NASE News

Taxes: Self-Employed Can Deduct Health Insurance (Bloomberg Businessweek)

NASE — Wednesday, 8 February, 2012 13:30:32 EST

“The self-employed health insurance deduction is one of the most powerful deductions you can take—and one of the single most-powerful ways to address the affordability of health insurance,” says Keith Hall, a certified public accountant and tax adviser for the National Association for the Self-Employed, which is based in Annapolis Junction, Md. Health insurance is a so-called “above-the-line” deduction, which means it reduces your adjusted gross income dollar-for-dollar. “Depending on your tax bracket, it could represent a substantial reduction in your tax” liability, Hall says.

You should report the deduction on line 29 of your IRS Form 1040. You can include premiums paid on qualified long-term-care insurance, if you purchase that as well. In addition to what you found in your tax preparation software, you can get instructions on filling out your 1040 here, and in IRS Publication 535, which discusses the self-employed health insurance and long-term-care deductions here. Instructions for free e-filing of 2011 returns are available.

Read the entire article here.

Preparing Your 2011 Tax Return (WLW-AM)

NASE — Thursday, 26 January, 2012 11:08:02 EST

NASE National Tax Advisor Keith Hall talks about tips for getting a jump on your 2011 tax return, such as taking the mileage deduction.

Click here to listen.

The State Of The Union: Small Firms Weigh In (Wall Street Journal)

NASE — Thursday, 26 January, 2012 10:32:02 EST

Spokespeople for the National Small Business Association and the National Association for the Self-Employed, both trade groups in Washington, D.C., said they were pleased that the president noted the importance of creating a level playing field for businesses, despite the absence of details.

"I forgive politicians who run a country and have one hour to outline plans," said NSBA Chair Chris Holman, adding that Mr. Obama's key themes of eliminating regulations, cutting the deficit and creating a fair tax code, were on point. The NSBA, a non-partisan organization that does not endorse candidates, has 150,000 members.

Kristie Arslan, president and chief executive of NASE, said that the overall message of fairness resonated with the self-employed population because "they are dealing with their own legal work and regulatory work, as well as being CEO."

NASE is a non-partisan organization that represents about 200,000 member businesses. It does not endorse candidates.

Click here to read the entire article.

The Tax Deduction Mitt Romney Did Not Take (New York Times)

NASE — Wednesday, 25 January, 2012 16:41:59 EST

Oddly, there was one strategy that Mr. Romney did not use — a full deduction for health insurance premiums that is available to most self-employed people. It is on Line 29 of the Internal Revenue Service’s Form 1040 income tax return. On Mr. Romney’s return, the line appears blank.

Keith Hall, the national tax adviser to the National Association for the Self-Employed, pointed to a restriction on the deduction. “It is very vague but it basically states that the health policy you have must be established under the small business,” Mr. Hall said. “There’s a reasonable chance that his health insurance is a policy that he’s had for many years — could be coverage that he had while at another company, or otherwise unrelated to his self-employment. If that’s true, he’d be precluded from taking that deduction on Page 1 on his 1040.”

Further, Mr. Hall said, it may not have made financial sense to shift his insurance to take advantage of the deduction. “He may have an old group policy, and depending on what medical conditions he or his family have, to try and convert it may cost more than the savings he’d get from the deduction.” Mr. Romney’s wife, Ann, was diagnosed with multiple sclerosis in 1998.

Click here to read the entire article.

State Of The Union: A "Level Playing Field" Must Include The Self-Employed Agenda (Huffington Post)

NASE — Tuesday, 24 January, 2012 16:28:18 EST

By Kristie Arslan, NASE President & CEO

As President Obama readies his State of the Union address, news outlets are reporting that economic growth and taxation will be the focus of much of his remarks. According to these news reports, he will call for a "level playing field" in tax policy to ensure that the economic recovery reaches everyone, not just those in the upper tax brackets. He'll surely include several applause lines to appeal to his supporters in Congress and across the country. If the President and Congress are really serious about ensuring a fair tax code, they'll take action on the tax and other policy changes that level the playing field for the foundation of the American economy: the self-employed.

The nation's 22 million self-employed are starting and building businesses and contributing to the economic turnaround. But they're struggling not just with the economic challenges we all face, but also with a disproportionate tax burden and excessive paperwork requirements. The changes required to address these challenges aren't necessarily difficult - but they are vital to the continued success of the self-employed sector of the economy.

The Self-Employed Agenda for 2012 includes the following items:

Item: Self-Employed Health Insurance Deduction - The premiums paid for health insurance by the small-business owner will still be deductible on page one of form 1040 in 2011, but unlike 2010, those same premiums will not be included on Schedule SE, Self Employment Tax. That means net earnings from self-employment will be higher and the related Self Employment Tax will be higher. This is in effect a 15.3% tax hike on the small-business owner.

Action: The self-employed need this deduction extended or made permanent to avoid the dramatic increase in tax burden that will otherwise take effect.

Item: Payroll Tax Relief Extension - The payroll tax cut for 2011 expires at the end of February 2012.

Action: Small and micro-businesses, who pay both the employer and employee version of the payroll tax, need relief to be extended for the full year to ensure they can continue to grow and contribute to overall economic improvement.

Item: Standard Home Office Deduction - Entrepreneurs managing businesses out of their home face added burdens at tax time. The current home office deduction has the words "See Instructions" over 10 times on a one-page form. Bipartisan legislation has been introduced in Congress to allow business owners the option of a $1,500 standard deduction, but would not preclude taxpayers currently qualifying for the home office deduction from continuing to itemize their expenses should they choose.

Action: More than half of the self-employed work from an office at home, so Congress should pass and the President should sign legislation simplifying the deduction.

Item: Tax Deduction for Startups - Passed as part of the Small Business Jobs Act of 2010, this provision allowed individuals to take a $10,000 deduction for start-ups in 2011. In 2012, the deduction will decrease to $5,000.

Action: Maintaining the current level for this deduction is vital to encouraging individuals to continue to start new companies and contribute to the growth of our economy.

Item: Alternative Minimum Tax (AMT) Exemption - For tax year 2011, the AMT exemption for a married couple filing a joint return is $74,450 and $48,450 for single filers, representing a $2,000 and $1,000 increase, respectively. For tax year 2012, the AMT exemptions are currently scheduled to decrease to year 2000 levels to $45,000 for a married couple and only $33,750 for a single taxpayer.

Action: Small and micro-businesses need this exemption to remain at 2011 levels to ensure the self-employed are not unfairly singled out for higher taxes by this reduction in the exemption.

We all know 2012 is a pivotal year for the economy - and for the politicians who help shape policies designed to boost growth. If our elected leaders are concerned about keeping their jobs into 2013, they should focus on the tax policies the self-employed need to keep growing their businesses in 2012.

This piece is also cross-posted on the Huffington Post.

Extending The Payroll Tax Cuts Into 2012 (Huffington Post)

NASE — Tuesday, 13 December, 2011 16:02:00 EST

By Kristie Arslan, NASE President & CEO

As 2011 comes to a close, so does the payroll tax cut for millions of Americans. If Congress does not come to an agreement, we'll start out 2012 by paying higher taxes. This fact has a greater impact on the 22 million self-employed and micro-business owners who, in an open-letter, urged both the President and Congress to consider impacts on their sector of the economy as cuts are made to reduce the federal debt by $1.5 trillion. The self-employed play the role of both the employer and employee, which means they are responsible for paying both portions of the payroll tax. In a cruel twist, the entrepreneurs who are trying to jump start the economy are, in effect, taxed twice for their efforts.

Now is the time for our policymakers to put politics aside and implement clear economic actions that will move our economy forward. Our nation's smallest businesses are waiting for our leaders to make the difficult decisions. A payroll tax holiday for the self-employed and micro-businesses will help with adding another phone line, conducting online advertising or covering the cost of a seasonal employee.

Taxes are just one item on a long list that those seeking self-employment must be aware of in their daily operations. Learning all the details of small-business ownership may seem overwhelming, but there are resources available to navigate the essentials. Extending the payroll tax cut is a step in the right direction towards an improved economy in 2012 and beyond. With money saved, small business owners can seize the opportunity to market and grow their businesses throughout local communities. Continued payroll tax cuts -- aligned with the tenets of the National Self-Employment Initiative -- will help small businesses rev up the economy and spur some of the nine million unemployed to embark in entrepreneurship.

This piece is also cross-posted on the Huffington Post.

