money for this is scheduled to run out the end of May.

Take a moment and make the call

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188


From: Trent Rhorer [mailto:Trent.Rhorer@sfgov.org] Sent: Wednesday, May 26, 2010 10:07 AMTo: Scott HaugeSubject:

Hi Scott.This is the bill to extend JobsNow. Can you send it out to your members? Maybe they can make a call in support. Thanks.

Trent

Dear Director:

A quick phone call from you today to your U.S. Representative (see list below) is critical.
As soon as today, the House may vote on H.R. 4213
Calls are needed TODAY (Wednesday) 1-888-245-0215 (toll-free to Capitol Switchboard).

Cardoza - Fresno (part), Madera (part), Merced, San Joaquin (part), Stanislaus (part)

Costa - Fresno (part), Kern (part), Kings

Susan Davis - San Diego (part)

Eshoo - San Mateo (part), Santa Clara (part), Santa Cruz (part)

Filner - Imperial, San Diego (part)

Harman - Los Angeles (part)

Honda - Santa Clara (part)

Lofgren - Santa Clara (part)

McNerney - Alameda (part), Contra Costa (part), San Joaquin (part), Santa Clara (part)

Schiff - Los Angeles (part)

Speier - San Francisco (part), San Mateo (part)

SBA Loans/OSHA/Red Flag Rules

As reported in prior emails the stimulus money for the waiver of fees and the 90% guarantee on SBA loans will run out the end of May. It is hoped that $505 million will be approved to provide funding for the rest of the year. It was expected that this would be passed yesterday but it did not happen. Again we are in a last minute situation and the banks will be rushing to get their packages to the SBA so I guess it is possible they could run out of money before the end of the month.

I just learned yesterday from one of our members that OSHA requires businesses to notify OSHA within 8 hours of a death of an employee at their business. This is required even if the death is from natural causes. Our member was fined $5000 for not reporting within 8 hours.

I hope all of you are aware of whether you are subject to the Red Flag rules put forth by the FTC. If you are considered a financial institution or arrange credit you are required to have a program in effect and enforcement will start June 1. Fines will be assessed if you are not complying. You also need to have this approved by your board if you are a corporation or a committee appointed by the board.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Small Business California continues to do amazing things for small businesses around the state -

We are responsible for bringing On Bill Financing to California. Last week I found out that PG&E in their filings has agreed to do On Bill Financing in their area effective July 1 2010. San Diego Gas has been doing this for years and has lent millions to small businesses. Southern California Edison will be implementing On Bill Financing in the next few months.

For those of you that are not aware of what On Bill Financing is it is a way to provide capital to small businesses at 0% financing for energy retrofits.

Access to capital is a major issue for small businesses and Small Business California is making capital available for energy retrofits. Kudos to Hank Ryan our executive director for making this happen.

Small business is seen by many as an obstacle to solving the uninsured problem in this country and California. We do have problems with the recently passed health bill but Small Business California also wants to be proactive.

As such Small Business California strongly supports Volunteers In Medicine. This program takes volunteer heath professionals that serve the working uninsured. We now have 78 clinics in 25 states. I am working on setting up a Volunteers In Medicine Clinic in SF. Many of you have contributed to this effort and I thank you. We are now looking at opening this clinic in SF around September. It will be called Clinic by the Bay. This is my dream for 11 years but more importantly it is something small businesses can be proud of in trying to find solutions to helping the uninsured.

I don’t usually ask for your help but I am going to do so now. We need you to join Small Business California. For those of you that have done so thank you. For those of you that haven’t I ask what organization provides you more information about what is going on in Sacramento and Washington than SB Cal? What organization has been more effective representing small business than SB Cal ?

Please visit our website a www.smallbusinesscalifornia.org to find out more about our effort and join on line.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

State Fund Announces Rate Cut/ Northern California Independent Booksellers Award/ Dodd Regulation bill

Last week State Fund filed for a 3.2% reduction in their workers compensation rates for July 2010. They also have filed to eliminate their loss free credit for policies between $25000 and $59999 but extended their merit credit to these policies which should make them more competitive on those accounts.

State Fund is in a unique position for insurance carriers. Their combined loss ratio [claims and expenses] was 161.5% yet because of their huge surpluses they made $143 million for 2009 up from about $75 million in 2008. I assure you other insurance carriers could not do this and eventually workers compensation rates are going to go up significantly.

I am pleased to announce that our affiliate member the Northern California Independent Booksellers Associations is being presented an award from The Bay Guardian as the Chain Alternative. Congratulations Hut Landon the Executive Director of the Association and Mike Tucker owner of Books Inc.

I’m sure you are all following the debate in Washington over financial regulations and trying to prevent future melt downs of our financial institutions. Yesterday they dropped the $50 billion bailout money and it appears Senator Dodd’s bill is getting closer to passage. As a small business person what do you think about this? Should the size of the huge financial institutions like Goldman Sachs be reduced? NSBA has consistently opposed the repeal of Glass Steagal.

What do you think about this?


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

I have the names of all of you that said you would send letters supporting HR 5141 but have decided to send the sample letter to everyone and hope you will take a couple of minutes to send the following.

Honorable Dan Lungren
US House of Representatives
Washington DC 20515

Dear Congressman Lungren:

I am a small business owner and am writing in support of your bill HR 5141 the Small Business Paperwork Mandate Elimination Act . HR 5141 will repeal section 9006 of the recently passed Patient Protection and Affordable Care Act PPAFC. PPAFC places a major burden on small business by requiring us to send 1099s for virtually all businesses we do business with.

The PPAFC requires me to send 1099s for anyone that provides goods and services to me with a value of $600 or more. This includes corporations and businesses that provide materials to me. I do not currently have to do this.

