The week begins with a three-day convention of small business owners May 20-22, which will be held in Washington, D.C., and is hosted by the Small Business Administration. The SBA created National Small Business Week in 2008 as a way to honor, promote and assist small business.

The Washington conference gives small businesses from across the country a chance to network with each other as well as with potential customers in private industry and government.

The National Small Business Week conference includes seminars and presentations by small business consultants, government officials, business financial services companies and large corporations that partner with small business suppliers. Almost all of the conference’s sessions will be webcast for interested parties who are unable to attend the gathering.

Some of the topics to be featured during this year’s National Small Business Week include:

• the importance of small business to “an economy built to last”
• small business marketing through social media
• getting your small business’s product noticed by big retailers
• getting your small business into the overseas export market
• government contracting basics for small businesses
• growing your business through sub-contracting to larger enterprises

A highlight of National Small Business Week is the announcement of the winner of the National Small Business Person of the Year award from among previously selected finalists in each of the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam. A diverse range of small entrepreneurs is nominated for the honor each year, with last year’s award going to a medical services company in Vermont. Runners-up were a Wisconsin brewery and an Italian restaurant in South Dakota.

In addition to the Small Business Person of the Year, awards are given at the conference to the year’s top family-owned business, top small business exporter, top home-based business, top minority-owned business, top veteran-owned business and top woman-owned business.

This year, the SBA is also sponsoring a video competition for the first time. Senior SBA officials will choose a winner among short videos submitted by small business owners who have benefited from the agency’s assistance. Each 1- to 2-minute video will illustrate how the SBA helped a particular business to grow, and all qualifying video submissions will be posted on the SBA’s YouTube channel.

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Although the big banks reported fairly glowing statistics in their financial reporting on their small business lending activity for 2011, they use a definition of “small business” –firms with less than $20 million in annual revenue – that may seem a little too inclusive to many people. For the 95 percent of small businesses that bring in less than $1 million in annually, lending actually went down last year, according to one Philadelphia-based small business consultant who helps small companies find funding.

In another twist to the difficult borrowing environment, the Wall Street Journal reported that some small business owners will begin paying significantly more for credit beginning this month. The Journal found that a number of small businesses with lines of credit from Wells Fargo, one of the top four small business lenders, are facing imminent rate increases of 2.5 percentage points.

Wells Fargo would not disclose the number of businesses affected, but said that they are all former Wachovia customers who were notified a year ago that their terms could be changed in April 2012. (Wells Fargo absorbed Wachovia in late 2008 during the crisis in the U.S. banking and financial services sector.)

The Wells Fargo situation comes after news in January that some small business customers at Bank of America, another top small business lender, were having their credit lines cut off. Bank officials said the number of customers affected was very small and that they were also notified a year prior to having their credit lines called in.

Meanwhile, some in Washington are looking to the nation’s credit unions as a possible solution to the business credit crunch. Bipartisan legislation currently under consideration would allow credit unions to increase their business lending from 12.25 percent of assets to 27.5 percent.

The National Credit Union Administration says that raising the cap to 27.5 percent could lead to more than $13 billion in new loans, which could in turn result in more than 140,000 new jobs being created with a year. Nine out of 10 small business owners polled said that lack of credit is preventing them from hiring additional employees. Banks, on the other hand, oppose letting credit unions expand their presence in the business lending market, saying that credit unions have unfair tax and regulatory advantages.

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The system of taxation on business operations is complicated, especially for businesses that have employees. Understanding and complying with business tax law is not one of the more pleasant tasks for an entrepreneur, but calculating taxes incorrectly or failing to remit them on a timely basis to the applicable taxing authority will result in serious penalties.

For a fledgling business, or for one struggling to turn a profit, avoiding a substantial tax penalty can mean the difference between solvency and bankruptcy.  Because the stakes are so high, many small businesses rely on business tax specialists to help them navigate the tax code and properly file their returns.