Reducing the National Debt While Keeping Small Businesses Top of Mind (Huffington Post)

NASE — Thursday, 17 November, 2011 10:39:31 EST

By Kristie Arslan

As we approach the Thanksgiving holiday season, the Joint Select Committee on Deficit Reduction approaches a looming deadline: by November 23rd, the super committee must provide recommendations to Congress on how to reduce the federal debt by $1.5 trillion. In an open letter, the 22-million self-employed and micro-businesses asked to be kept in mind as the super committee determines which cuts will be made to reduce the debt.

Small business owners and the self-employed appreciate the importance of the task at hand because they must keep their financial books balanced in order to maintain a successful business. Good financial habits are the key to operating a successful business. For those pursing self-employment, there are resources available to help develop and instill the financial habits necessary for getting a business up-and-running.

Click here to read the rest of the post.

Payroll Tax Cut Extension Will Support Small Business Growth (Huffington Post)

NASE — Thursday, 20 October, 2011 11:11:38 EST

I think we can all agree that the tax code could be more fair for Americans who want to start their own small business. It's one of the pillars of the national self-employment initiative that I have been urging policymakers to adopt. One of the key components of President Obama's American Jobs Act is a further extension of last year's payroll tax cut for employees. In 2011, the employee FICA contribution stands at 4.2 percent, a cut of 2 percent. The President's proposal would cut the employee contribution even further to just 3.1 percent. Employers would also see their contribution halved to 3.1 percent. For the nation's over 22 million self-employed business owners, extending the payroll tax cut to employers is a big deal because they pay both the employee and employer portions of the FICA contribution. By extending the payroll tax cut to employers, the self-employed will see their overall tax liability decrease in the short-term, which will help these businesses generate growth for the long-term.

Read the rest of this post here.

Self-Employed Struggle In Bad Economy (Deseret News)

NASE — Wednesday, 5 October, 2011 12:15:28 EST

"The numbers speak for themselves," said Gene Fairbrother, lead small-business consultant at the National Association for the Self-Employed which is based in Washington, D.C. "However, particularly during a difficult economy, there are a lot of people attempting to be self-employed that never show up in the numbers. It could be multi-level marketing or an Internet business that may never develop enough revenue to cause them to file a business tax return. Numbers are indicators, but they don't tell the entire story."

Small Businesses Feel Left Out Of The Jobs And Tax Debate (McClatchy)

NASE — Wednesday, 5 October, 2011 10:59:21 EST

"Somehow it is OK to take a hit (on mounting deficits) on tax provisions that benefit larger corporations," said NASE President Kristie Arlsan, adding that "the word 'small business' is the card that's always pulled out when there is a talking point on the economy ... but a lot of policy out there does not help mainstream businesses."

Bad Tax Policy One Reason For Decline In Entrepreneurship (Crain's NY)

NASE — Friday, 9 September, 2011 14:00:00 EST

“One minute you have these benefits, the next you don't,” said Kristie Arslan, CEO of the National Association for the Self-Employed. “Creating long-term tax and economic policy instead of doing these short-term fixes is incredibly important.”

Click here to read the entire article.

Removing Obstacles For U.S. Entrepreneurs (Bloomberg)

NASE — Thursday, 8 September, 2011 14:34:00 EST

NASE: Small Business Faces Too Much Uncertainty (Fox Business)

NASE — Thursday, 8 September, 2011 14:20:00 EST

Arslan: An Open Letter to the President and Congress (Roll Call)

NASE — Thursday, 8 September, 2011 14:18:09 EST

By Kristie Arslan

Official Washington returns to work this week, and any lawmakers who were hoping the economy would shape up in their absence are sorely out of luck.

The unemployment rate of 9.1 percent remains “disturbingly high,” according to one Federal Reserve Bank president. It is poised to remain high as the Congressional Budget Office has issued its grim prediction that unemployment will remain above 8 percent until 2014.

Read the entire op-ed here.

Fewer People Choose To Be Self-Employed (USA TODAY)

NASE — Thursday, 8 September, 2011 14:14:35 EST

By Laura Petrecca

In August, 14.5 million people were self-employed, down 2.1 million from the most recent peak in December 2006, according to Bureau of Labor Statistics data.

The number of "incorporated" self-employed workers — those who incorporate to gain legal protection and other benefits — began its decline in 2008. Last month, 5.1 million people were in this category, down 726,000 from August 2008....

"Constant news about the difficult economy makes people hesitant to venture out on their own," says Kristie Arslan, CEO of the National Association for the Self-Employed. Many have concerns about how health care reform, tax policy and other regulatory issues could affect a new business, she says.

Click here to read the entire article.

U.S. Recovery Offers Few Opportunities (Bloomberg Businessweek)

NASE — Friday, 2 September, 2011 10:47:23 EST

By Anna-Louise Jackson and Anthony Feld

More than 1 million self-employed Americans are no longer in business almost four years after the last recession began, as the economy constrains entrepreneurial activity and small-business job creation....

The extension of unemployment benefits -- to as long as 99 weeks in several states -- has influenced some people’s decisions about starting their own business, according to Kristie Arslan, president and chief executive officer of the National Association for the Self-Employed, based in Washington.

‘Calculated Assessment’

They “are trying to make a calculated assessment,” she said. Is the amount they’ll collect “going to be greater than what they’d make working for themselves?” And if they fail, they may no longer be eligible for these benefits, she added.

Click here to read the entire article.

An Open Letter to the Budget Super Committee (Huffington Post)

NASE — Monday, 15 August, 2011 14:06:33 EST

The nation's smallest businesses would like to send our encouragement as you roll up your sleeves to address our nation's debt challenges, including finding $1.5 trillion to cut from the federal budget. That's a big number and no small task - we are writing to ask that you keep the 22 million self-employed and micro-businesses in mind when you take out the red pen.

Read the entire post here.

Five Indicators To Watch In The Region's Economy (Washington Post)

NASE — Monday, 15 August, 2011 13:54:52 EST

By Dion Haynes

The deficit reduction agreement, the Standard & Poor’s downgrade of the nation’s credit rating and the tumult on Wall Street have for many local economy watchers turned what seemed to be a growing recovery into a big question mark. Here is what five experts are saying about the region’s prospects for jobs, construction and a double-dip recession....

Kristie Arslan, president and chief executive of National Association for the Self-Employed, said the credit downgrade will quash growth plans of many small businesses that were starting to dig their way out of the first recession.

“They already have had problems getting access to capital. Now they will be paying more for the money they actually get. They aren’t big businesses with lots of liquidity — every dollar matters. ... A lot of our members were considering growth — they’re in a position to bring on one or more people. Now they’re taking steps backward to maintain their current level of operation in case things get worse.” Moreover, she said, small businesses may see subcontracting opportunities dry up. Large corporations “may freeze spending on consultants and it will have ripple effects in the small business community.”

Read the entire article here.

NASE On Small Biz And The Credit Downgrade (Fox Business)

NASE — Monday, 15 August, 2011 10:03:01 EST

Click here to watch the video.

NASE Reacts To The Credit Downgrade (FoxBusiness.com)

NASE — Friday, 12 August, 2011 13:16:00 EST

What The Downgrade Means For Small-Business Lending (Wall Street Journal)

NASE — Friday, 12 August, 2011 10:08:31 EST

Earlier this week, the Federal Reserve announced plans to keep interest rates near zero for at least the next two years. That’s good news for banks – but less assuring for small-business owners....

“It’s more about the overall climate,” says Kristie Arslan, president and CEO of the National Association for the Self-Employed, a trade group in Washington, D.C. “Banks will be more cautious about their lending because of the downgrade. If you have so-so or average credit, the downgrade will make it more difficult for you to get loans and you will likely have to pay higher interest rates.”

To read the entire article, click here.

NASE on Your Business (MSNBC)

NASE — Monday, 11 July, 2011 15:24:48 EST

Debunking One Size Fits All (Huffington Post)

NASE — Wednesday, 6 July, 2011 14:24:13 EST

America's lawmakers are working frantically to craft a solution to the ballooning federal deficit and the rapidly approaching August 2 debt ceiling deadline. Tough decisions abound about whether to let the nation default on its debt, how to pay down the deficit if the debt ceiling is increased and whether certain tax cuts can be extended to help grow the economy.

Leaders from both parties are embroiled in the debt drama leaving taxpayers and the financial markets to wonder if there is any hope that Congress can balance our nation's books.

This exercise hits close to home for America's small business owners, who manage to balance their books each and every day. Their ability to invest in advertising or pay for health insurance is entirely dependent on what they have in the bank. Responsible business owners make tough decisions on a daily basis to ensure they stay in the black. So how come policymakers can't do the same and are not required to balance the federal budget?