I currently send 1099s for [ fill in the number] businesses. If PPAFC goes into effect I will have to send [ fill in the number]. Not only will this create a serious paperwork problem to send these but it will create a problem for me to get all the tax ID numbers.

I also think it would create a serious problem for the government processing the millions of additional 1099s they will be receiving.

Thank you for introducing HR 5141 and we will be urging the House Member in our district to support this legislation also.

Signed

Be sure and include your name, company name and address.


Feel free to change this anyway you would like. If you are a sole proprietor you might add that your tax id number is your social security number and that you are concerned about identity theft.

Also if you think the number of additional 1099s is too small just say you support the bill.

Copy me and Kevin Holsclaw in Congressman Lungren's office (Kevin.Holsclaw@mail.house.gov) on the letter.

I will also send a copy of your letter to your House member and copy you on this.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
415 680 2188
shauge@cal-insure.com

New 1099 Requirements

It seems as though the US Chamber is stepping into this discussion. See below.

Thank you to everyone that said they would send a letter of support for HR 5141. I will have a letter to you by Monday.

I talked to Congressman Lungrens office yesterday and they said what will be important in any letters sent will be the affect on your business. For example my company does 25 1099s. The new requirements will force me to do 700. Give some thought as to how it will impact you.

Thank you also to all the association that agreed to sign a joint letter. I will get the letter to you Monday.

If any other associations on this email want to sign on please let me know. I will be sending to every House member in California.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188


Letter supporting H.R. 5141, the "Small Business Paperwork Mandate Elimination Act"

April 29, 2010

The Honorable Dan Lungren
U.S. House of Representatives
Washington, DC 20515

Dear Representative Lungren:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, strongly supports H.R. 5141, the “Small Business Paperwork Mandate Elimination Act,” which if passed into law, would repeal the onerous paperwork burdens imposed on business by the ill-conceived expanded information reporting mandate contained in Section 9006 of the “Patient Protection and Affordable Care Act” (PPACA). This provision was used as an unrelated “pay for” in the PPACA and it should be rescinded based on the merits of the provision alone.

Unless this section is repealed, businesses across the nation will be subjected to the folly of data collection and information filing on virtually all business-to-business transactions they make aggregating $600 or more in a year at a time in which many can least afford it. When the United States is depending on the small business community to generate jobs and grow the economy, lawmakers are diverting their precious time and resources to collecting volumes of information and filling out mounds of new paperwork for the government.

If allowed to be implemented, Section 9006 of the PPACA will also have a chilling effect on new business relationships, most of which will be small businesses and startups. Many businesses in an attempt to reduce data collection and paperwork burdens will simply reduce vendors and refuse to entertain new business dealings. This will have a disproportional impact on small businesses and entrepreneurs attempting to get a foot in the door.

The ultimate irony of these new burdens is that the IRS neither has the resources nor the ability to use the new information to reconstruct an accurate picture of a company’s revenues since a large volume of business-to-consumer transactions are not reported. While the vast majority of compliant taxpayers will bear the cost of implementing this law, it will have only minimal benefit as a government tool in reducing non-compliance.

Moreover, the U.S. tax system is only as strong as the willingness of its participants to voluntarily comply. Imposing vast new data collection and reporting requirements may be viewed by many small business owners as unreasonable and overreaching. In the end, this could serve to undermine confidence in the government and further frustrate tax collection efforts.

Ninety-six percent of the Chamber’s members are small businesses with fewer than one
hundred employees. On behalf of its members, the Chamber thanks you for introducing this important bill and looks forward to working with you on its passage.


Sincerely,
R. Bruce Josten

1099 Requirements and Small Business

Small business traditionally has not been involved in the legislative process. This drives me crazy but when I ask why, you tell me you are to busy and the issue doesn’t affect you.

While I think this is wrong and we get hurt by legislation consistently, we now have an issue that effects almost every small business in this country.

I have sent out emails telling you about 1099 requirements under the new health care bill. These take affect in 2012 . If you think it doesn’t impact you you are wrong.

For my business, I currently send out 25 1099s. The new requirement will have me send out about 700.

I send out a challenge to you.. This email goes to 4000 small businesses. I don’t think there is a single one of you that won’t be impacted by this provision in the health bill.

If you think you re not impacted let me know. I will personally pay you $100 and let all on the email know how many of you have shown I am wrong. My only caveat to this is if you feel this may reduce competition from the underground economy this is not quantifiable and will not be considered.

However feel free to send this to anyone you want and my offer stands to them.

I am grandstanding I know but this is serious. I am being told we can’t win this battle and that is probably right.

Do you want Small Business California to fight the fight and will you join us?

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
415-680-2188
shauge@cal-insure.com

1099s/ Worker Compensation/ Arizona Boycott

Yesterday I told you about the requirement that was slipped into the health bill that businesses would have to file 1099s on all providers of goods and services over $600 to their business. This will now include corporations so you will have to do so for companies like PG&E, IBM as well as smaller corporations.

I had one of the people on the email list that said his business will now have to file about 3000 new 1099s at a cost he estimates at about $1300. He pointed out something I hadn’t thought about and that is he will also have to get the Federal ID number for all of these businesses.

I have verified that this requirement will take effect 2012 and it is estimated that it will raise $17 billion over a 10 year period.

Dan Lungren from California has introduced HR 5141 to repeal this onerous provision. Small Business California has been in contact with his office and we strongly suggest you write a letter supporting this legislation. If you want to do so send me a return email and I will send you a suggested letter. If you are in the Congressman district [ Sacramento/ Parts of the Mother Lode] let me know that also.

I have been trying to find rate filings for increases in workers compensation. It seems that most of the major players have not done so yet but what I do have is Everest will be filing a 5% increase, First Comp 13.5% Hanover 7.1% and Benchmark 12.34. There are other filings but they are really small carriers. As I have said before I don’t expect major increases in July except for a few carriers but watch out for January.

