NASE on Micro-Business

Posts Tagged ‘entrepreneur

Every time we ask the self-employed to tell us what’s on their mind, they don’t disappoint. This week, I’ve been knee-deep in efforts surrounding the recent release of our survey on the health reform perspectives of the self-employed.

Here are some cool tidbits I learned from the results (print version):

  • The self-employed are following the health care debate like hawks. When asked how many had heard the term “public option” in relation to discussions surrounding reform, two-thirds indicated they were familiar with the term, and of those, 71 percent identified it correctly as “a health insurance program run by the government and open to anyone in need of health coverage.”
  • The top two health tax proposals favored by micro-businesses are providing tax credits to businesses and the self-employed to offset health care costs and reforming the tax treatment of health coverage so that, regardless of whether health insurance is purchased individually or accessed through an employer, the worker receives the same tax benefits.
  • The majority of respondents were neutral on a recent suggestion of a cap on the employer exclusion. However, there were quite a few who strongly opposed such a cap.

The above figures are cool – in the Public Affairs department, we LOVE having stats to pass along to media – but I always enjoyed being able to wade through individual responses. Our response system is completely anonymous, and even though I can’t “put a face” to each comment, reading them always gives me a better understanding of what people out in the “real world” are thinking. Many survey respondents gave specific comments on the public option, mandates and other issues impacting the health care reform conversation. Here are just a few examples:

I do not think the government should become an insurer. I do think the government should regulate private insurers more.

I do not agree with the government mandating how businesses should run. They have been unsuccessful with their own budgets. What qualifies them to stipulate this to successful businesses?

Employers should not provide coverage. Let individuals subscribe to whatever plan they want and let employees take home money to purchase insurance instead of the employer purchasing for it for them. Individual needs are different.

I do not think the government should be able to pick and choose the businesses that are required to carry health insurance for their workers.

I would prefer that the government not be involved in providing my health care. However, I also cannot continue to provide health insurance on my own through private insurers if they continue to increase premiums at the current rate. If I could not afford private insurance, I would hope that there would be some other option rather than no insurance. If that is a government policy, then so be it.

NASE Members: Do you have a comment to add about health reform or any of the topics mentioned above? I’d love to hear from you. Just leave a note below, drop us a line on Twitter (@NASEtweets or @koberlander) or visit our Facebook sites (Group and Fan pages) to weigh in.

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Here are some of the top small business articles and blog posts of the week so far:

·         You\’ve finally settled up with Uncle Sam. So what should you do with the extra cash? (CNN Money)

·         Obama Seeks To Root Out Credit Card Issuer Abuses (WaPo)

·         GM Plans Major Summer Shutdown (CNN Money)

·         Will Obama Blow It With Small Businesses? (The Journal Blog)

·         105 Absolutely Free Online Videos and Lectures (SmallBizBee)

·         New Health-Care Rule for Laid-Off Workers Hits Small Businesses (Ind Street)

Check for hidden deductions: There are a number of deductions that small-business owners and the self-employed forget when filing taxes. If you work out of your home, your office may qualify for a deduction. Do you drive to the post office or a client site? Those miles may add up to a sizable deduction too.

 – Retirement Savings: Retirement savings, such as SEP contributions and IRA deposits, are deductible for last year’s tax return up until April 15, 2009. That means you can count money deposited into these accounts, up until the day you file your 2008 tax return. In the case of SEP contributions, those can even be made up until an extended due date, as late as October 15th.

 – Filing Date: If, despite all your rushing around, you still can’t make the April deadline, relax. All tax filers can get an automatic 6-month extension by filing Form 4868 by April 15th, which you can download from the IRS Web site at http://www.irs.gov/. However, an extension of time to file is not an extension to pay. If you do not send the IRS what you think you owe, you’ll be stuck with late fees and interest.

 – Proofread the form: Most of the mistakes on tax returns are simple addition and subtraction errors. Check your math. Then, check your math again.

 – Start thinking about next year: While micro-business owners may be tempted to finish their return and not think about taxes again until next year, now is a great time to reflect on how to reduce your 2009 tax liability. Consider deductions for a home office or employing your children; create a health reimbursement arrangement, which would enable the business to reimburse bona fide employees for all out of pocket medical expenses; reconsider the tax implications of incorporating your business; and research retirement plans designed specifically for the self-employed, including an IRA, SIMPLE, SEP, Single 401(k), and Keogh plan.