Read the entire article here.

7 Ways to Help Entrepreneurs Help the Economy (The Atlantic)

NASE — Wednesday, 15 June, 2011 15:01:12 EST

By Derek Thompson

Let's start by thinking about the smallest firms. The companies of one. Self-employment is the new employment these days. Accounting for one third of the workforce, the self-employed population is 40 million and growing. By the end of this decade, the Bureau of Labor Statistics predicts that 40 percent of the U.S. labor force will be self employed.

The self-employed can be a major force for job creation. But they need a push. There's been an uptick in start-ups since the recession; however the number of start-ups that hire in the first year declined before the recession, and it's still declining. More people are striking out on their own, but they're not hiring help.

How do we scale our start-ups? Here are seven ideas to boost entrepreneurship and help creative people move from starting a company to building a company.

Click here to read the full article.

Five Big Myths About American Small Businesses (Huffington Post)

NASE — Tuesday, 24 May, 2011 16:18:40 EST

By Kristie Arslan

Politicians on both sides of the aisle have been struggling to stimulate the economy and put a definitive end to the Great Recession. These efforts have included sector-specific bailouts, cash for clunkers and the American Recovery and Reinvestment Act of 2009, which helped some notable companies and stimulated some industry sectors, but most of these efforts provided little benefit to the typical American business.

Last week, the Obama administration recognized the contributions of this important business demographic with its National Small Business Week. It's worth challenging a few of the myths about the American small business landscape -- as they are truly the engine of the economy.

Read the entire post here.

Tax Break For Self-Employed Likely To Vanish (Bloomberg Businessweek)

NASE — Thursday, 19 May, 2011 14:16:43 EST

By John Tozzi

The Small Business Jobs Act nixed the tax that self-employed workers pay on health insurance for 2010. Small biz advocates doubt Congress will extend it.

Despite politicians' calls for tax reform and oft-professed devotion to small business, prospects for passing two tax fixes that self-employed business owners like Fleming have sought for years are shrinking, small business advocates say. One bill would make the health insurance tax break permanent, bringing the self-employed in line with payroll workers, whose health insurance is fully deductible. The other would simplify the home office deduction, a proposal that has been around for at least a decade.

"I'm concerned that this is going to fall by the wayside," says Kristie Arslan, executive director of the National Association for the Self-Employed, who has championed both measures. "It's a perfect storm of politics right now. You have a divided house in Congress and you have a Presidential election coming up. The only expectation you can have is gridlock." Arslan plans to urge lawmakers to extend the health insurance deduction when she testifies before the Senate Small Business Committee on May 19. Twenty-two million Americans are self-employed business owners, and more than half work from home, she says.

Read the entire article here.

Budget Ideas From Small Firms (Wall Street Journal)

NASE — Wednesday, 18 May, 2011 14:20:00 EST

By Emily Maltby

We’ve heard from the president, Rep. Paul Ryan and numerous politicians about how they’d cut the deficit. Now, what would small-business owners propose?

In a recent survey, about 500 business owners who are members of National Association for the Self-Employed – a lobbying group representing 200,000 of the country’s 22 million enterprises with fewer than 10 employees – voiced their opinions on the best ways to address the debt.

“If we cut even 10% of the defense budget, we could pay for many of our other programs!” wrote one anonymous survey respondent. “Also, if we overhaul the WAY that health care is delivered, rather than how we pay for it, we could make it much, much cheaper.”

“Tax laws should be simplified by eliminating the provisions that allow special groups to receive tax breaks, which is the best way to increase revenues,” wrote another.

Read the entire article here.

Self-Employed In America (Build Your Business Radio)

NASE — Tuesday, 26 April, 2011 10:55:41 EST

NASE's Kristie Arslan is a guest on Build Your Business Radio where she talks about the self-employed in the United States.

Listen to the segment here.

Shutdown Cost To One Small Business: $60,000 (CNN Money)

NASE — Friday, 8 April, 2011 11:24:00 EST

[During a federal shutdown], self-employed people who filed paper returns won't be able to get their federal government tax refunds to plunge back into their businesses, said Kristie Arslan, executive director of the National Association for the Self-Employed.

"Our smallest businesses -- the self-employed -- will be impacted worse than most because many count on the infusion of capital they receive from their annual tax refund," Arslan said.

Read the full article here.

NASE Warns Of Gov’t Shutdown’s Effect On Small Biz (SmallBusinessNewz.com)

NASE — Thursday, 7 April, 2011 11:13:00 EST

A partial shutdown of America’s government is an interesting – and controversial – concept. Some people seem to be half looking forward to it (Conan O’Brien joked that he’ll immediately park in a loading zone), while others are more worried. And the National Association of the Self-Employed falls into the second camp.

Read the entire article here.

Self-Employed Workers Can Reduce Health Insurance Costs (USA TODAY)

NASE — Tuesday, 5 April, 2011 13:11:04 EST

By Sandra Block

The National Association for the Self-Employed (NASE) estimates the provision will save self-employed business owners $456 to $968 in taxes, based on average health insurance premiums.

Keith Hall, national tax adviser for the NASE, says the law addresses an inequity in the way health insurance is taxed. Employers are allowed to deduct their health insurance costs as a business expense, thus lowering the amount they pay in payroll taxes. Meanwhile, employees who have employer-provided health insurance can pay their share of the premiums with pre-tax dollars, Hall says. "For the first time, we are on the same basis for deductibility as everybody else."

"We talk over and over again about access to health care, but the biggest issue for small-business people is affordability," Hall says. "This is a 15.3% savings on the cost of health insurance premiums."

Click here to read the entire article.

Kristie Arslan: Let’s Make Tax Code Fair For Small Businesses (Buffalo News Op-Ed)

NASE — Monday, 4 April, 2011 11:35:00 EST

It is a sad, but true fact: Health insurance is a luxury item for many small business owners, purchased when times are good and forsaken when times are lean. This is especially true for self-employed and micro-businesses — our nation’s smallest businesses.

Read the entire op-ed here.

Self-Employed Can Take 2010 Tax Deduction For Health Insurance Premiums (S. FL Sun-Sentinel)

NASE — Friday, 18 March, 2011 09:43:05 EST

By Marcia Heroux Pounds

The self-employed can take a tax deduction for health insurance premiums for 2010 -- a one-year benefits through the Small Business Jobs Act.

The deduction also can be taken for small firms with 10 or fewer employees.

The 2010 deduction will put about 15 percent of the premium back in the pocket of the self-employed, said Kristie Arslan, executive director of the National Association for Self-Employed.

Click here to read the entire article.

Tax Day: Let's Make the Tax Code Fair (Huffington Post)

NASE — Tuesday, 8 March, 2011 14:52:52 EST

It is a sad, but true fact: health insurance is a luxury item for many small business owners, purchased when times are good and forsaken when times are lean. This is especially true for self-employed and micro-businesses -- our nation's smallest businesses. Thanks to a minor quirk in the tax code that has a major effect on their bottom lines, the self-employed are the only business entities that receive no tax benefit for purchasing coverage. Every other type of business, like corporations and partnerships, can write off the cost of health insurance as a business expense.

Read the rest of this post by Kristie Arslan, NASE Exec. Dir. here.

How To Find A Qualified Tax Preparer (Wall Street Journal)

NASE — Tuesday, 15 February, 2011 15:44:00 EST

According to Keith Hall, national tax adviser for the National Association for the Self-Employed, a nonprofit business group in Washington, D.C., you should hire someone experienced in preparing tax returns for start-ups. Further, the more recent the experience he or she has doing this, the better. “Just because you passed the CPA exam some years ago doesn’t mean you have the tax expertise to fit clients’ needs,” Mr. Hall says, referring to accounting professionals with the Certified Public Accountant designation.

Even better would be to find a tax professional who’s prepared returns for businesses in your industry because there are distinct rules and deduction options for businesses in certain sectors, adds Mr. Hall. For example, “if you’re in the construction industry, you have unique depreciation issues,” he says.

Read the entire article here.

Why It's Worth Paying For A Tax Pro (Wall Street Journal)

NASE — Sunday, 13 February, 2011 15:56:00 EST

This tax season, entrepreneurs operating on a tight budget may be tempted to forgo professional help in preparing their companies' returns. But experts say the investment is typically worthwhile -- at least for those just starting out -- to maximize deductions and avoid penalties. Tax specialists can help ensure that business owners don't pay Uncle Sam too much or too little and help identify all the tax breaks they're eligible to receive.