Yesterday I was interviewed on a local television channel on boycotting Arizona over their new immigration law. SF is not the only City looking at this and I believe the state is also considering something. In SF there is discussion of not allowing City contracts to businesses doing business in Arizona. My personal opinion is that I think it is a horrible law and I hope it gets struck down by the courts but I don’t think there should be a boycott. What do you think.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Small Business and 1099s

It has just come to my attention that the Health bill recently passed had a provision slipped into it that will require all businesses to file 1099s to any provider of goods and services over $600 in a year.

It appears this will start in 2012 but I am verifying this. For a $14 trillion dollars US economy that is a lot of 1099s.

House member Dan Lungren is introducing legislation to repeal this.

Scott Hauge
President
Small Business California'
2311 Taraval Street
San Francisco, CA 94116
415-680-2811
shauge@cal-insure.com

Red Flag

AB 1771 passed the Assembly Public Safety Committee yesterday on a 4 to 0 vote. Voting in support was Jerry Hill from South SF, Curt Hagman from Diamond Bar, Danny Hill from Hanford and Jim Beall from San Jose. This is the Small Business California bill that would allow small businesses to bid on small contracts with state agencies. Currently they can only be done by prisoners.

The Red Flag rules which have been postponed for about a year will be enforced effective June1. These rules put in place by the Federal Trade Commission. The rule was designed to fight identity theft by requiring creditors with certain kinds of accounts to implement compliance programs to detect and prevent identity theft. Take a look at the website below to see if you are impacted by this. There is a $2500 fine for noncompliance.

Here is the website:

http://www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm

Small Business California sponsored bill SB1373 will be going before the Revenue and Taxation Committee on April 28. This bill levels the playing field for small businesses on paving work. It will require vertically integrated manufacturers[ businesses that manufacturer asphalt and cement and install the materials] to pay the same sales tax as the contractors that only do the work.

We are running into to strong opposition by vertically integrated manufacturers as it could effect as much as $10 billion of work. Thank you to all the associations and individuals that sent letters and a big thank to Betty Yee Chair of the Board of Equalization and Senator Mark Leno for authoring the bill

For those of you in San Francisco be sure and get your paperwork into the City for the Health Care Ordinance. It is due April 30.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

SB 900/AB 1771 and Governor's Conference for Small Business

I just found out that Senator Alquist has introduced legislation to create a Health Insurance Exchange. This would be housed in the California Health and Human Services Agency. The Exchange will be governed by a board with gubernatorial and legislative appointments and would meet at least once every two months. We are tracking this legislation closely.

It is critical that small business have representatives on this board. Small Business California will be pushing hard to make this happen.

The bill number is SB 900 and you can get more information by going to www.leginfo.ca.gov

We are getting close to the Governor's Conference for small business. Please see below information. If you have not done so already please register for this event.

There has been added a session on the new health bill from Washington. I will be speaking at this event on this issue.

Assemblyman Tony Mendoza has introduced AB 1771 which would allow small businesses to bid on goods and services for state agencies currently provided by prisoners. The sale of prison goods and services is a $230 million dollar industry.

Small Business California has been quoted in numerous media outlets supporting this legislation.
Even though the Prison Industry Authority has considerable advantages such as lower labor cost and lower overhead we are only asking that small businesses be given the opportunity to bid on these contracts and the low bidder should be awarded the contract.

In these difficult economic times where small businesses are struggling to survive this does not seem unreasonable. Also the state may be able to save some money.

It is interesting to note that 30% of the prisoners or about 2000 are lifers.

What do you think?

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Workers Compensation Results/SBS Funding Extended/Webinar/ Employer Lawsuits

The Workers Compensation Insurance Rating Bureau released April 14th the summary of Insurer Experience for 2009. The total written premium was $8.9 billion down from $10.7 billion for 2008. The average rate per $100 of payroll was down slightly from $2.37 to $2.35. This is down 63% from 2003. The accident year loss ratio was 75% up 6% from 2008. The combined loss ratio was not reported but in 2008 it was 108% and the estimate is that it will be around 120%.

So you are asking what does this mean. The pressure is on to increase rates and at some point they will go up double digits but I do not see it happening this year but look out for January. There will most likely be some increase in pricing but I do not see any dramatic increases this year. The caveat here is that some companies may increase premiums by double digit amounts but most won’t. State Fund is one of those companies you will see double digit increases

The Senate passed an extension of several of the American Recovery and Reinvestment Act provisions that were set to expire April 30th. These provisions include the higher guarantees for SBA 7a loans and fee waivers for 7a[ working capital and some real estate] and 504 loans[ real estate] The extension provides $80 million to extend these provisions until May 31 2010.
While this is clearly good news what we need is passage of S2869 which will extend these provisions to the end of the year and increase the loan size to $5 million and allow refinancing of 504 loans.

Some of you were on the webinar Wednesday on the impacts of the health bill on small and medium size businesses. We received great reviews of the webinar and we had about 115 people participate. What would you think of us doing another one of these in about three months? If you would like a copy of all the questions that were asked and the answers to these questions please let me know by return email.

The other day I was talking to a labor attorney and asked him what he was seeing in the way of litigation against businesses. His answer was that there has been an explosion of lawsuits for wage and hour violations. I strongly recommend you talk to your insurance broker about coverage for Employment Practices liability. This coverage also provides for wrongful termination, sexual harassment and discrimination along with some third party liability like ADA. Be sure to ask your broker about wage and hour and ADA as some Employment Practices policies do not automatically cover this


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Health Bill Small Business Tax Credits

All of you are probably aware that the recently passed health bill provided for small business tax credits. Some of the details of those tax credits are:

Tax credits are available to small businesses in two phases:

Phase One -if you are a business with 25 employees or less and average wages of $50000 or less and pay at least 50% of the total premium for your employees coverage you can receive a credit up to 35% of the premium cost between 2010 and 2013.

