Solution to Washington Post Article

The article, titled “Small Businesses Brace for Tax Battle” suggests that small business owners are fearful of the potential increased taxes on their businesses. What should small business owners know about using tax credits to offset the increased taxing?

Small business owners have many opportunities to offset their fears of rising tax liabilities, by implementing one, if not more, of the many wage-based tax programs available to them, for creating jobs and employing people. From the Federal Empowerment Zone Wage Tax Credit Program, to Renewal Community Initiatives and Work Opportunity Tax Credits, to similar state programs, available in many of the lower 48, the options are many. It’s actually safe to say that on average, 10-15 percent of the W2s that run through a business owner’s payroll in a given year could be worth, an average, $1,500 per person (depending on which of the myriad of wage-based tax credit programs they may qualify for) per year. Take a typical two store, fast-food business with 40 people on the payroll; and a 200 percent turnover of personnel. In this example, the business owner would then be managing an average of 80 W2s and chances are that eight to 12 of those employees past or present, could produce tax credits, averaging $45,000 ($1,500 Credit X 10 W2s X 3 Years = $45,000). That’s REAL money to any small business owner. Do you feel the media and small businesses still need to be educated on the power of tax credits? Most certainly, that’s what we and our franchisees are in business to do. Communicate and educate business owners to the value proposition of these tax credits and moreover, to then guide them through the process of maximum utilization of these opportunities. The media is usually very interested in helping us spread the word, once they discover how powerful an opportunity we provide for small and medium business owners in the communities that they serve.

What is missing in the education? Nothing that can’t be remedied, with the strategic placement of more RetroTax franchisees, in markets where these credits abound. They will then continue to spread the word to business owners, in the communities that they serve.

Often, when approached about the possibility of having thousands of dollars sitting unclaimed, business owners usually respond by saying, “this just sounds too good to be true.” I agree, It does sound too good to be true, but that notwithstanding, it is true. I simply encourage any skeptics to Google IRS Publication 954. This publication spells it all out and validates the reality of these programs. What it doesn’t do though, is tell a business owner how to administer them.
That’s where we come in.

Long-Time Friend Killed: Ken Harris Will Be Missed

On Friday April 17, 2009, the world lost a great soul, when my long-time friend and mentor, Ken Harris was killed in a motorcycle accident. I first met Ken in 1988, when I was hired by ERA Real Estate, as a “wet behind the ears” franchise sales rookie. At that time, Ken was ERA’s Vice President of Franchise Development. During those years, and the years that followed, Ken taught me a ton about franchise relationships and development.

Many of you know that George Slusser, another ERA colleague, is who actually hired, nurtured and managed my career at ERA. (Not once or twice, but over the course of nearly 10 years, George actually hired and promoted me on three separate occasions.) It was Ken Harris though, who taught me my most fundamental lessons about franchise sales and development. Ken helped me learn that franchising is a business model built upon relationships. He also taught me that life is more about the journey, than the destination. While I don’t think I ever told him so, Ken actually gave me the courage to get into business for myself.

More than anyone I’ve ever known, Ken Harris reached for the stars. He had the courage to step outside the box and give things a try. Some of those things worked out better than others, but make no mistake, Ken Harris was always in the game. Moreover, Ken inspired the same in all of those that knew him. He was the consummate networker and he cared deeply about everyone in his universe.

Ken loved life and lived it to its fullest. While he’s left us behind for now, the Big Guy’s legacy will live on, in all of the professionals whose lives he touched. His wife Gayle, their kids and grandkids are some of the luckiest people in the world. They had the good fortune of spending more time with Ken than I ever could. I can't thank them enough though, for sharing some small part of him with me.

Live to ride, ride to live…, that’s the Ken that I knew. I will love him and miss him, until I see him again.

Business Owners Should Understand the Importance of: The Empowerment Zone, Renewal Community and Enterprise Community Enhancement Act of 2009

In essence this is a bill that would amend the Internal Revenue Code of 1986, to extend and expand the benefits for businesses operating in Empowerment Zones, Enterprise or Renewal Communities.

This particular bill has been proposed in each of the last two sessions of Congress, but never got voted upon. Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that did not pass are cleared from the books. Members often reintroduce bills that did not come up for debate under a new number in the next session. In the 110th Congress, this bill was known as HR 2578 and in the 109th Congress, HR 5660. Now, in the 111th Congress, HR 1677 has been referred to the House Committee for Ways and Means and that is where it currently awaits further action.

This bill will allow for the extension of tax credits for those who create jobs and that’s a good thing for our prospective and existing clients and franchisees. In the broader sense, anyone in business should keep a close watch on what goes on at the Capitol. How better to protect and preserve one’s ability to stay in business? That's one of the reasons why I love the IFA so much. The mission of IFA’s Government Relations Department is exactly that; to preserve and enhance the legislative and regulatory climate for the growth of franchising. They do so by providing services and representation to IFA members nationwide, by monitoring legislative and regulatory activity, conducting lobbying and grassroots campaigns, participating in national and local coalitions, creating forums and educational tools for experts in the franchising community, and promoting positive relations between franchisors, franchisees, and elected and appointed government officials and employees. Most business owners don't have the resources required to manage these vital activities without belonging to an organization like IFA.