Accountants typically charge between $250 and $500 to prepare a start-up company's tax return, says Keith Hall, national tax adviser for the National Association for the Self-Employed, a nonprofit business group in Washington, D.C.

Click here to read the full article.

Small-Business Groups Parse Tax Deal (Wall Street Journal)

NASE — Wednesday, 8 December, 2010 14:43:13 EST

President Obama's newly proposed tax package is being praised, though with cautious optimism, by several of the nation's most prominent small-business advocacy groups.

....

The deal would also allow businesses to expense 100% of most of their investments in 2011, which could encourage owners to purchase new equipment and ultimately hire more workers, says Keith Hall, national tax adviser for the National Association for the Self Employed in Washington. "The evaluation of investing in new equipment for small businesses is predicated on existing tax laws," he says. "When small businesses invest in new equipment, they're going to need new employees to work that equipment."

Read the entire article here.

The Small Business Case for Extending Tax Cuts (Huffington Post)

NASE — Wednesday, 8 December, 2010 14:40:22 EST

Congress has important work to finish before the 111th Congress comes to a close. Much of its agenda includes priorities that are critical to the nation's smallest businesses. While the recent passage of the Small Business Jobs Act was a major accomplishment, small businesses also need relief from onerous paperwork burdens created by the IRS Form 1099 expansion provision hidden deep within the health care reform legislation, as well as resolution of a suite of tax issues, including the Alternative Minimum Tax (AMT), the estate tax and the Bush-era tax cuts.

Much of the political posturing over the Bush-era tax cuts focuses on how much money one earns - either below the $250,000 threshold or above it. The tax cut debate gets bogged down about whether the individuals who benefit from the tax cuts are middle-class or ultra-wealthy. What's missing from this discussion is the fact that 23 million of these individual taxpayers are something else, too: they are business owners. While Congressional leaders -- and the White House -- debate the merits of who deserves these tax cuts, self-employed business owners are depending on this extension for their businesses' very survival.

Seventy-eight percent of small businesses are self-employed and they collectively contribute close to a trillion dollars to our economy every year. Contrary to government policy that often regards them as home-based "hobby" businesses, the self-employed have real jobs in fields like finance, real estate, manufacturing and health care. They aren't simply sitting at home in their pajamas and bunny slippers. They support their families and their communities. And they create job opportunities and spur economic growth when they are thriving.

Read the entire article here.

NASE on The Dylan Ratigan Show (MSNBC)

NASE — Sunday, 10 October, 2010 13:55:00 EST

The Myth About Small Businesses (CQ Politics)

NASE — Saturday, 2 October, 2010 10:41:00 EST

The Myth About Small Businesses
By Richard Rubin, CQ Staff

There’s one type of American business that tends to fail frequently, leaving customers and employees in the lurch. Such companies routinely underpay their taxes, forcing everyone else to bear more of the cost of government. They typically provide lower wages and skimpier benefits than their competitors, imposing a financial toll on their workers.

There’s another type of American business that is the darling of Congress. Lawmakers and presidents extol these companies as the engines of job creation and the lifeblood of the nation’s economy. Federal policies are shaped to benefit them, and they receive preferential tax treatment and exemptions from burdensome regulations.The two types of companies are one and the same: small businesses.Small businesses are so exalted in the public imagination that criticizing them seems like hitting mom in the face with an apple pie. The term is so ill-defined that it’s almost meaningless, and that vagueness allows opportunistic politicians and corporate interest groups to present their own preferred policies under the mantle of small business.

Nearly every piece of major economic legislation passed by the 111th Congress has been framed by advocates as a boon to small business and derided by opponents as a disaster for those same small businesses. The post-election debate about the extension of the tax cuts enacted in 2001 and 2003 will be no different.

For politicians interested in electoral success, lavishing praise on small business makes perfect sense. The constant congressional genuflection to “the little guy” appeals to Americans’ visions of themselves as loyal corner-store shoppers and budding entrepreneurs. And the very word “big” is a term of opprobrium, as in “Big Oil,” “Big Tobacco” or “Big Government.” The persistent support for small businesses has a downside, however. Those public beliefs, reinforced by rare bipartisan consensus, create a potent, one-sided myth about the importance and virtue of small business. In fact, what gets labeled as “small business” in political discourse often bears little resemblance to the mom-and-pop image in our minds.

“It winds up hurting us because sometimes we’ll be invoked on issues that may not be central to most companies,” said Todd McCracken, president of the National Small Business Association, the oldest of several organizations that advocate for such enterprises. “When we’re invoked all the time, sometimes I think some folks lose focus on what matters to small companies.”

Congress, eager to create jobs and accelerate economic growth, continues to shape economic policy around small business. But the logic of focusing on small-business job creation during an economic recovery relies on faulty premises about the sources of employment growth, leading directly to skewed policies that emphasize business size as opposed to economic vitality or neutrality.

“Obviously, small business is good. It’s a part of our national identity,” said Alan D. Viard, a resident scholar at the American Enterprise Institute. “It does hire people and produces output. But, of course, that’s what big business does as well.”

Small Is Beautiful
The constant refrain about helping small business taps into a powerful part of the American psyche. As a society, we mythologize small-town America, the kind of place where everyone knows the dry-cleaner and the owner of the hardware store. It’s a resonant image because it evokes the personal-contact economy that many Americans no longer experience, and because it enables us to think about ditching the cubicle and working for ourselves.

We also mythologize inventors and innovators, the garage and dorm-room tinkerers who turn a half-baked idea into Apple or Facebook. Even though these companies are now huge, their small-business roots make that improbable piece of the American dream seem more attainable.

Along with the military, small business is one of the few institutions in America that retains a strong, positive public image. According to an August poll by NBC and The Wall Street Journal, 84 percent of Americans say they have at least some confidence in small business. Compare that with large corporations and Congress, which have corresponding scores of 54 percent and 44 percent, respectively.

Small businesses are unquestionably an important segment of the economy and of local communities. Using the broad definition that includes all companies with fewer than 500 employees, they employ about half of private sector workers. Some of the negatives associated with big businesses — from overseas customer service agents to mass layoffs — are absent in the day-to-day contact that Americans have with smaller companies.

“It’s personal. It creates jobs, and people feel that. And they see the jobs created and they associate with innovation,” said Drew Westen, an Emory University scholar of political psychology who has helped Democrats frame their policies. “Big businesses are associated with the same bureaucracy that government is associated with.”

Small-business owners are also the cornerstones of communities. Real estate developers and community bankers, whose own interests are tied up with their cities’ futures, tend to get involved in civic life through their jobs in a way that chain-store managers and plant foremen don’t. That clout extends into local government, local business groups and the campaign-contribution cycle that propels members into office.

This popularity back in congressional districts makes everyone eager to be on small businesses’ good side, leading to the array of loan programs, contracting benefits and tax breaks that they now enjoy. At least sometimes, however, “small business” gets used solely as a convenient slogan.

“Democrats and Republicans routinely use small business as a justification for what they’re trying to do,” said Lloyd Chapman, president of the American Small Business League, which focuses on making sure contracting policies meant to benefit small business are not benefiting large corporations instead. “But when you actually look at what they do to help small business, I would say it’s difficult to find legislation passed in the last decade that helps small businesses and only small businesses.”

A package of benefits for small businesses signed by President Obama last week, for example, does include a number of provisions that would directly help those companies, such as lower fees for Small Business Administration loans, elimination of capital gains taxes on certain investments in small companies and assistance for state small-business programs. The law also includes a controversial lending program to address complaints about small businesses’ access to credit.

But it doesn’t do much to boost economic demand, which a recent survey from the National Federation of Independent Business showed was the No. 1 concern for business owners. And one of its major tax provisions is an extension of bonus depreciation, which the small-business law makes available to all companies, regardless of size. The ability to write off half of new investments will cost the government $40 billion in fiscal 2011 largely by accelerating deductions that would occur later in the decade. The smallest businesses don’t benefit much from those depreciation changes; they can already write off 100 percent of investments, up to certain thresholds.

Even small-business advocacy groups split over the attention lavished upon the little guys. Less-known and less-powerful organizations say they sometimes get ignored. Kristie Arslan, the executive director of the National Association of the Self-Employed, welcomed several provisions in the new law, especially a temporary deduction from payroll taxes of health insurance expenses for the self-employed. That’s a provision her group had been seeking for nearly a decade.