Phase Two begins 2014 and if you meet the criteria you can receive a tax credit up to 50% of your health insurance cost. The full tax credit is available in both phases to employers with 10 employees or less who have an average wage of $25000 . The credit phases out for employers with between 10 to 25 employees with average wages between $25000 and $50000. The credit ends 2016.

The tax credits can be captured by a deduction on your federal income tax liability and can be carried back 1 year and forward 20 years.

Are you eligible for these tax credits?

If you are not providing insurance will this incentive be enough to get you to provide health insurance to your employees?

Would you be willing to talk to the media? If so send me your contact information and the number of employees you have.

If you want to learn more about this and other provisions of the health bill please join the webinar April 13 at 9AM. You must register and can do so by calling 800-399-5331.

Scott Hauge
PresidentSmall Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Health Care Webinar/CA Office of Economic Development

There is still room for more participants on the Webinar PrimePay, California Employers and CAL Insurance is doing April 13th from 9AM to 10. The topic is the impact of the recently passed health bill on small and medium sized businesses.

Our presenter Lucian Wulsin from the Insure the Uninsured Project will be presenting. Lucian is recognized as a health policy expert. There will be time for your questions. It is free but you must register.

To do so call 800-399-5331.

See below announcement of the opening of the Governors Office of Economic Development.

Scott Hauge
President Small Business California
2311 Taraval Street
San Francisco, CA 94116
415-680-2188


Small Business CaliforniaGovernor Schwarzenegger Establishes Office of Economic Development

Signs Executive Order, Appoints Director, Launches Web Site to Improve Communication between Businesses and State

Governor Arnold Schwarzenegger today signed an executive order establishing the Governor’s Office of Economic Development (GoED), a one-stop shop to help businesses acquire the direction, information and resources they need to invest, succeed and expand in California. The Governor appointed Joel Ayala, former president and chief executive officer of the California Hispanic Chambers of Commerce, as director of the new office.

“California is the best place in the world to do business, and by cutting red tape and streamlining functions, my Office of Economic Development will make the state an even better partner to the economy,” said Governor Schwarzenegger. “This office is exactly what businesses need to navigate through state requirements and take advantage of state resources, and Joel Ayala is exactly the person to head it up. He knows what it takes to create jobs and bring businesses to our state, and I am looking forward to working with him to boost California’s economy.”

Those who want to do business in California must interact with the state in many ways, such as establishing, registering and maintaining their businesses, obtaining permits and licenses, reporting required information and paying taxes. The state also has more than 100 individual economic development programs and services available to businesses. At GoED, experienced staff will guide businesses through the various state requirements and help them access state resources.

The idea of creating a one-stop shop to cater to California businesses needs was originally suggested as a part of the Governor’s 2004 California Performance Review <http://cpr.ca.gov/> and again in a February 2010 Little Hoover Commission <http://www.lhc.ca.gov/studies/200/report200.html> report. The office will have three defined functions: to promote California as a place to do business; to support businesses interested in starting, growing, financing, expanding or relocating in California; and to help those businesses facing challenges to operating in California.

GoED will be open for business beginning today and can be contacted toll free at 877-345-GoED (877-345-4633) or at http://www.business.ca.gov/ <http://www.business.ca.gov/> .GoED is being established, staffed and housed using existing state resources. The Administration is currently in the process of drafting legislation that will make GoED a permanent entity in state government.

Joel Ayala has been appointed to lead GoED as the director. Since 2007, he has been president and chief executive officer of the California Hispanic Chambers of Commerce. Previously, Ayala served as president and chief executive officer for the Orange County Chamber of Commerce from 2001 to 2007 and school director for adult education and corporate training at the Career Management Institute from 1994 to 2001. He was deputy probation counselor for the Orange County Probation Department from 1985 to 1993. Ayala is a member of the Orange County Presidents Council and a previous member of the Santa Ana Workforce Investment Board, Anaheim Workforce Investment Board, University of California, Irvine Alumni Association Board of Directors and the California Task Force for Small Business Department of General Services.

Ayala, 44, of Anaheim, earned two Bachelor of Arts degrees in political science and social ecology from the University of California, Irvine.This position does not require Senate confirmation and the compensation is $138,000. “I’m looking forward to working with the Governor, businesses and the people of California to improve the economy and get people back to work,” said Joel Ayala. “The development and growth of businesses is more important now than ever due to the economic hardships so many communities face. Improving California’s business climate will attract new businesses and allow greater prosperity for businesses that are already here.”

The full text of the Governor's executive order is below:

EXECUTIVE ORDER S-05-10

WHEREAS job creation and retention are critical to California’s economic well-being and quality of life; and

WHEREAS in 2009, the United States confronted the most severe economic downturn since the Great Depression; and

WHEREAS California was especially hard hit by the global financial crisis, and while the recovery has begun, economic growth remains modest and high unemployment persists; and

WHEREAS unemployment in the State stood at 12.5 percent as of February 2010; and

WHEREAS it will take aggressive action on the part of government and the private sector to ensure that California leads the recovery; and

WHEREAS good jobs enable Californians to achieve their potential and contribute to the economic performance of the State; and

WHEREAS California has led the world in innovation as the high-technology capital of the world, the biotechnology capital of the world, the agriculture capital of the world, the entertainment capital of the world, the aerospace capital of the world, and now the green-technology capital of the world; and

WHEREAS in 2009, venture capital investment in California led all other states, with approximately $8.9 billion of the $50 billion invested nationwide; and

