SBDC Counselors Selected as SCBP Ambassadors of the Year

Two of our SBDC at RVCC small business counselors – Karen Katcher and Linda Dousis – have been chosen as Ambassadors of the Year for 2010 by the Somerset County Business Partnership (SCBP).  The title is awarded to the most active member(s) of the SCBP Ambassador Committee.  Congratulations Karen and Linda!

Small Business Issues of Interest: Independent Contractor (Self-Employed) or Employee?

 (The following information is excerpted from an article on the IRS website:  http://www.irs.gov/businesses/small/article/0,,id=99921,00.html )

 … It is critical that you, the business owner, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. If you are an independent contractor and hire or subcontract work to others, you will want to review the information in this section to determine whether individuals you hire are independent contractors (subcontractors) or employees.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -

• An independent contractor
• An employee (common-law employee)
• A statutory employee
• A statutory nonemployee

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

To view the complete article, visit the IRS website at:    http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

Obama Signs Small Business Bill Into Law

Win McNamee/Getty Images President Barack Obama signs the Small Business Jobs Act in the East Room of the White House on Sept. 27. The legislation provides $12 billion in tax incentives and establishes a $30 billion fund to increase credit access for small businesses.

(Excerpted from www.aolnews.com  — By Senior Correspondent Joseph Schuman)

(Sept. 27) — President Barack Obama today signed into law a chain of tax cuts for small businesses and up to $14 billion in federally funded loans aimed at stimulating job creation, in what’s likely to be the government’s last bid to boost the economy before the midterm elections. 

Enactment of the Small Business Jobs Act, passed with the support of just two Republicans in the Senate and one in the House, comes at a time when economic growth has yet to generate enough momentum to replace the more than 8 million jobs taken by the recession — the majority from small businesses. A dearth of commercial loans remains one of the biggest factors holding back the recovery. 

“Government can’t create jobs to replace the millions that we lost in the recession, but it can create the conditions for small businesses to hire more people through steps like tax breaks,” Obama told a gathering of small-business owners at the White House before signing the bill. … 

 The $42 billion law would extend several small-business loan programs created by last year’s Recovery Act and give tax cuts to small businesses and their owners that would encourage new investment and hiring. 

The White House said more than 1,400 small or midsize companies with more than $680 million of loan applications already in the pipeline and approved by banks would immediately benefit from the program. In total, about $14 billion in new loans could be funded. The maximum size of loans supported by the Small Business Administration would also increase, to $5 million from $2 million, and some manufacturing-related loans could reach up to $5.5. million 

The largest microloans, often used by entrepreneurs and for startup capital, would increase to $50,000 from $35,000. And the SBA’s so-called express loans — usually tapped for working capital that companies use to buy new inventory and process new orders — would increase to $1 million from $35,000. 

The new tax cuts would let small businesses write off hundreds of thousands of dollars in equipment purchases while eliminating capital gains taxes for about 1 million companies, and many entrepreneurs would be allowed to deduct the first $10,000 in startup costs. 

The law also lets self-employed Americans deduct all health insurance costs for themselves and their families. … 

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LEARN MORE AT:    

• U.S. Small Business Administration (SBA):  Small Business Jobs Act of 2010  
• “The White House Blog”     The site’s article on the Small Business Job Act outlines key points.  

All U.S. Federal Tax Deposits to be Made by Electronic Payments

The Internal Revenue Service recently issued proposed regulations (in REG 153340-09) which will eliminate the use of paper coupons rather than electronic payments for a variety of federal tax deposits, effective beginning with payments due in 2011.

Background

Under current regulations, depositors whose aggregate annual federal tax deposits exceed $200,000 generally must use the Treasury Department’s Electronic Federal Tax Payment System (EFTPS) to pay their deposits. Depositors not currently required to use EFTPS for deposits may instead use a paper-based coupon system to make a deposit by presenting a check and a coupon to a bank teller at one of approximately 8,000 financial institutions authorized as a government depositary or to a financial agent, a process that dates back to World War I.

Basic Effect of the Proposed Regulations

The proposed regulations require all deposits of the following federal taxes to be made by EFTPS beginning January 1, 2011:

• Corporate income and corporate estimated taxes pursuant to Treasury Regulations(TR) Sec. 1.6302-1;
• Unrelated business income taxes of tax-exempt organizations under InternalRevenue Code (IRC) Sec. 511 pursuant to TR Sec. 1.6302-1;
• Nonpayroll taxes, including backup withholding pursuant to TR Sec. 31.6302-4;
• Federal Unemployment Tax Act (FUTA) taxes pursuant to TR Sec. 31.6302(c)-3;and
• Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, pursuant to TR Sec. 40.6302(c)-1.

ZPi Signs Distribution Agreement

ZPi, Inc. owners Bruce Potter and Robert Crosby

SBDC clients Bruce Potter and Robert Crosby, of  Zeta Potential instruments, Inc. (ZPi), recently signed a global distribution agreement with Quantachrome Instruments to sell their zetaREADER, a device that analyzes particles in liquids.

Destinations Celebrates First Anniversary

Destinations owner Susan Kibler and SBDC's Bill Harnden

Destinations recently celebrated their first anniversary.  Destinations is located at 47 Maple Ave., Flemington, NJ.  Visit their website  for more information about Destinations personal fitness coaching.