At the federal level, business taxes fall into four categories, although not all of them will apply to all companies:

Income tax – The profits of a business venture are subject to taxation by the IRS. Unlike corporate taxes levied on large limited liability companies, however, small business taxes are more likely to be accounted for on the personal income tax returns of an individual sole proprietor, the partners in a partnership or the shareholders in an S corporation.

Self-employment tax – The self-employment tax (SE tax) is method by which the IRS collects Social Security and Medicare contributions from self-employed persons. This is separate and distinct from the income tax paid on the profits that a business generates for its owner or owners. Unlike Social Security and Medicare taxes that are withheld from each employee paycheck, SE tax is estimated and remitted quarterly.

Payroll taxes – In addition to withholding income taxes from their employees’ pay, employers must deduct employees’ Social Security and Medicare contributions. The employer also pays a share into the Social Security and Medicare programs from its own funds. In addition, the employer alone pays federal unemployment insurance tax.

Excise taxes – Only certain kinds of businesses have to pay federal excise taxes, which are levied on specific products and services. The most familiar examples are gasoline and other fuels, alcohol and tobacco products. Federal excise tax is also paid by companies that operate heavy trucks on highways. Some other business activities subject to excise taxes include the manufacture of fishing and archery equipment and the provision of indoor tanning services.

States and localities impose taxes on business, too. Almost all states have a business or corporate tax. All states require employers to pay taxes for state workers’ compensation insurance and for unemployment insurance. Five states and Puerto Rico also require a business to pay for temporary disability insurance. And, of course, employers must withhold and remit their employees’ state income tax, except in the few states that don’t impose an income tax on their residents.

In addition, almost every state collects a sales tax on some or all retail transactions. States and localities can also impose excise taxes on selected products or services.

The professionals at Padgett Small Business Services provide small business tax preparation services for business owners who want to make sure that their taxes are done right. We can also assist with your business financial planning, including tax planning. Padgett also provides a range of other small business services such as bookkeeping, consulting and payroll. Contact Padgett Business Services today at 800-PADGETT (800-723-4388) and see why small business owners have considered us a friend and partner for more than 45 years.

Each state’s economic conditions, tax structure and regulatory code all play a part in determining how well small businesses there are doing and how profitable they are, and there are many less tangible factors, too. Although asking which states are best may be an impossible question, several different organizations try to answer it every year by rating and ranking the them on their environments for businesses in general or small businesses in particular. Perhaps not surprisingly, the results of these rankings do not necessarily agree with each other – or even with the actual amount of small business activity taking place within each state.

Every year for the past 16 years, the Small Business & Entrepreneurship Council has ranked states’ favorability toward small business entrepreneurs on its “Small Business Survival Index.” For the 2011 index, the most recent, the SBE Council’s chief economist crunched numbers for 44 statistics, all related to state and local government policies, that could affect small business success. Among the factors studied were the rates for various business taxes, fuel taxes and wireless telecom taxes, as well as the level of state and local government spending, the number of health insurance mandates, the crime rate, electric utility costs and “highway cost effectiveness.”

South Dakota has topped the SBE Council index two years in a row. New York and New Jersey were the lowest-ranked states for both years, although the very bottom 51^st spot on the list was taken both times by the District of Columbia.

Looking at the rankings, one professor of entrepreneurship noted that South Dakota’s high ranking hasn’t necessarily made it a magnet for small business. In fact, another Upper Midwest state, Wisconsin had the highest number of small businesses per capita in the country in 2010, while ranking only 31^st on the SBE Council’s index that year.