WHEREAS in my State of the State Address this year, I announced a job creation package that will create or retain at least 100,000 jobs, and additional efforts are necessary to eliminate barriers in further creating jobs; and

WHEREAS I have just signed two important parts of this jobs package: a homebuyer tax credit and a sales tax exemption for companies purchasing green-technology manufacturing equipment; and

WHEREAS people who want to do business in California must interact with the State to establish and maintain their businesses, by obtaining permits and licenses, registering their businesses, reporting required information, and paying taxes; and

WHEREAS California has at least 100 individual programs and services across 28 separate state government entities that support economic development; and

WHEREAS the American Recovery and Reinvestment Act of 2009 will provide approximately $85 billion in cash and tax benefits to Californians; and

WHEREAS state-level services and resources for California businesses are disjointed, with an uneven geographical distribution of services, no centralized entity with broad expertise, no mechanism to focus efforts and measure results, and a lack of effective coordination with other government and private sector resources; and

WHEREAS some of these services and resources reside under the authority of other constitutional officers, including the Lieutenant Governor, the Treasurer, and the Secretary of State; and

WHEREAS from a business owner’s perspective, state government is not a collection of independent agencies, but rather one “state government” and therefore, business owners expect seamless services from the State; and

WHEREAS some who want to start a business in California do not know where to begin, and even some established business owners find it difficult to navigate the state bureaucracy; and

WHEREAS the State should simplify the path to the state-level resources and services that businesses need to grow and succeed in California; and

WHEREAS the California Performance Review and the Little Hoover Commission have also recognized this need for a central economic development entity, and action is needed. NOW,

THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, by virtue of the power vested in me by the Constitution and statutes of the State of California, do hereby order effective immediately:

1. The Governor’s Office of Economic Development is hereby created. Its purpose is to promote California as a place to do business, to support those interested in starting, growing, financing, expanding or relocating a business in California, and to help, to the extent possible, those businesses facing challenges to operating in California. The Office of Economic Development shall exist within the Governor’s Office, and shall be headed by a director designated by the Governor.

2. The Office of Economic Development shall be the state’s lead entity for economic development coordination with all public and private entities and shall perform the following functions:

a) Leading the State’s business-oriented outreach and marketing efforts and promoting California as a place for business investment and job creation, working with private-sector, nonprofit and other government entities;

b) Creating a Web portal that will provide one-stop access to state-level information and resources for businesses;

c) Serving employers, corporate real estate executives and site location consultants who are considering California for business investment and expansion;

d) Communicating the business advantages of California locations for new business investment and expansion;

e) Providing site, workforce training and infrastructure availability and cost information;

f) Providing permit and regulatory assistance;

g) Facilitating participation in state capital financing, grants, loans, tax credits, and other incentives;

h) Supporting the State’s small businesses by providing information about accessing capital, regulatory compliance, state procurement and state initiatives that support small businesses;

i) Encouraging collaboration among research institutions, start-up companies, local governments, venture capitalists and economic development organizations to promote innovation;

j) Working with the federal government to leverage economic development programs and to foster relationships with international counterparts to help address barriers to trade, find business partners and promote California’s strengths; and

k) Conducting ongoing research about how California can remain on the leading edge of innovation and emerging sectors.

3. The Office of Economic Development shall be created with existing resources and shall be staffed with personnel from agencies and departments whose functions relate to economic development, including small business promotion. These agencies shall include, but not be limited to, the Labor and Workforce Development Agency, the Business, Transportation and Housing Agency, the Environmental Protection Agency, the Natural Resources Agency, the State and Consumer Services Agency, the Department of Food and Agriculture, the Office of the Chief Information Officer, and the Office of Planning and Research.

4. Each member of the Cabinet shall identify a senior manager within his or her agency to coordinate business support activities with the Office of Economic Development.

5. The Office of Economic Development shall operate a Web portal, as described above in paragraph 2(b), and shall be prepared to respond appropriately and promptly to all requests for information and assistance from businesses that need help interacting with California state government.

a) The Web portal shall provide assistance with: establishing or registering a business; license, permitting and registration requirements; tax requirements; and building codes and zoning.

b) The Office of Economic Development shall ensure all state Web sites focused on economic development and business support are user-friendly and provide accurate, updated resources.

6. The Director shall seek advice and input from local government officials, economic development agency officials, and industry leaders.

IT IS FURTHER ORDERED that the agencies and departments under my executive authority shall cooperate in the implementation of this Order. Other entities of state government not under my direct authority are requested to assist in its implementation. This Order does not and is not intended to create any rights or benefits, substantive or procedural, enforceable at law or in equity, against the State of California, its agencies, departments, entities, officers, employees or any other person.

I FURTHER DIRECT that as soon as hereafter possible, this Order shall be filed with the Office of the Secretary of State and that widespread publicity and notice be given to this Order.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 8th day of April 2010.

ARNOLD SCHWARZENEGGER
Governor of California

ATTEST:
Debra Bowen

New for 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage

Mark Herbert from Speakers Pelosi’s office sent me information that outlines the tax credits available to small businesses under the health bill. Note they are available now.

Please see below

The money given the SBA to continue the 90% guarantee of 7a and 504 loans and the waiver of fees is expected to run out in the next couple of weeks. It was expected that the $40 million of interim money would last until the end of April but it appears this will not be the case. If the money does run out it will be the third time in the last 6 months. What small business needs is a permanent solution. We need the passage of S2869 which both Senator Feinstein and Boxer have signed onto.

Small Business California is working with the National Association of Government Guaranteed Lenders and the National Small Business Association to get this done. One of our members Jim Baird of Bay Area Development is working with the Association of 504 lenders also in this effort.