As for RetroTax, passage of HR 1677 will be good news for existing and future RetroTax clients and franchisees. In essence it would extend the scope and benefit of these Federal wage-based tax credit programs through December 31, 2015.

Also, bills such as this one, are signs that tax credits will continue to evolve in the years to come. Just as the Hearltand Disaster Relief Credit was legislated in 2008, extending benefits to the mid-western states for flood relief and the GO Zone credits (Gulf Opportunity) were legislated following Katrina, look for future legislation to include Work Opportunity Tax Credits for jobs created during during recession, helping to reduce and reverse dependency on unemployment insurance. Green credits too, continue to evolve as conservation and global warming continue to weave their way into the fabric of our lives.

Be sure to return to my blog often, to monitor the public’s opinion of HR 1677, in the tool bar to your right. More importantly, contact your Members of Congress and tell them that you are counting on their support of HR 1677.

Administration of Tax Credits Takes Time; How RetroTax Makes It Easier

When I am asked, “how much time and energy goes into administering a tax credit?” I return that question with this one: “How much time goes into closing a mortgage loan?” Of course, in either case, the answer depends on who is doing the work. Even for those that sell a house on their own, minus the help of a professional realtor, who knows of anyone that actually gets a mortgage loan closed the same way? Answer… NONE! The reason is that even if you do navigate your way through the real estate process and transaction alone, virtually NOBODY closes the loan by themselves, without the help of professionals. Same can be said for the process of administering tax credits and incentives. It is onerous. The good news though, is that when you retain us to do the heavy lifting, WE do the work, and YOU get the credit.

The timeline from when we are retained, until the time when credits are redeemed, depends on whether we are administering demographic or geographic credits. The process and client involvement is a bit different too, depending upon which types of credits we are administering.

Today’s economic climate has definitely created something of a “stimulus” for us as a business model. What we do makes sense in ANY economy, but it becomes far more compelling in times like these. With so many business owners struggling to make ends meet and wrestling with issues like tightening credit to keep their boats afloat, payroll can become something of a challenge. In reality, sometimes the credits that we administer, can make the difference between keeping, vs. laying off personnel.

As our business continues to grow, perhaps RetroTax itself is providing a stimulus for the economy. From my vantage point it’s really impossible though to know how the money that we save a company is allocated. Is it saved, or is it spent? I just don’t know. What I DO know is that because of us, many business owners at least have the option of deciding that for themselves, as opposed to scrambling to make ends meet. They have the choice. They have options… and options, like credits are GOOD things!

Two Weeks Until Tax Day – For Many Businesses Though, It’s Still Not Too Late to Benefit From Tax Credits

While the media is certainly hot on the topic of taxes as we approach April 15th, the topic of “tax credits” is one that our clients talk with us about all year long. In fact, our rush began around January 1 and ran through the deadline for the first quarterly filing date for corporations, which was March 15.

When it comes to business vs. individual tax returns, the biggest myth of all, is that April 15 is tax day. While true for individuals, corporations are on quarterly cycles, with March 15 ending the busiest time of all, for those in the corporate tax world. Many companies have other quarterly filing dates, but March 15 is the grand dad of them all. Can you claim tax credits year round? Certainly, if you are eligible for geographic, wage based credits. (FEZ/RC) But, that said, retroactivity only extends three years from the open tax year. So, once 2008 returns are filed, we would only be able to look back as far as 2006 for any credits that might have been available in those tax years. If the 2008 return has yet to be filed, we could go back as far as 2005, retroactively.

A year from now, tax credits will change, but it’s still too soon to tell what impact the stimulus package will have on jobs creation. If however, those shovel-ready jobs begin gaining traction, there will be many opportunities to generate credits, as a result of the jobs that will be created. More immediately though, there are two new categories for demographic credits (WOTC) that were born out of the stimulus bill and these WILL make a big difference. These categories are: unemployed veterans and disconnected youth. In general, an employer can earn from $2,400-$9,000 in tax credits for hiring a qualified unemployed veteran or disconnected youth who begins work for the employer during 2009 or 2010.

An unemployed veteran is any veteran who is certified as having been discharged from active duty at any time during the 5-year period ending on the hiring date; and being in receipt of unemployment compensation for not less than 4 weeks during the 1-year period ending on the hiring date.

A disconnected youth is any individual who is certified as 16 – 24 years old, not regularly attending any secondary, technical, or post-secondary school during the 6-month period preceding the hiring.

The bottom line is many businesses have tax credits available, but never claim them. That is why our business is so attractive to both potential clients and franchisees as well. Our tax credit administration process is second to none. While we cannot predict future tax credit trends, we definitely know how to maximize their potential, once we identify them and let our clients know that they are available.