But she also argues that other ideas — such as a standardized home-office deduction that would make life simpler for millions of sole proprietors — get ignored amid a focus on a sliver of companies that are defined as “small” but are really quite large and successful. Those bigger small businesses, Arslan says, have more time to lobby Congress and have factories and stores that make better photo opportunities than a self-employed software engineer at a home computer.

“When you are looking at the actual policy, you see that a lot of proposals are really benefitting a small slice of small businesses,” she says.

For all the adulation heaped on small businesses, they still tend to lack the lobbying clout enjoyed by larger companies. That is particularly true when the two wings of the business world split over an issue and the bigger guys can quickly and efficiently get their message to lawmakers, said Mickey Edwards, a former Republican congressman from Oklahoma who is now a lecturer at Princeton’s Woodrow Wilson School of Public and International Affairs. “If you have the U.S. Chamber and IBM and General Motors and you have these people that have very large lobbying activities and a lot of money, they can sometimes just swamp the other side if it comes down to big vs. small,” he said.

Big businesses trying to influence the economic policy debate also try to align themselves with the popularity of small businesses. Last month, for example, under the title “Mutual Benefits, Shared Growth: Small and Large Companies Working Together,” the Business Roundtable released a study from Dartmouth economist Matthew J. Slaughter showing the extensive supply-chain links among businesses of all sizes.

He said there’s not much evidence for the idea that small businesses are somehow better than large ones and notes that their fates are closely tied to each other. “In a big economy like the U.S. economy, there’s an awful lot of links between firms of a lot of sizes,” said Slaughter, who was a member of President George W. Bush’s Council of Economic Advisers.

Is Smaller Better?
A clearheaded look at small-business policy raises a simple, important and rarely asked question: Why should size matter?

The first and often trickiest issue is defining “small business.” For research purposes, the Small Business Administration sets the threshold at 500 employees, which means that all but about 18,000 of the 27.5 million companies in the United States are classified as small. A more complicated set of industry-by-industry measures determines which companies qualify as small for federal contracts and other government programs. During tax debates, politicians often describe any business income reported on individual returns as being from “small business,” whether it comes from sales made at the neighborhood market, book royalties earned by the president or profits received by a partner at a big law firm.

Those definitional questions complicate the economic debates about the impact of small companies, but the core of most of those arguments starts with the assertion that small businesses generate the most net new jobs. Politicians then take the next step and contend that if the government is interested in job growth, it should enact policies that encourage small businesses to create jobs.

That all sounds logical, but it’s based on several fallacies.

It is indeed true that most private sector job growth occurs at small businesses. According to the SBA, 65 percent of the net new jobs created between 1993 and 2009 were generated by companies with fewer than 500 employees. But that employment growth is not evenly distributed. The net numbers obscure the fact that every year, more than 500,000 small businesses shut their doors.

The job growth is concentrated among startups and a relatively small group of young companies expanding quickly. A study released this summer by economists at the University of Maryland and the Census Bureau, analyzing data that became available in the past few years, found that after controlling for age, small companies don’t create jobs any faster than big ones do. “It’s hard for me to tell a story where small business has some magical power except for the fact that it’s young,” said Charles Brown, an economics professor at the University of Michigan who has written about the differences between small and large businesses.

In their first few years, startups tend to grow rapidly or die. This “up or out” dynamic suggests that job growth is concentrated among a relatively small number of successful startups, and it cautions against policies based solely on business size.

Given that background, governments interested in job growth might prefer incentives for startups and assistance to help those companies grow quickly. But that line of thinking rests on a false premise, too. Just because small businesses — or, if rethought more narrowly, startups and young businesses — generate the most net new jobs does not necessarily mean that they would generate more jobs if given assistance from the government. Additionally, a government policy that promoted more business startups might simply encourage doomed startup ideas that could not get off the ground without government assistance because they were not viable. “I guess, for some people as an initial guess, directing money to the sector that has been generating jobs in the past is the more effective thing to do,” Brown says.

Furthermore, it’s not clear exactly how these fast-growing businesses generate jobs or where those jobs come from. New jobs in the economy must come from some innovation that creates a market or from serving an expanding population. If startups use lower wage and benefits costs to undercut larger competitors, that may promote economic efficiency, but it won’t necessarily create new jobs.

The temptation for government, then, would be to search for new markets and new ideas that would expand the economy as opposed to shifting wealth from one person to another. But finding and successfully and efficiently encouraging those startup ideas can be risky, and it leads directly to the picking of winners and losers that politicians often decry.

Besides the job-growth argument, advocates of small-business policies make a corollary case. They say small companies need help because bigger companies can take advantage of economies of scale in business competition and in coping with government regulations.

Current law addresses all these arguments. Smaller companies, for example, can have trouble taking advantage of export markets without the internal infrastructure needed to cope with multinational regulations, and the new small-business law includes assistance for small-business exports. Some small companies are already exempt from complying with requirements such as granting family and medical leave. Depending on how they are structured, small companies can have tax advantages, such as the ability to pay their owners in “founder’s stock” that can be taxed as capital gains when sold.

But regulations have a public purpose, and that purpose can be undermined when exceptions are made.

A recent example is the much-discussed provision in this year’s health insurance overhaul that makes businesses file 1099 information-reporting forms to the IRS for each vendor receiving more than $600 in a tax year. In addition to helping offset the costs of the law, it was written to address a significant problem of tax evasion and avoidance by businesses, particularly small, cash-based operations. An IRS report analyzing 2001 tax data found that the estimated $109 billion in under-reported business income accounted for more than half of the tax gap between individual income taxes owed and collected.

Now, business lobbies are arguing that the paperwork will be burdensome to small business, and lawmakers from both parties are trying to repeal or modify the new requirement.

Intuitively, a rule exempting companies with 25 or fewer employees would help. In reality, it would just demonstrate how size isn’t everything. A hedge fund with 24 employees — but with hundreds of millions of dollars in revenue and millions in annual profits — could easily pay an accounting firm to file the correct forms and comply with the law, while a struggling 30-employee manufacturer in a weak corner of the economy might have a much harder time managing the same regulatory burden.

Hard-and-fast rules on size exemptions also yield unintended consequences. A recent study of the effects of the 2002 accounting overhaul law found that some companies made otherwise economically irrational maneuvers — such as reducing investment and reporting lower earnings — to avoid crossing a $75 million market-value threshold that requires significant changes in accounting procedures.

More recently, Republicans have used a similar argument to criticize two aspects of the health care law designed to protect small businesses. A tax credit for purchasing health insurance is available only to companies with 25 or fewer employees, and penalties for not purchasing health insurance will apply only to companies with more than 50 employees. Those thresholds will hold back business growth, Republicans argue, because companies will have an incentive to keep their employment levels below those targets or even to lay people off to hit the marks.

As Republicans criticize the health care law, their advocacy of small business causes a similar problem in one of their own proposals: a 20 percent deduction for small-business income that is part of the House Republicans’ recently released “Pledge to America.” Their plan defines small business as companies with fewer than 500 employees.

To avoid the perverse incentive they see in the health care law, the Republicans’ plan would allow companies to continue receiving the deduction even if they exceeded that size. As introduced by Michigan’s Dave Camp, the top Republican on the Ways and Means Committee, the bill would apply only in 2010 and 2011, which means relatively few companies would be able to exploit that provision after growing beyond the threshold.

But the bill also draws arbitrary lines to limit the scope of the provision. It piggybacks on various tax-code definitions of small business that exclude hotels, restaurants, banks, law firms, golf courses and liquor stores, among others, from taking advantage of the proposed deduction.

“There’s no universally accepted metric of support-worthiness, for lack of a better term,” said Donald Bruce, associate professor of economics at the University of Tennessee. “How do I choose which businesses are worth public support or not?”

Taxing Problems
Perhaps the most frequent — and most confusing — discussion of small-business policy occurs when Congress talks about marginal income tax rates.

That debate will again move to the political forefront after the election, when Congress will return to consider whether to maintain the tax cuts Bush pushed into law in 2001 and 2003 or let them expire as scheduled at the end of this year. In an attempt to raise revenue and to draw clear distinctions between “the rich” and everyone else, Obama has narrowed the debate to focus on the top two tax brackets. He and most Democrats want to let the tax cuts expire on income over $200,000 for individuals and $250,000 for married couples.

So far, much of the loudest debate in Congress has focused on competing claims about small business that are both accurate and misleading. Eager to ward off Republican complaints that the tax rate increase would hurt small businesses who report their profits on their owners’ individual tax returns, Democrats note that just 3 percent of taxpayers with business income would be affected.