You all know that Small Business California is headquartered in San Francisco. You also know that San Francisco has some quirky politics [I am being nice here]. The Board of Supervisors recently passed a resolution to make Monday a meatless day in SF. A number of years ago the Wall Street Journal wrote an article entitled “Who needs Oprah when you have the Board of San Francisco Supervisors”.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188



WASHINGTON ― Many small businesses and tax-exempt organizations that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service.

Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.

“This credit provides a real boost to eligible small businesses by helping them afford health coverage for their employees,” said IRS Commissioner Doug Shulman. “We urge small businesses and tax-exempt employers to look closely at this important tax break - which is already effective - to see if they qualify.”

The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible employers that are tax-exempt organizations.

The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low and moderate income workers. It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.

The maximum credit goes to smaller employers – those with 10 or fewer FTEs – paying annual average wages of $25,000 or less.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.

The IRS will use postcards to reach out to millions of small businesses that may qualify for the credit. The postcards will encourage small business owners to take advantage of the credit if they qualify.

More information about the credit, including tax tips, guides and answers to frequently asked questions, is now available on the IRS Web site, IRS.gov.

Internal Revenue Service
Governmental Liaison for California & Nevada

David versus Goliath Support SB1373

Yesterday we got great news that Betty Yee the Chair of the Board of Equalization will be sending a letter of support for SB1373.

This is Small Business California’s bill that would require vertically integrated manufacturers[these are manufacturers that make asphalt and concrete and then bid on the construction project] to pay the same sales tax as small contractors when they only do the construction work. Right now these vertically integrated manufacturers have a competitive advantage of between 6% and 7% and this bill will level the playing field.

We now need your help.

You might be saying to yourself this doesn’t affect me. Why should I send an email? The reason is that small business is only going to be effective when we work together. This clearly is a case of inequity for small contractors. It is the big guys versus the little guys. I think you would hope that when an issue effects your industry that you would get the support of other small businesses not impacted.

Please send an email to Bob Hartnagel in Senator Leno’s office. His email is:

Bob.Hartnagel@sen.ca.gov

The letter very simply is -

Dear Senator Leno,

As a small business I strongly support SB1373 that will correct an inequity in the Tax Code and level the playing field for small business when competing against big companies. We appreciate your leadership on this.

Sincerely

Your name
Your company

Cc Revenue and Tax Committee

Please send a copy to me and I will make sure the Revenue and Tax Committee gets a copy of your email. I think this is doable in less than 5 minutes and it will make a difference.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

HIRE Act/ Workers Compensation/ Health Webinar

Please see information from Rich Gunn, of Burr Pilger Mayer, regarding tax credits available to business. Thanks Rich for sending.

Yesterday a committee of the Workers Compensation Insurance Rating Bureau decided not to do a midyear recommendation on workers compensation rates. It is expected the full Board will follow next week.

This does not mean companies will not make new filings July 1.

At some point rates are going to go up dramatically. Rates have gone up for most classes of business but they have not been dramatic except for construction and State Fund. With a projected combined loss ratio of 125% to 130% for 2009 the pressure is there but no one knows when.

Cal Insurance, the California Association of Employers and PrimePay will be holding a webinar April 13th at 9AM discussing the recently passed health legislation. The Presenter will be Lucian Wulsin the head of the Insure the Uninsured Project and partner of Small Business California. Lucian is a recognized expert on this and he will answer your question about how the health legislation will affect your business. If you are interested in participating let me know. It is free but we can only accommodate 200 callers.

Scott Hauge
President
Small Business California
2311 Taraval
StreetSan Francisco, CA 94116
shauge@cal-insure.com
415-680-2188




President Signs HIRE Act into Law Creates New Tax Incentives

On March 18, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847). The Act includes provisions designed to spur job growth and help business owners.

The effective date for many of its provisions is March 18, 2010. This means that provisions like the up-to-$1,000 credit for "retained workers" (under Act Sec. 102) apply for any tax year ending after March 18, 2010.

Below we have highlighted key business and offshore provisions.

Business Tax Changes in the 2010 HIRE Act:

Extension of enhanced small business expensing (Section 179) retaining the $250,000 expensing election

Payroll tax holiday eliminating the current 6.2 percent employer Social Security tax for eligible new hires

Up-to-$1,000 business tax credit for keeping eligible employees for at least 52 consecutive weeks

Note: The HIRE Act does not extend the "bonus depreciation" tax break that was also available for business equipment purchases in 2009

Offshore Anti-abuse Provisions in the 2010 HIRE Act

Increased disclosure of beneficial owners

Foreign financial asset reporting

New reporting rule for PFICs

IRS will be authorized to require a financial institution to electronically file returns with respect to any taxes withheld by the financial institution even though the financial institution files less than 250 returns during the year

Provisions related to foreign trusts and imposition of a minimum penalty of $10,000 on any such failure to file

To review each provision in-depth please go to this link:

http://tinyurl.com/yh7wrkv

For further information contact Rich Gunn at rgunn@bpmcpa.com

Health Bill and Corporate Write Off

Many of you I am sure have seen that a number of large companies are taking charges in the current quarter for reforms that came out of the health care bill. 300 large corporations have urged the President to repeal a provision that allows them to receive a subsidy on drug coverage and then take a tax deduction for the expense. The companies have said this would deal a significant blow to corporate profits and discourage companies from hiring more workers.

I don’t understand the large companies on this one as it seems to me that if I receive a subsidy I shouldn’t be allowed to then take a deduction. Seems like double dipping but maybe some of you can explain this to me.

Yesterday I received an inquiry from a reporter indicating that businesses are going to be allowed to reduce their prepayment on payroll taxes due to the economy. I have not heard of this. Are any of you familiar with this provision and if so will it help you?