 – Look for help: Sole proprietors doing their own taxes can find help from a number of sources, including the NASE’s Tax Resource Center [tax.NASE.org], where you can ask the NASE’s expert CPAs a question and hear back within a few business days. You can find Schedule C from A to Z, a line-by-line guide for completing the tax form Schedule C, available online at http://www.nase.org/. The IRS also offers a Web site (http://www.irs.gov/) and toll-free help line, 1-800-829-1040, for your tax questions.

The Obama Administration recently announced its plans to step up the search for noncompliant taxpayers as one method for offsetting a massive budget deficit and to help shore up economic losses for the nation. A newly formed Task Force on Tax Reform will concentrate on the tax gap – a $300 billion difference between what the Internal Revenue Service is owed and what it collects.

 

In the past, lawmakers have pointed to underreporting by the self-employed as a significant contributor to the tax gap, a claim the NASE has worked hard to refute. The association has countered that an effective strategy to increase tax compliance should include overall simplification of the tax code, the elimination of issues that are inequitable to entrepreneurs, and greater access to reliable taxpayer education and outreach, not just an increase in enforcement activities.

 

Under the Bush Administration and the previous Congress, tax gap proposals placed an undue burden on micro-businesses. Those included imposing withholding on non-employee payments, specifically payments made to independent contractors; requiring information reporting on all payments of $600 or more to corporations; and demanding businesses that utilize contractors to obtain and verify an accurate Taxpayer Identification Number (TIN) for those contractors receiving payments of $600 or more.

 

Kristie Arslan, Executive Director of the NASE’s Legislative Offices, testified before the House Committee on Small Business last year against the annual reporting of electronic payment transactions to the IRS. Although some have supported this measure as a solution to the tax gap, the NASE is opposed to this legislation because of the increased tax regulation it places on small businesses and because it likely would not boost tax compliance.   

 

While the NASE believes the IRS should be able to collect all the money it is owed, increasing the burden on micro-businesses is not the most effective way to increase compliance. A strategy to increase tax compliance should include overall simplification of tax code, the elimination of issues that are inequitable to entrepreneurs, and greater access to reliable taxpayer education and outreach.

As this year’s Cover the Uninsured Week starts to wind down, I am encouraged that we will see major steps in reform for the working uninsured. And that’s a nice place to be.

With over 60 percent of Americans living without health insurance coming from a family where the head of household works for a small business, the NASE routinely supports efforts, like Cover the Uninsured Week, to inform folks about their coverage options from federal or state programs.

The NASE conducts several online polls of our members each year. Recently, we asked micro-businesses to speak up about their health care situation. It’s nothing new that many people, not just the self-employed, struggle to pay their premium costs. However, we found that one quarter of micro-business owners are currently uninsured, and almost three-quarters (71 percent) have been uninsured at some time.

While corporations are able to deduct health insurance premiums as a business expense and forego FICA (Social Security and Medicare) taxes on these expenses, the self-employed are not. As I mentioned in last week’s blog post, The Equity for Our Nation’s Self-Employed Act (H.R. 1470) would eliminate this double digit disparity in the tax code, which inhibits the self-employed from receiving a full deduction for health insurance costs.

Cover the Uninsured links:

 

 

 

I’m happy to announce that the Tax Resource Center has officially launched. Pretty exciting stuff! 

The Center is a one-stop show for all of the tax goodies the NASE has to offer – TaxTalk Q&A and audio/video tips, plus some great tax calculators, calendars and planning tools. We have included a new section on home offices, with focused how-to articles on making the most of working from home, links to Keith and Maureen’s illustrious TaxTalk Seminar program and a section where folks can search for a CPA in their area.  

It’s getting closer and closer to April 15, so make sure to visit the Tax Resource Center at tax.NASE.org for tips to help you get started on your filing!

In his recent address before Congress, Obama highlighted health care and the need for health care reform, especially to help small businesses and their insurance needs. The NASE remains very engaged in this debate, working with your legislators to make sure the issue remains a top priority. We continue to advocate that the self-employed must be able to exclude health insurance premiums from self-employment tax regardless of the entity form under which they choose to operate.

The NASE heads up the coalition supporting Equity for Our Nation’s Self-Employed, which brings together over 40 small-business organizations, working to remove this unfair tax burden on the self-employed. For more information, please visit our coalition Web site at www.setaxequity.org.


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