Republicans respond by noting that the group still reports nearly half of all business income that shows up on individual returns. Democrats volley that many of the businesses reporting their income through individual returns are not small at all, including big accounting firms and big pipeline operators. Republicans counter that regardless of the size of the company affected, a tax increase on business income is still a tax increase.

The back-and-forth ignores an important question: Why is so much business income reported on individual tax returns?

In part, the answer is that in the 1980s, Congress provided tax advantages for small companies that operate outside the traditional corporate form. Companies that are not publicly traded can choose to be corporations or “pass-through entities.” Corporations must pay the corporate income tax rate, which tops out at 35 percent, on their profits, and their owners must also pay taxes on dividends or capital gains. Pass-through entities, such as partnerships, S corporations and sole proprietorships, don’t have to pay a tax; only their owners do, via their individual tax returns.

By lowering individual tax rates from their pre-Reagan levels and by liberalizing the rules for forming pass-through entities, Congress effectively encouraged businesses to avoid the corporate tax system altogether. As a result, the share of business done by pass-through entities has, unsurprisingly, increased dramatically over the past three decades. In 1980, 80 percent of net business income was earned in traditional corporations; by 2007, that share had dropped to 53 percent.

That trend is uncommon in other countries. Here, the recent commingling of business and personal income makes it difficult for contemporary Congresses to set separate tax policies for businesses and individuals — and it leads directly to this year’s confusion. Higher marginal tax rates on “the rich” apply equally to basketball star LeBron James, a doctor with a big practice and the owner of a successful manufacturing company.

With that broad a group in the top two tax brackets, sorting out the impact of a tax increase on “small business” becomes a morass of competing claims that are hard to reconcile with the available data. (Taxes and jobs, p. 2288)

Either way, the public debate seems unlikely to change, because the marketplace of political ideas has already declared a winner. “Both sides of the aisle know that Americans have a gut-level positive attitude toward small business and a gut-level negative attitude toward big business,” Westen said. “And so you hear both sides talk about small business.”

FOR FURTHER READING: Tax cut extensions, p. 2292, CQ Weekly, p. 2228; small-business benefits (HR 5297 — PL 111-240), p. 2233; ‘Pledge to America,’ p. 2230; Westen and Democratic strategy, p. 1082; State of Taxation, p. 898, 2009 CQ Weekly, p. 828; health care overhaul (PL 111-148, PL 111-152), p. 748; first Bush tax cut (PL 107-16), 2001 Almanac, p. 18-3; second Bush tax cut (PL 108-27), 2003 Almanac, p. 17-3. accounting overhaul (PL 107-204) 2002 Almanac, page 11-3. The Camp bill is HR 6168.

A New Tax Break For The Self-Employed (NY Times)

NASE — Wednesday, 29 September, 2010 15:18:32 EST

The National Association for the Self-Employed said it expected that the new provision would save self-employed business owners anywhere from $456 to $968, on average. It based those numbers on the average premiums paid by single individuals and families.

“We and other small business groups hope to push for this to become permanent, but at the very least we will work to keep extending it,” said Kristin Oberlander, a spokeswoman for the association.

Click here for the full article

Arslan: Congress Can Rev Up Engine Of Economy (Roll Call)

NASE — Monday, 20 September, 2010 09:31:00 EST

Read this article online at RollCall.com.

Conventional wisdom used to hold that what’s good for General Motors is good for the country. While an American automaker may no longer be the face of our economy, our economic and employment policy often blindly assumes that large employers are the primary drivers of growth.

In fact, large employers don’t even represent 1 percent of the nation’s businesses, and they grow at a much slower rate than the real engine of our economy — small businesses. More than 77 percent of small businesses are entrepreneurial enterprises run by an individual who is by definition self-employed. While this business demographic is incredibly diverse, including businesses run from home offices, work trucks and storefronts, the self-employed as a whole would benefit from policy remedies that have been slow to gain momentum in the 111th Congress.

After spending a few weeks back home, Members of Congress should have a firsthand sense of the pall looming over Main Street America. Economic reports and employment data may help characterize business conditions, but it’s at dinner tables across America where small-business owners are having to chose between basic family needs and their businesses’ needs in the current economy.

Congress is in a position to deliver real relief to a segment of our economy that can help reverse recent dismal economic trends and begin to deliver meaningful growth, both in terms of revenue and employment. The self-employed are counting on lawmakers to deliver on a critical piece of legislation: the Small Business Jobs Act.

For small businesses, relief cannot come soon enough. These businesses need help to survive the lingering economic recession and to begin to thrive in an economic recovery.

With the rising cost of health care, the self-employed must be allowed to take a one-year business deduction for their health care costs. Currently, sole proprietors are unable to deduct their health insurance costs as a business expense, meaning they pay more in payroll taxes than any other type of business. While a one-year reprieve on an inequity in the tax code may seem like lip service, it is an important first step in leveling the playing field.

Another priority is giving self-employed business owners the option to take a standard home office deduction. Since more than half of small businesses are run out the home, this deduction is an important tax benefit for a huge number of small businesses. Unfortunately, taking this benefit is so complex and requires such a significant amount of paperwork that most qualifying business owners forgo the relief to which they are entitled.

While failing to meaningfully lower health costs for small businesses, the recent health care reform measure also created a monstrous paperwork burden for the self-employed. While ostensibly an expansion of an existing reporting requirement, the new law requires every business to issue a Form 1099 to vendors that it pays more than $600 during a tax year for goods and services. A typical self-employed business that issues two or three Form 1099s a year would now be facing two dozen or more, largely for basic business expenses such as hotel stays, high-speed Internet service and inventory.

Businesses need capital to grow. Small businesses would benefit if small banks, credit unions and other small lenders get an infusion of capital to make loans to those who need it. A $30 billion lending fund would help the self-employed who have been forced by the credit freeze to dip into their families’ savings or rely on personal credit cards to keep their businesses afloat.

After Senate passage last week, the Small Business Jobs Act returns to the House for its approval. The House must act quickly and decisively to ensure America’s small-business community gets the relief it so desperately needs.

As Congress resumes its work, it is critical that it specifically addresses the concerns of America’s self-employed and micro-businesses. They are and will continue to be the engine of the economy. Instead of more for Wall Street, now is the time for Main Street to put our economy back in the fast lane.

Kristie Arslan is the executive director of the legislative offices of the National Association for the Self-Employed, which represents 23 million self-employed and micro-businesses.

Commentary: Legislation Provides Needed Tax Breaks, Funding For Small Business (Capital Business)

NASE — Monday, 13 September, 2010 08:55:00 EST

Click here to read this article on the Washington Post site.

Last week, President Obama proposed to spur job growth in small businesses through an extension of a tax credit used when they spend money on research and innovation in the United States. While this is a step in the right direction, it will do little to help our constituents -- the self-employed.

Government policy often favors the larger small business, regarding the self-employed merely as people working on their hobbies at home in their pajamas and bunny slippers. But in reality, the self-employed represent 78 percent of small businesses and contribute $1 trillion to the economy.

Congress got it right with the Small Business Jobs Act of 2010, a bill that would provide needed funding, tax breaks and increased outreach to businesses. The provisions of the legislation have consistently received bipartisan support. However, the bill languished in the Senate in July mostly due to posturing and politics on both sides of the aisle.

As Congress returns from recess, it's time for lawmakers to do for small business what they did for Wall Street. Instead of merely talking about how small business will lead the economy out of the downturn, Congress needs to take action in passing the legislation to give small business the tools and support it needs to recover. By putting off this legislation, lawmakers are turning their backs on the nation's most plentiful job creators and contributors to our economy.

It is not easy for small businesses to create jobs when revenue is down and the economic climate is so uncertain. For many of our members, it's sink or swim time -- they are just trying to stay afloat through some rough economic waters.

Andrea Caplan, owner of the Body Politic, a massage studio in Bethesda, is a one-person business waiting for policymakers to focus on Main Street. She said the bill is a step in the right direction.

"If it would give sole proprietors like me any kind of a break on taxes on our health insurance, then I'm all for it," Caplan said. "Even if it's temporary -- for one year only -- I could use the money on some other business expense, like advertising or office improvements."

The measure offers small businesses much of what they want most -- access to credit and relief from taxes.

It would allow them to deduct their health-care costs from their payroll taxes for a year. Currently, self-employed people, unlike their larger counterparts, can't deduct their health-care costs as a business expense. The measure would also expand the types of equipment deducted for business expenses.