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Waiver of fees and 90% guarantees extended/ IRS Scam/ On Bill Financing/ LA Times

I just received word from Tony Wilkinson of the National Association of Government Lenders that legislation has been passed by the House and the Senate to extend the 90% guarantees on SBA 7a and 504 loans through the end of April. It is expected the President will sign. While this is good it is another stop gap measure and what is really needed is the passage of HR4312 which would extend funding through the end of the year.

Yesterday I received an official looking email which appeared to be from the IRS. It appeared that they were checking information. Have any of you received this? If so it is a scam. My accountant told me the IRS does not send things through email.

Southern California Edison just filed with the California Public Utilities Commission[CPUC] their intention to do On Bill Financing as is being done by San Diego Gas. This would mean 0% financing for small businesses who do energy retrofits. The loans would be $5,000 to $100000. Unfortunately it is not clear when the program will start for small businesses. San Diego Gas has loaned over $6 million on the program and numerous small contractors are getting work they would not have received without the program. The amazing thing is that the default rate on these loans is around 1%.Small Business California and our Executive Director Hank Ryan is responsible for bringing On Bill Financing to California and has spent numerous hours testifying before the CPUC.

For more information on On Bill Financing go to www.smallbusinesscalifornia.org

I received a call the other day from a reporter at the LA Times. It seems they will be running stories about the impact of the health bill on small businesses. If you are in the LA area please let me know if you would be willing to speak to her.

For those of you in the Bay Area I will have my comments in the SF Chronicle Sunday. My comments were based on your responses to me.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Governor's Conference on Small Business & Entrepreneurship II

I have been asked by a reporter how the health bill will affect small business both directly and indirectly. Please provide me your comments today.

Please see below information on the Governors Small Business Conference May 6. Click on the image and zoom in to enlarge it.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Health Bill Passes

I know many of you were opposed to the health bill but it now has passed. It is now time to move forward as there are many details to be worked out. Small Business California plans to be involved in those discussions.

The biggest issue I think for California small businesses is the development of an Exchange. Small Business California wants to be part of its development.

Do you want more information about what an Exchange is? Do you want to be part of this discussion?

Scott Hauge
President
Small Business California
2311 Taravel Street
San Francisco, CA 94116
415-680-2188
shauge@cal-insure.com

SBIR/IRS collects 4 cents and $202.31 in penalties/SBA Stimulus Funding

I have been asked why Small Business California should get involved in the Small Business Innovation Research[SBIR] debate.

I start with Ms Velazquez statement “Without the participation of venture -backed companies, the SBIR program has become little more than corporate welfare for marginal companies who are unable to secure external market based funding”.

Ms Velazquez is the Chair of the House Small Business Committee and in fairness to her she retracted her statement but still believes VCs should be allowed into the program.

The statement in my mind is an attack on the small businesses around the country and the SBA. Does she also mean that small businesses that get SBA 7a and 504 loans, which are not "external market based programs", are taking corporate welfare and marginal small businesses.

Will these programs only be legitimized if VC’s are allowed to use the program? It should be noted that VC’s that have less than 500 employees can use the SBIR or if they do not control the management of the small business those small businesses can use the SBIR program.

For background information there are 4000 companies getting venture capital in the US and there are 25 million small businesses in the US.

You might find the article by Bob Shallit interesting. It was in the Sacramento Bee. It is a story about a car wash owner who had two IRS agents show up at his business to collect 4 cents the IRS says was due. The penalties on this were $202.31

Click here: Bob Shallit: IRS visits Sacramento carwash in pursuit of 4 cents - Sacramento Business, Housing Market News Sacr

Last week I sent an email regarding HR 4213 which would provide $560 million stimulus funding to continue the 90% guarantees on 7a and 504 SBA loans and waive the fees on those loans.

It should be noted it does not include increasing the size of those loans from $2 million to $5 million. That would be done by passage of HR 4302 which Small Business California has strongly supported.

The provisions of HR4302 are in the Senate jobs bill which Senators Feinstein and Boxer have coauthored. We have been working on getting House members from California to coauthor HR 4302 and to date the Congress people that have signed on are Baca, Speier, Costa, Cardoza, Richardson, Davis and Woolsey.

Please ask your congressman to support HR 4302. If you want a sample letter please let me know. Please also tell me where you are located so we can set the letter up to the person in your district.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

SBIR

I have written about the battle in Washington between small business and the large venture –backed companies. Basically venture backed capital companies want to redefine the SBA’s criteria of small business.

On March 4 a document passed by the House contained the following statement put forth by Chair of the House Small Business Committee Nydia Velazquez:

“Without the participation of venture-backed companies, the SBIR program has become little more than corporate welfare for marginal companies who are unable to secure external market based funding."

The passage of the document was with the proviso that the document could be changed to make punctuation and technical changes.

For some background information, if you go to the www.sbir.gov website, you will see The US Small Business Administration[SBA] Office of Technology administers the Small Business Innovation Research[SBIR] Program and the Small Business Technology Transfer{STTR] Program. Through these two competitive programs, SBA ensures that the nation’s small,_high-tech innovative businesses are a significant part of the federal governments research and development efforts.

Eleven federal departments participate in the SBIR program; five departments participate in the STTR program awarding $2 billion to small high-tech businesses.

It should be noted that the SBIR program does not prohibit venture-backed companies from participating in the SBIR program just those that do not meet the definition of small business put forth by the SBA.

There was a firestorm around the country about Ms. Velazquez' comments. As a result Ms.Velazquez revised her statement to say:

“In addition, SBA should permit venture capital-backed small businesses to be able to fully participate in the Small Business Innovation Research program. Such participation is essential for high- growth small firms seeking capital, particularly during this period of economic weakness”

Seems to me this is a bit more than punctuation and technical changes but the bottom line is that Ms Velazquez has become a real problem for small business. Not only on the SBIR issue but she prevented an amendment to include small businesses from being included on the credit card reform bill passed by the legislature and signed by the government and voted against the $125 million included in the Defense bill which extended stimulus funding for SBA loans

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

ALERT Senate Votes, Extend SBA Recovery Act to 12/31

Please see below for the National Association of Government Guaranteed Lenders information to members. As you all know Small Business California and the National Small Business Association have been working closely with NAGGL to get this funding.