Wisconsin fared similarly, but slightly worse at #40, on a list of the best states for business compiled by Forbes in 2011. Forbes’ rankings give heavy weight to three major business costs in each state – labor, energy and taxes, and while they’re not specifically oriented toward small business, the Forbes rankings do have points of agreement with the SBE Council’s index. Utah has been at the top of the Forbes list for two year in a row (it’s ranked #14 by the SBE Council) and Maine has been at the very bottom for the same years (which aligns with its lowly #45 and #46 rankings on the “Survival Index”). But the top choices of the SBE Council, South Dakota and Nevada, fall to #17 and #36 respectively on the Forbes list. The state of North Carolina presents another huge disparity – Forbes ranked it #3 in 2011, while the SBE Council placed the Tarheel state way down at #37.

The U.S. Chamber of Commerce ranks states on their friendliness toward business in terms of the level of taxation and business regulation in each state. The Chamber concurs with the SBE Council on South Dakota, putting it at #2 on its 2011 list, but gives its top spot to Tennessee, which has a middling ranking on the SBE Council list. Like Forbes and the SBE Council, the U.S. Chamber of Commerce gives top 10 rankings to Utah and Texas. Wyoming makes the top 5 on both the Council and the Chamber’s lists, and Forbes puts the Cowboy State fairly high at #14.

Meanwhile, the Small Business Administration’s Office of Advocacy compiles an annual snapshot of small business activity by state (including openings, closings and bankruptcy filings). The SBA figures give the number of active small business operations in each state without weighting them on a per-capita basis, so it may not be too surprising that low-population states like South Dakota and Wyoming don’t even make its top 20. But among the states with the most small business are ones that placed both very high (Texas, Florida, Washington, Tennessee, Ohio) and very low (New York, New Jersey, Michigan, Minnesota, Maryland, Massachusetts) on other organizations’ rankings of friendliness toward business.

Wherever your enterprise is located, Padgett Business Services can help you with expert bookkeeping, payroll and tax services. Padgett has more than 400 offices across the United States and Canada. We take the accounting burden off of small business owners so that they can focus on innovation and their companies’ growth. We also offer business advising and consulting services. To learn more about how we can help you, call Padgett Business Services® today at 866-729-8725.

In late March, the Bureau reported that 45 states and the District of Columbia still had fewer people employed in the financial services sector as of January than they did four years earlier in January 2008. Of the few states with net increases – Louisiana, North Dakota, Texas and Nebraska – only one, Texas, is a sizeable player in the financial services industry. And the increases are meager, too; all four states combined had an aggregate net increase of only 4,600 jobs.

The state of Alaska alone had no net change in its number of financial services employees, and all remaining states, along with the nation’s capital, showed reductions compared to 2008 that ranged from about 2 percent to almost 18 percent.

The financial services employment sector includes people in a wide variety of occupations working for companies that range from large banks, brokerages and insurance companies to smaller accounting and tax preparation firms. The sector employs millions of people in the United States, particularly in the Northeast.

Comparing the number of financial jobs in January 2008 to January of this year, the Bureau of Labor Statistics found that California experienced the largest loss, with a net reduction of more than 100,000 financial jobs over the four-year period. In percentage terms, the Golden State suffered the third-highest reduction, losing nearly 12 percent of its financial jobs. The only states to experience a higher percentage reduction in financial services employment were Washington, down slightly more than 12 percent compared to 2008, and Nevada, with a whopping loss of almost 18 percent.

In raw number terms, no other state can even compare to California’s financial sector employment losses over the last four years. The second-biggest loser, Florida, shed just under 55,000 financial services employees since 2008. Other states bearing the brunt of the losses included traditional financial services centers such as New York, Illinois, New Jersey, Pennsylvania and Massachusetts.

According to The Business Journals online, three states count on financial services activity for 10 percent or more of all their private-sector jobs – New York, Connecticut (the nation’s insurance capital) and Delaware (home to credit card giant FIA Card Services). Compared to 2008, Connecticut lost 8 percent of its financial services jobs while Delaware’s lost nearly 6 percent.