Moreover, it would provide $30 billion in funding to credit unions and community banks that could be lent to small businesses.

We at the National Association for the Self-Employed (NASE) believe that creating your own job is just as important as being hired for an office or factory job; the contributions of small business to local economies and communities are just as vital, if not more, as the contributions made by large corporations.

The nation's self-employed keep the economy hopping, which is why Congress needs to stop the partisan sniping and pass a bill that's good for America -- the Small Business Jobs Act.

Kristie Arslan is executive director of the National Association for the Self-Employed's legislative offices.

Own a Small Business? Say Hello to Your New Best Friend: IRS Form 1099 (Huffington Post)

NASE — Monday, 19 July, 2010 11:02:00 EST

Found deep within the new health reform law is a little known provision that will increase tax regulation on all of America's businesses beginning in 2012. Who will be hardest hit? You got it...small business.

The IRS currently has a reporting requirement for businesses who hire independent contractors. If a business hires a contractor, and pays them more than $600 in a tax year for services, the business must file a Form 1099. One copy of the Form 1099 goes to the contractor to remind him/her that taxes must be paid on the amount of income received. Another copy goes to the IRS which utilizes the form to ensure that the contractor accurately complies with the tax code by paying the proper amount of taxes on income.

Click here to read Kristie Arslan's entire post.

Senate Wakes Up and Pays Attention to Small Business (Huffington Post)

NASE — Tuesday, 13 July, 2010 10:44:00 EST

On the eve of expiration for a number of key small business tax deductions and with the Small Business Administration running out of funding for small business loans, the U.S. Senate finally wakes up and begins to pay attention to small business. The same sector of the business community they have been touting will pull us out of this economic downturn.

With the guidance and leadership of Senator Mary Landrieu, the current chair of the Senate Committee on Small Business and Entrepreneurship, Senate leadership has finally introduced legislation that includes help for our nation's smallest businesses. The Small Business Jobs Act of 2010 (H.R. 5297) includes a one-year business tax deduction for health insurance costs for the self-employed, an increase in the start-up business expense deduction, expansion of Section 179 expensing limits, increases in SBA loan limits, and a new Small Business Lending Fund to help increase access to capital.

Read Kristie Arlsan's entire post here.

America's Self-Employed: Not So "Bunny" (Huffington Post)

NASE — Monday, 14 June, 2010 14:45:00 EST

The Obama Administration is trying desperately to create jobs and boost our sluggish economy. But the public increasingly thinks the President's economic policies are making things worse. The latest Pew Research Center survey clearly illustrates the pessimism that continues to loom like a dark cloud over the nation. For the first time, more people now believe that Administration policies have made economic conditions worse (29%) than they have made them better (23%).

For the nation's self-employed, the root of that pessimism is frustratingly simple: the Administration talks a good game about supporting small businesses while quietly issuing backdoor rules and regulations that pull the rug out from under our entrepreneurs. It's as though they just don't appreciate who small business owners are, how they operate and why one more IRS reporting requirement can make the difference between just making it and packing it in.

Read Kristie's entire post at the Huffington Post online.

NASE On MSNBC

NASE — Monday, 7 June, 2010 14:13:00 EST

MSNBC's report on Small Business Week featuring Kristie Arslan from the NASE discussing the 1099 issue. Passed under the health care law is a provision that would require the self-employed to issue additional 1099 forms to the IRS. This applies to every tansaction over $600 to a service provider or vendor.

Click here to watch the Video

New Tax Changes For Self-Employed (CNN.com)

NASE — Thursday, 18 March, 2010 13:14:31 EST

(CNN) -- As the April 15 income tax filing deadline approaches, the top tax expert at the National Association for the Self-Employed offers his best advice for business people who work for themselves.

Keith Hall, a national tax adviser at the association, answers the tax question he is asked most often and talks about changes in tax rules for small-business owners. He also offers advice about how the self-employed can best avoid being audited by the Internal Revenue Service.

CNN: What should self-employed taxpayers keep at the top of their minds this year?

Keith Hall: I think the most important thing to remember is that you have resources. The IRS is always changing information -- from automobile deductions, to alternative minimum tax limits, to net operating loss carry-forwards.

It's tough to keep up with, but you don't have to remember it, because it's all out there on the IRS Web site for you.

Don't forget, you've got resources to go out and look for.

CNN: What's different this year for self-employed taxpayers?

Hall: Perhaps the most important thing unique to this year is there are so many businesses which were affected by the downturn in the economy, that the IRS has expanded opportunities for loss carrybacks.

The definition of a loss carryback is if you had losses from your business in 2009, then you may have the opportunity to then take those losses and offset income from previous years.

That's certainly something to look into if you had a tough year for 2009, because it may give you the ability to recover taxes in more years -- namely five -- than you used to be able to, which is just two. So if that's the situation that you find yourself in, certainly look into options for those loss carrybacks.

It certainly can help you with the tax impact. More particularly, for those new to being self-employed or maybe even their first year filing a Schedule C, make sure you look for deductions that don't appear in your business checkbook.

It's very easy to overlook deductions like the deduction for the home office that you use, deduction for the business use of your automobile -- those typically don't show up in your business checkbook, so if you don't know to look for them, they're very easily overlooked, and that's basically just leaving money on the table.

CNN: What can self-employed workers do to avoid an IRS audit?

Hall: The No. 1 reason a small business gets audited or asked for additional information by the IRS is simple math errors -- the numbers simply don't add up correctly on the form.

Whether you use TurboTax or TaxCut or the IRS online filing, it's a great idea -- particularly for the new small business -- to make sure you use that software package -- if nothing else -- just to make sure those math errors are eliminated.

Don't be too afraid of an IRS audit. Obviously, when people think in terms of the IRS, they get a little bit antsy. Nobody likes to get that letter in the mailbox on Saturday morning that's got an IRS return address in the upper left-hand corner.

But if you do, the best thing to keep in mind is pay attention to your tax return. Do the due diligence that you need to to avoid the little shortcuts of filling in numbers that you don't have support for.

If you just take the time to pay attention to the business and do the tax return the way you should, there's nothing to be afraid of with that audit.

So at a very minimum -- just to ease the stress of that potential letter you're going to get form the IRS -- just make sure you take the extra time to use resources like nase.org, like the IRS Web site at irs.gov, and just make sure you dot your I's and cross your Ts. And then, if you do get a request from the IRS, it won't be stressful.

CNN: What are some important tax law changes for tax year 2009?

Hall: Always be aware that every year, the IRS changes something.

For example, automobile mileage: The new rate for 2009 is 55 cents. Make sure you get that one correct.

The IRS always changes the adjusted limits for alternative minimum tax. For the standard itemized deductions, all those levels are adjusted for inflation.

Make sure that you get those right numbers. Using an automated software program -- having that system in place -- will help you keep up with any of those changes that occur as a matter of course with the IRS every year.

CNN: What's the most frequent tax question you get asked?

Hall: The first question we typically get, particularly at tax return time, is "What can I do right now to save money on last year's tax return?"

Most tax planning ideas really end with the New Year's Eve party. But the one thing you can do today to save money on your taxes for last year is to consider making a retirement plan contribution -- whether it's a traditional IRA contribution, a self-employed pension plan contribution, lots of different ways to put money away for your own future.

The IRS recognizes how important that is, and they'll even give you a tax deduction for it.

So you can actually reduce the taxes you have to pay right now, just by putting money away for your own future. That's certainly something that should be considered.

CNN: Should we expect future tax breaks for small businesses?

Hall: The current administration and both sides of the House and Senate all promote the growth of jobs through small business.

The influences of small business in generating jobs -- which are more and more important these days -- is only going to increase the influence of small business.

Whether it's legislation for a standard home office deduction, which is pending, legislation for additional health credits and concentration on affordability for health care for the self-employed, which is also pending, there's lots of legislation out there to benefit small business.

The more and more small businesses we have, I think more emphasis in Washington and at the state level will focus on benefits for the self-employed.

Link

Bill Would Have Different Effects On Different People (USA TODAY)

NASE — Monday, 28 December, 2009 14:37:00 EST

House and Senate to begin negotiations next month. Here are major groups that would face changes:

Self-employed

People who buy health coverage on their own — not through an employer — would face some of the biggest changes under the health care bills.

Like all Americans, independent contractors and the self-employed would be required to have coverage by 2014 or face a penalty.

About one-third of the 22 million self-employed don't have coverage, said Kristie Arslan with the National Association for the Self-Employed.

