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Street Talk: Small business edges closer to the fiscal cliff
According to Matt Becker, partner at BDO USA LLC in Grand Rapids, “There’s never a dull moment in U.S. tax policy.”
Last week BDO conducted its annual accounting and tax update seminar at Watermark Country Club for accounting professionals. Of course, the most prominent feature of the U.S. landscape these days is the so-called fiscal cliff — “everybody’s favorite topic,” quipped Becker — so, naturally, it drove the discussion at the seminar.
Becker said he was looking at the cliff from the perspective of business as opposed to the individual taxpayer — but in the case of small business, it is difficult to separate the two.
If there is no action by the government to avert the fiscal cliff, the Bush Administration tax cuts will automatically expire Jan. 1. Recall that two years ago, the Bush legislation was scheduled to expire, but Congress and the Obama Administration renewed them for two more years.
A lot of small businesses are set up as S corporations and partnerships — “pass-through” entities, in accounting terminology, according to Becker. That means the income of the business goes directly to the owners and they individually pay the income tax on it.
“Ordinarily, at the end of the year, we try to accelerate deductions and defer income,” for those individual taxpayers, said Becker. Now, “we’ll be in a situation where we’re trying to defer deductions (until 2013) and accelerate income” to be taxed in 2012.
If going over the cliff just means we go back to the tax rates in place before George Bush was elected, “it will result in approximately a 5 percent tax increase on small business, based on the circumstances of the business,” said Becker. “It could be more or less, but that’s a good number” to plan on.
The 5 percent is the difference between the top marginal income tax rate now, which is 35 percent, and the 39.6 percent that was in effect for years before the Bush tax cuts.
“All the other marginal rates that lead up to the top rates” will also increase, said Becker, and probably at the same 5 percent.
For now, Washington is rife with uncertainty.
“What business really needs is some certainty. It’s these times of uncertainty that make it very, very difficult for businesses to make decisions,” said Becker.
And that’s the truth
Marsha Friedman, a 22-year veteran in the public relations industry, CEO of EMSI Public Relations and author of “Celebritize Yourself: The 3-Step Method to Increase Your Visibility and Explode Your Business,” tried to push some of her recent advice viral, so we stopped to ponder … her additions to the vernacular.
Friedman advises an online presence has to pass the “truth test,” while noting what everyone has noted the past five-plus years: The fastest growing trend on the Internet is the“fakeosphere” — fake blogs (flogs), fake web news sites and fake testimonials.
“They look like the real thing, right down to comments posted by “bloggers” and their supposed readers,” she warns. “Those comments appear to be written by people discussing the pros and cons of a particular product or service, and they even include some naysayers. It’s become a $500 million industry.”
Before flogging yourself over this latest trend, Friedman offers a few tips about “real” websites and newsletters:
- Real people have text that informs and entertains users while offering them helpful information. The copy is professionally written — no typos or other mistakes — and provides answers to anticipated questions. It's easy to learn more about their business and to find their contact information. Testimonials are from real people whose existence can be verified through a simple Internet search. They write blogs that are updated regularly and/or post articles with helpful information.
- Fake people have websites with lots of pop-up advertising banners and text urging users to “Buy my product!” Testimonials are from untraceable people with vague titles or credentials. The site may be hard to navigate, contact information may be missing or difficult to find, and there’s no link to media about the person or company.
- Real people share valuable information in their newsletters (which can be as minimal as a “tip of the week” email). Their newsletters (or tips) include no overpowering sales pitch or self-promotion — or, at least, only occasionally. They convey a personality, whether warm and friendly, authoritative, or humorous.
- Fake people blast newsletters and promotional emails that may identify a problem but offer, as the only solution, hiring them or buying their product. They may seem unprofessionally written and lack personality. They offer nothing of value to the reader.
“All of these things will help you create an online personality that conveys your authenticity. But the No. 1 thing you can do — what I value above everything else — is to be, actually ... genuine,” said Friedman.
And the winners are …
Last week’s Economic Club of Grand Rapids luncheon was special. First, noted futurist Peter Sheahan spoke to the gathering about inflection points in the economy (see the story by Mike Nichols on grbj.com), and he made suggestions the room’s movers and shakers should take to heart.
Also gaining a sliver of the spotlight, however, was a group of people most likely unaccustomed to the glare. The Econ Club recognized those “unsung heroes” who make life easier for a lot of the movers and shakers of the world with the Essential Service Awards from Michigan Works!
Here are some people who are deserving of their boldface type:
In the Cleaning/Housekeeping/Groundskeeping category: Donna Lay of the Amway Grand Plaza Hotel.
In the Food Service category: Abbie McClung of Bitter End Coffee House.
In Health Care: Meliha Resic of Davis Dental Laboratory.
In Hospitality: Hillary Wheeler of Northern Air Inc.
In Retail: Dana Mathews of Speedway.
In Government: Marylou Echavarry of Network180.
In Transportation: Norman Young of The Rapid.
In Nonprofit: Denis Mworia and Drew Zimmerman of MOKA.
In the General Labor category, Mathew McKee of Renewed Earth Inc. was posthumously awarded, with his widow, Ashley, accepting on his behalf. McKee died in June from a work-related accident at the Renewed Earth processing yard in Ostego.
This week’s meeting of the Rotary Club of Grand Rapids featured Terry Stelter, executive director of the Conductive Learning Center at Aquinas College.
For those who are unaware, the program is designed to help children with motor disorders perform even the smallest tasks on their own by increasing mobility, strength, problem-solving skills, confidence and self-esteem.
Now, Rotary is usually a pretty stoic bunch, but Stelter unveiled a short film describing the program that even the most staid member could not ignore.
John Zwarensteyn, publisher of Gemini Publications and a longstanding Rotary member, said the inclusion of the late Fred Meijer in the film got everyone’s attention. Then, as a young child on screen struggled several times to rise, the room “burst into applause” when the task was finally accomplished.
“In a movie!” Zwarensteyn exclaimed.