Business consultants don’t think that the shakeout in the financial services sector will be over any time soon. Last year, financial services companies worldwide announced plans to trim their payrolls by a combined total of about 200,000 employees during 2012 and 2013, according to Bloomberg News. Four large companies alone have plans to cut a total of about 80,000 jobs as financial reporting from the sector continues to bring dismal news such as severe earnings shortfalls.

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Naturally, the point for many early tax filers is to get their returns in to the IRS as soon as they have W-2 forms in hand, in order to get their tax refund dollars as quickly as possible. The earliest filers eligible for refunds have already received checks from Uncle Sam, meaning that some of the money is already flowing from consumers’ pockets back into the retail economy. This could be good news for small business owners, as some of them could see a boost in sales at a time of year that otherwise might be very sluggish.

Not surprisingly, those expecting large refunds are more likely to file early in the tax season. Ever since electronic filing and direct deposit became options, greatly speeding up the total time it takes to get a refund, there has been a spike in payouts from the IRS every February. In all, well over $300 billion has flowed back to taxpayers from the federal government in refunds each of the last two years, at an average of about $3,000 per return. Roughly the same amount of money will no doubt be in play again in 2012, with a large chunk of it again arriving in bank accounts in February.

Retail business owners understandably cannot help but wonder how much of that figure will find its way to their stores and shops. Of course, many businesses explicitly make a bid for a share of people’s tax refund checks at this time of year. For instance, many car dealership ads suggest that making a down payment on a car would be a good use for a tax refund. Other purveyors of big-ticket items, from appliance and electronics stores to travel agents, run similar ads, because as one financial writer put it, for many people this is the one time each year that they feel rich.

After hard economic times hit in 2008, survey statistics suggested that Americans were being more conservative with their refund dollars, putting more into savings and paying down more debt than they did in better times. In one 2010 survey, 58 percent of taxpayers receiving refunds said that’s how they planned to spend the money. By contrast, only 7 percent said they were going to splurge. By the 2011 tax season, an annual survey conducted by one maker of tax return preparation software revealed that the number of people planning to spend their tax refund on a vacation had doubled.

The slowly improving economy could mean that Americans will be more likely to spend their tax refunds a little more freely this year. And even people who won’t spend their entire tax refund on expensive luxuries or high-dollar necessities may just be that much more likely to spend the money shopping on Main Street, giving a much-needed boost to their hometown economies.

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The NFIB and many other small business groups have opposed the Patient Protection and Affordable Care Act (PPACA) since it was first drafted. The PPACA was passed by Congress two years ago, but some of its most controversial provisions won’t go into effect until 2014, even if the entire law is eventually upheld. However, many commentators doubt the Act will make it out of the Court intact, based on the lines of questioning pursued by the justices during an almost-unprecedented six hours of oral arguments spread over three days.

Many business leaders and small business consultants have said that uncertainty over the health care law’s fate has made it difficult for small business owners to do accurate financial planning for things like growth and expansion. As a result, many businesses have been reluctant to add new workers to their employee payroll, keeping unemployment high and contributing to the slow pace of the economic recovery in the United States.

One of provisions most opposed by business groups would require companies with more than 50 employees to either provide an adequate health insurance plan for their workers or to pay a federal government penalty. Another would require every person not covered by an employer or government health insurance program to buy individual insurance. These two mandates are among parts of the health care law scheduled to kick in on January 1, 2014.

The NFIB attorney represented individual business owners on whose behalf it brought the original Florida lawsuit challenging the PPACA. It was the first time that the NFIB has argued as a lead plaintiff in a case before the Supreme Court. The NFIB is based in Nashville, Tennessee but has offices in every other state capital and Washington, D.C.  The organization claims about 350,000 members. Also arguing against the PPACA, which is often referred to as “Obamacare,” was lawyer Paul Clement, a former U.S. solicitor general, who was representing 26 states whose attorneys general sued the federal government over the law.