We now ask Speaker Pelosi and all members of the California House delegation to support passage quickly of HR 4213.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188



Senate Passes HR 4213, Includes NAGGL-Originated Amendment to Extend & Fund SBA Recovery Act Provisions through CALENDAR Year


March 10, 2010

Dear Members,

Just moments ago the Senate passed HR 4213, To amend the Internal Revenue Code of 1986 to extend certain expiring provisions, and for other purposes -- more commonly called the 'Tax Extenders Bill' to extend jobless benefits, tax breaks... and small business programs.

The bill includes an amendment sought by NAGGL that increases the amount of funding to further extend the SBA Recovery Act provisions. NAGGL argued that the additional $354 million proposed in earlier legislation would likely not support SBA lending stimulus provisions through even the end of the fiscal year.

Senators Mary Landrieu (D-LA) and Snowe (R-ME) (the Chair and Ranking Member of the Senate Committee on Small Business & Entrepreneurship) concurred with NAGGL. As part of a technical amendment, the Senate has increased the funding to $560 miliion (in addition to the $60 million for March). The $620 million total should be sufficient to get the SBA lending industry through the end of the CALENDAR year. The bill also includes an extension of the authorization of the SBA Recovery Act provisions through 12/31/2010.

What's next? HR 4213 now goes to the House for consideration. NAGGL is hopeful that all congressional work will be completed and the bill signed into law by the March 28 expiration of the recently extended stimulus provisions.



Thank you for your continued support. We'll keep you updated on naggl.org and through email alerts.


Anthony R. Wilkinson
& Your NAGGL Team


NAGGL
215 East 9th Avenue
Stillwater, Oklahoma 74074

Proposition 16 June Ballot

PG&E will be putting on the ballot Proposition 16. This measure will require a two-thirds voter approval before local governments provide electricity service to new customers or establish a community choice electricity program using public funds or bonds.

Questions: Were you aware this would be on the June ballot? Do you support or oppose this initiative?

Last week I heard from Tony Wilkinson of the National Association of Government Guaranteed Lenders that the Senate has put forth an amendment that would provide $560 million for the SBA to provide 7a and 504 loans with a 90% guarantee and waives the fees on these loans for the calendar year. This is on top of the $60 million that is now in place with the extender legislation that was passed a couple of weeks ago. Small Business California has been at the for front of this effort along with our partners at the National Small Business Association.

Small Business California has delivered the results of our survey to every House member from California and the Governor’s office. We will be sending the surevey results this week to every member of the California legislature.

For the results for 2010 and the results of 2009 please visit our website at http://www.smallbusinesscalifornia.org/


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Workers Compensation/ AB 32 Global Warming

On Tuesday I spoke at the Department of Workers Compensation conference. Dave Belluschi from the Workers Compensation Insurance Rating Board also was a speaker and he reported that he expects that combined loss ratio for workers compensation for 2009 was going to be around 125%. The combined loss ratio for 2008 was 111%. As I have said before at some point there is going to be double digit increases for small businesses for their comp insurance.

You all may know that there is a movement afoot to put a measure on the ballot to suspend implementation of AB 32.The measure will delay implementation until California’s unemployment drops to 5.5% for a year. Currently the unemployment rate is just over 12%.

Yesterday Valero Energy Corp and Tesoro Corp Texas based refiners have pledged $2 million to get signatures to put this on the ballot. What are your thoughts on this?



Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

Survey Results/CARB Workshop

Please see link to the results of Small Business California’s 6th annual survey.

The top concerns for Small business are:

1. The Economy-88% Top or High Priority

2. Cost of Healthcare-79% -Top or High Priority

3. Quality of Public Education-74%

4. Repair of Infrastructure-66%

5. Access to Capital- 64%

6. Awarding state contracts to small business-61%

7. Regulations-60%

8. State Taxes-58%

9. Energy- 48%

We had over 2700 hundred responding. Thank you.

English results:
http://www.zoomerang.com/Shared/SharedResultsSurveyResultsPage.aspx?ID=L247A8TNDLL3


The California Air Resources Board has developed, and is hosting, a FREE workshop entitled “Taking Advantage of the Growing Green Economy – Real People. Real Solutions. Real Opportunities!” in conjunction with the Green California Summit on Tuesday, March 16, 2010, from 9:30AM to 4:00PM, at the Sacramento Convention Center. Please help us promote this workshop by distributing the attached agenda and flyer to your networks, colleagues, customers and clients.

The focus of this workshop is "Real California Small Businesses" learning from other "Real California Small Businesses" about what is working, what didn't work, how their respective businesses have benefited from the actions they've taken to “Green” their businesses by reducing energy and fuel use, becoming more efficient, accessing local assistance programs, and selling green products and services.

This is a fresh approach and the response thus far has been quite excellent. Our confirmed attendance figures to date have already exceeded our original attendance goals within the first three days of marketing, but we want to be even MORE successful with your assistance! We've expanded the room that was originally reserved for us so we still have capacity to accommodate additional small businesses who want to learn and GROW during this very challenging economy.

Thank you for your support and we hope to see you AT the workshop on March 16!

Jerry Hart
Air Pollution Specialist
CA Air Resources Board
ghart@arb.ca.gov
916-324-5941

The energy challenge facing California is real. Every Californian needs to take immediate action to reduce energy consumption. For a list of simple ways you can reduce demand and cut your energy cost, see our web site at http://www.arb.ca.gov/


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188