Some provisions would help: Insurers could no longer deny coverage or increase premiums because of pre-existing medical conditions. Enrollees would be protected from having their coverage dropped if they got sick.

But premiums for some in the "non-group" insurance market would increase 13%, the Congressional Budget Office predicts.

For those eligible to receive subsidies, premiums would fall 59% on average, but subsidies would be available only to individuals earning less than $43,320 a year.

Reid and other Democrats say the higher prices for some would buy more stable coverage because the bills would set minimum standards for policies.

Arslan said some members of her association would rather have the ability to choose fewer perks if it meant paying less.

"Entrepreneurs need lower costs and they need flexibility," said Arslan, whose group opposes the Senate bill.

"In this economy, it's all about the bottom line," she said.

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Learn Piano In Your Home - A Success Story (Business In General Blog)

NASE — Thursday, 5 November, 2009 13:54:04 EST

Melodie Ellis knows what it’s like to work for somebody else. And she knows what it means to work for herself. In fact, she managed to do both for almost eight years, holding down a job as an employee at a private piano studio while also teaching students on her own in the Dallas-Fort Worth area. In 2004, she decided to make the leap to full-time self-employment. She left her studio job and started her own business – Learn Piano in Your Home.

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LLCs Are Worth a Look (Kiplinger)

By Jonathan N. Crawford — Tuesday, 15 September, 2009 13:18:00 EST

The simplicity and benefits of LLCs are spurring more businesses to set them up. “Is there a growing trend? Yes. The growing trend for the last few years has been the limited liability company,” says Gene Fairbrother, a small business consultant for the National Association for the Self-Employed.

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The Perils of Running a Business From Home (U.S. News & World Report)

By Matthew Bandyk — Friday, 4 September, 2009 13:09:00 EST

Filling out the form to apply for a home-office deduction can get complicated. "You almost have to be a CPA to figure out that form. The phrase 'see instructions' appears 14 times on a one-page form," says Keith Hall, tax adviser for the National Association of the Self-Employed.

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A Simpler Home Office Deduction (CNN Money)

By: Ian Mount — Tuesday, 18 August, 2009 16:10:00 EST

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The Self-Employed Push To Repeal The 'Health-Care Tax' (BusinessWeek)

By: John Tozzi — Tuesday, 11 August, 2009 15:45:00 EST

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For The Self-Employed, It's An Endless Workweek (Wall Street Journal)

By: Sarah Needleman — Tuesday, 4 August, 2009 14:58:00 EST

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Self-employed Health Insurance Deductibility - Will It Get Lost in the Shuffle? (OPEN Forum)

By: Anita Campbell — Monday, 20 July, 2009 14:25:00 EST

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Grants Give Accountant Leg Up, Big Windfall (Southern Maryland Newspapers)

By: Erica Mitrano — Wednesday, 1 July, 2009 14:13:00 EST

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NASE Offers Calming Tax Tips (SmallBusinessNewz.com)

By: Doug Caverly — Tuesday, 7 April, 2009 12:12:00 EST

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Hidden Tax Tips for Entrepreneurs (BusinessWeek)

By: John Tozzi — Tuesday, 17 February, 2009 14:18:00 EST

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Escape From Cubicle Hell (Inc.com )

By: Tamara Schweitzer — Friday, 16 January, 2009 20:40:00 EST

From retirement-averse baby boomers to Gen Y-ers disillusioned with the corporate world, a growing number of people are starting businesses out of their homes in a wide range of industries.

We've all heard the legend about wildly successful entrepreneurs who got their start tinkering in their basements, ultimately creating the next big thing. But these days, it's not all that surprising to find entrepreneurs who are starting businesses out of their homes -- and staying there, even as the businesses begin to grow.

The home-based business owner, once a title associated with the likes of stay-at-home moms and dedicated eBay sellers, is now a pursuit of entrepreneurs from all kinds of backgrounds and demographics.

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Microbusinesses Feel Recession Pinch (MicroEnterprise Journal)

By: Dawn Rivers Baker — Monday, 12 January, 2009 12:50:00 EST

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Study: Millions of Small Business Owners Hold Toxic Mortgages (Washington Post)

By: Sharon McLoone — Wednesday, 26 November, 2008 12:07:00 EST

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Smaller Firms In The Spotlight This Election (Chicago Tribune)

By: Ann Meyer — Monday, 3 November, 2008 11:46:00 EST

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S.F. Diner's Pickle - Opening In Hungry Times (San Francisco Chronicle)

By: Julian Guthrie — Sunday, 5 October, 2008 09:47:00 EST

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Business Groups Urge Quick Action On Bailout (BizJournals.com)

By: Kent Hoover — Thursday, 25 September, 2008 11:31:00 EST

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Small Businesses Seek Clarity From Presidential Candidates (New York Times)

By: Brent Bowers — Wednesday, 10 September, 2008 11:23:00 EST

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Health Care Reform Key Issue as Entrepreneurs Size Up Presidential Candidates (MarketWatch)

BusinessWire — Monday, 8 September, 2008 10:50:00 EST

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Small Business Looks at Where Candidates Fall on Its Issues (Wall Street Journal)

By: Simona Covel and Raymund Flandez — Tuesday, 2 September, 2008 10:14:00 EST

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For the Self-Employed, a Year-Round System Will Smooth Tax Time (The New York Times)

By Caitlin Kelly — Thursday, 3 April, 2008 20:55:00 EST

In tough economic times, as workers lose full-time jobs and take longer to find new jobs, more and more people are finding themselves self-employed. And with April 15 approaching, they are about to learn an important business lesson — keeping track of income and expenses is part of the job, too.

Staying on top of one’s tax obligations “is as important, if not more important, than the skill you’re trying to sell,” says Michelle Goodman, who has been a freelance writer in Seattle for 14 years and is the author of “My So-Called Freelance Life: How to Survive and Thrive as a Creative Professional for Hire,” to be published in September by Seal Press.

Learning about the world of 1099s — the income record that freelancers most often receive from their clients — is essential, Ms. Goodman said, no matter how confusing or tedious. “It’s part of the job, just like boring Monday meetings when you work in an office.”

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Tax Tips for Procrastinators (BusinessWeek)

By: Karen Klein — Friday, 28 March, 2008 16:03:00 EST

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How '07 Changes Affect Small Business (The Washington Post)

By: Sharon McLoone — Sunday, 9 March, 2008 20:52:00 EST

Small-business owners take note: Changes in the tax code this year could add a few dollars to your coffers. But you could be in for colossal headaches if you've been sloppy in your record keeping.

AMT exemption increase: For tax year 2007, the alternative minimum tax exemption reached $66,250 for a married couple filing a joint return, up from $62,550 in 2006. The exemption rises to $33,125 for a married person filing separately, up from $31,275, and rises to $44,350 for singles and heads of households, up from $42,500. Some small-business experts say the AMT can be a hassle for small firms because many small-business people are taxed on their personal income as self-employed workers. If an entrepreneur's income requires use of the AMT calculation, some business deductions aren't allowed.

Standard mileage rate: The rate for business use of a car, van, pickup or panel truck rose 4 cents, to 48.5 cents per mile. Darrel Shinn, president of SSB Tax Professionals in Arlington and Culpeper, said business miles can be deducted, but don't confuse them with miles driven for charity and medical purposes. The Internal Revenue Service treats those miles differently. Shinn said record keeping is essential. "If you keep the records, you get the deduction," he said.

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Creative Ways to Cut Costs (ABC News)

By: Mellody Hobson — Sunday, 13 January, 2008 11:28:00 EST

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Finding health care for your employees (FORTUNE Small Business)

By: Shara Rutberg — Thursday, 3 January, 2008 12:43:00 EST

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Small firms creatively fight health costs (Business Courier)

By: Andrea Tortora — Friday, 18 October, 2002 20:45:00 EST

Owner: 'All we're doing is interpreting the code'

When Keith Vande Stadt saw the monthly HMO premiums for his one-man business jump from $650 to more than $900 last year, he started shopping around.

What Vande Stadt, an information technology consultant who runs VanData LLC from his Anderson Township home, finally settled on is one of a half-dozen alternative strategies that a growing number of small employers are using to reduce health care insurance costs — and even save money on plans that cost employees less than the traditional approach.

Caution is advised before implementing these strategies, some of which are quite complicated.

Options include using Section 105 of the tax code to deduct nearly 100 percent of medical costs as a business expense, pairing gap insurance with high-deductible coverage to reduce premium costs and helping employees better utilize government-run health plans such as Medicare and the Children's Health Insurance Program to reduce expenses for workers and their employers.

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