While the NFIB opposes in principle the coming health insurance mandate for businesses, its arguments before the Court this week were actually against the health care law’s individual mandate provision. Other plaintiffs argued not just that the individual mandate should be ruled unconstitutional, but also that it then follows that the entire PPACA must be struck down in its entirety.

Many small business owners are worried that if the law’s other provisions go into effect without the individual mandate, the cost of health care and health insurance will skyrocket, driving them to limit hiring, cut jobs or go out of business entirely. Many employers also think they will ultimately bear the cost of a tax that the PPACA would impose on insurance companies, because insurers would pass on the tax in the form of higher premiums.

It’s worth noting that some small business owners, including some NFIB members, support the health care law because of certain parts of it that have already gone into effect. These provisions have extended business tax credits to small companies to offset the cost of providing insurance to employees. For employers who were already footing some 50 to 80 percent of the costs of employee health insurance, the tax credit has reduced their costs.

The NFIB originally filed its lawsuit in opposition to the PPACA in a federal court in Florida. The suit eventually found its way to the U.S. Court of Appeals for the 11^th Circuit, and then was chosen last fall, along with one other PPACA case, for this week’s review by the Supreme Court.

The justices’ decision on the fate of the Administration’s health care legislation is likely not to be handed down for another three months. The Supreme Court’s nine-month session usually finishes near the end of June, and historically the Court’s opinions on its most important cases are among the last to be issued each term.

Whatever happens in the legal or judicial arena, Padgett Business Services® is there to help small business owners run their companies as smoothly and successfully as possible. With small business consulting, business tax planning, employee payroll and bookkeeping services, Padgett can help your enterprise succeed and grow.  We have office across North America – to find one near you, call Padgett Business Services® at 800 PADGETT (723-4388) or use our online locator.

Projecting cash flow is a worthwhile bookkeeping exercise, especially for a business that’s just starting out or for one that’s planning to deplete cash reserves to pay for expansion or capital improvements. Seasonal businesses also need to be mindful of their cash flow patterns in order to devise financial strategies to get them through their slow periods. Cash flow projection spreadsheets are included in many business financial software packages, and some free ones are available online.

A big part of maintaining cash flow is simply ensuring that you’re getting paid what your business is owed. In other words, stay on top of accounts receivable and make sure that customers are paying your invoices on time. Don’t be shy about following up invoices with phone calls to make sure that customers have received them, particularly for larger invoices. Nor should you refrain from making contact to collect on any invoice that remains unpaid even one day beyond your payment terms. The bleak economy has caused many business customers to put off making payments longer than before, but by being the “squeaky wheel” you increase your chances of getting paid first.

Better yet is to reduce the amount of receivables your business creates in the first place. Instituting a “cash-upfront” policy for small purchases may save you from wasting time and effort later on collection efforts for overdue low-dollar invoices. Give customers the option to pay by credit card or ACH transfer whenever you can, even if your business involves performing services at or delivering to the customer’s location. Credit payment devices and software that work with smartphones make it easier than ever for small businesses to accept credit cards. And, of course, use caution when extending credit to businesses or individuals, especially on large orders. Insist on cash payment from those whose credit history suggests that they are bad risks. Many small businesses could have their very existence imperiled by failing to collect on just one large account.

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Having the President’s cabinet include the SBA administrator, as it did during the Clinton administration, may turn out to be a symbolic move that won’t actually accomplish much for small business advocacy. The cabinet is not the exclusive club it once was, having doubled in size just since the 1970s. The SBA administrator would bring membership in the cabinet up to 24 officials, and it’s generally agreed that a body that large can’t do and doesn’t do much in the way of actual policymaking. Even so, the Financial Services Roundtable, an association of the 100 largest U.S. financial companies, praised the move and said “We look forward to working with the SBA … to continue providing benefits, education and lending opportunities to small business.”

But any influence the SBA administrator might gain from becoming part of the cabinet could be more than offset by a reduced emphasis on helping small business when and if the agency reorganization takes place. The president and CEO of the National Small Business Association, Todd McCracken, expressed just this concern in a response to the President’s proposals. The president of the American Small Business League, Lloyd Chapman, went even further, saying that the reorganization would “reduce the power of the only federal agency that helps small businesses” and would lead to the eventual elimination of the SBA.

The Department of Commerce is more than 100 years old, having been created in 1903 during the administration of Theodore Roosevelt. The SBA came along 50 years later under President Eisenhower. No name has been chosen for the new consolidated department that President Obama’s proposal would create, although the Department of Competitiveness is one of the leading contenders. A similar proposal for business-agency realignment put forth last year by an outside group suggested the name Department for Business, Trade and Technology. If the consolidation of federal business agencies does occur, it’s expected to create efficiencies that would save taxpayers $3 billion over 10 years.

A related idea announced by the President in the same speech in January is more likely to see implementation in the near-term. That’s the creation of a comprehensive business services website, Business USA, that would serve as “a one-stop shop for small businesses and exporters” looking for information about government programs designed to encourage entrepreneurship, especially for companies that export to other countries or would like to do so. The current SBA website would presumably become a subdomain of this larger site.

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Unfortunately many banks that provide financial services to small business, especially the bigger banks that have accounted for a large volume of business lending in the past, seem unlikely to increase their lending activities in 2012. While the overall picture for small business credit in the coming years seems murky, some small business consultants see the more hope for improvement than any time in the last several years. Small business owners may just have to look to less conventional or less familiar sources of credit if they want to expand operations or upgrade equipment.

Earlier this month, Bank of America was the subject of unwanted attention from business news outlets after several small business owners reported that BofA was calling in their established lines of credit. A BofA spokesman responded to the report by saying that the bank was severing a small, select number of small business credit lines, not making across-the-board reductions. But the BofA actions would be consistent with a trend towards a continuation of heightened risk aversion among the bigger banks.

Even before the financial crisis, a Small Business Administration study found that a decade of bank consolidation had the effect of reducing the availability of credit to small business. Larger financial institutions with international dealings must focus more on global economic conditions, sometimes to the detriment of the local markets in which they do business. Today, those conditions continue to be especially shaky, as evidenced by Europe’s long, ongoing financial crisis.

Big banks also claim that increased capital requirements that federal regulators put in place following the financial meltdown of 2008 restricts the amount of lending they can do. Banks’ greater selectivity rules out extending credit to many businesses whose financial reporting of their last few years of operations merely reflects the overall economic downturn rather than problems specific to those particular companies.

Banks are understandably even more leery of funding new startup companies, and alternative sources of cash for startups may be hard to tap. For instance, the SBA reports that venture capital funding is down by 30 percent. For the near future, only the most impressive business plans are likely to get backing from traditional financial institutions. Small-scale entrepreneurs may need to look to their network of family and friends to invest in their ideas, or to explore the new worlds of “crowdfunding” or “social lending” to raise capital.

Many established small business owners report having better luck obtaining credit from more local sources such as community banks and credit unions. Such financial institutions are usually more responsive to local economic conditions, which are much more positive in some regions than in the country as a whole. A Wall Street Journal survey last year reported that approval rates for small business loans at these institutions were about five times higher than the rate of approval from big banks. Small, local financial institutions are often more willing to consider the specific financial circumstances of a local business seeking to borrow money, and to make exceptions where a bigger institution will not. Small businesses can also look to community development financial institutions (CDFIs) and microlenders as sources of capital.

Padgett Business Services has worked to understand the changing needs of small business owners since 1966. Padgett offers small business consulting services to help business owners make the decisions that are vitally important to the ongoing health of their enterprises. We also offer bookkeeping, business tax preparation and payroll services for small business, along with business financial software to keep your operation running smoothly and efficiently with less time and effort. Call Padgett Business Services today at 800-PADGETT (800-723-4388) to find out more about everything that we have to offer to you and your small business.