Social Networks
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From The President
The News Publication For
Your Micro-Business
Volume 22, Issue 5
September/October 2010
That’s The Spirit!
The entrepreneurial spirit might have been a bit shaken during the past few troubling years.
But, it’s alive and thriving nowadays.
The articles in this issue of Self-Employed prove my point.
Just take a look at our cover article on Page 16. NASE Members show that the competitive
fire is still burning strong. And they share their best tips for keeping your micro-business on
the cutting edge.
Be sure to check out the article about financing on Page 20. Even though traditional credit
sources appear to have run dry, entrepreneurs are relearning the value of bootstrapping as
a way to finance their businesses.
Or take online social networking. While big corporations can foot the bill for big advertising
campaigns, small companies have embraced networks such as Facebook and Twitter. Our
article on Page 12 shows you how entrepreneurs are finding creative, effective ways to use
no-cost social networking.
In fact, we believe that social media is a cornerstone for micro-business marketing. That’s
why the NASE launched the Water Cooler, a social network exclusively for NASE Members.
At the Water Cooler you can market your products and services to other NASE Members. You
can share your marketing message via your blog. You can post photos of your products. And
so much more. Read the article on Page 24 to find out how the Water Cooler can boost your
bottom line.
To help encourage the entrepreneurial spirit in the next generation, each year the NASE proudly
gives scholarships to the deserving students of our members. This year Zachary Gosling was
awarded the NASE Future Entrepreneur scholarship in part because of his entrepreneurial
attitude and drive. You can read all about him and the other scholarship recipients starting
on Page 8.
So three cheers for the enduring entrepreneurial spirit . . . and to all of you who work so hard
to keep it alive.
Robert Hughes
At the NASE Water
Cooler you can share
ideas and discuss
business strategies.
Self-employed SEPTEMBER/OCTOBER 2010
POSTMASTER: Send address changes to
Self-Employed, P.O. Box 241,
Annapolis Junction, Maryland
(ISSN 1041-8741, USPS 011513)
is published bi-monthly by
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Periodicals Postage paid at Washington, DC
and additional mailing offices.
Association Member subscriptions
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Robert Hughes, NASE President
Legislative Office
Washington, D.C.
Maureen Petron, Editor
Suzanne Martin, Contributing Editor
Molly Nelson, Assistant Editor
Design by TGD Communications
Contributing Writers
Kristie L. Arslan
Gene Fairbrother
Keith Hall
Jan Norman
Kim O'Connor
Kristin Oberlander
Philip M. Perry
Don Sadler
Printed by Progress Printing
NASE Member Services
800-649-NASE (6273)
Self-Employed provides financial and business
information pertinent to micro-business owners.
The NASE does not, however, render legal or
accounting services. Statements of fact and
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©2010, National Association for the SelfEmployed, Inc. All rights reserved. No part may be
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Self-Employed does not accept unsolicited
submissions, including advertising.
Photo credits listed
in the order in which
they appear:
© Jeff Wojtaszek,
© Elaine Odell,
© Dan Sellers and
© Jim Flynn
“cutting edge.
Micro-business owners
must stay on the
6 Member Benefits
For Your Home Biz
24 NASE News
Make A Deal
30 Member Profile
Multifamily Makeovers
26 More Tax Rules
28 ShopTalk 800
Corporate Change
Business Insurance
Collecting Rent
29 TaxTalk
Section 179
Tax Penalty
8 NASE Awards $24,000 To Future Entrepreneur
Meet Zach Gosling, computer whiz, website creator and
recipient of the 2010 NASE Future Entrepreneur Scholarship.
11 NASE Gives $80,000 In College Scholarships
This year the NASE gave $4,000 scholarships to
20 deserving students of NASE Members.
12 Schmoozing For Sales
Use online social networks to give your micro-business
more marketing muscle.
15 Biz Apps For Your iPhone
Load up these apps to manage your schedule,
organize your data and more.
16 Cover: How To Keep Pace
NASE Members know that staying in business requires staying
up to speed. Here are their tips for honing a competitive edge.
20 Bootstrap Your Way To Success
Think of bootstrapping as do-it-yourself financing.
See why it’s back in style for micro-businesses.
23 Double Duty
Self-employed and caring for a special needs child? Tap these resources.
Self-employed SEPTEMBER/OCTOBER 2010
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Self-employed SEPTEMBER/OCTOBER 2010
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Home-Based Biz
Use these NASE benefits to startup your business,
launch a marketing campaign and more!
Home Office Insurance Quick Link “Protection”
Whether you’re just starting your home-based company or
have been in business for years, the NASE has you covered
with the Home Office Protection Plan.
And it’s included with your membership at no additional cost!
This plan gives you $20,000 of business liability coverage
at your residence. You also receive coverage for temporary
relocation of your home business. Plus, you’re covered (subject
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office in case of burglary, theft, vandalism, fire and more.
Employer Services
Business Branding Quick Link “ADP” Quick Link “CrowdSPRING”
Even home-based businesses sometimes
need employees. Let ADP help with the
paperwork headaches.
Brand your home-based business with unique
designs for your logo, product packaging,
marketing materials and more.
ADP, the nation’s largest payroll company
specializing in small business, offers
NASE Members:
It’s easy with crowdSPRING. You simply post the
details of your project online at the crowdSPRING
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top-tier designers present actual designs created
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workers’ compensation policy
CrowdSPRING offers a network of more than
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quality you want on a budget you can afford.
Find out how crowdSPRING can help you develop
the branding you need for your micro-business.
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Self-employed SEPTEMBER/OCTOBER 2010
NASE Scholarship Program
Zach Gosling
Receives The 2010
NASE Future
By Jan Norman
Zachary Gosling was just 13
when he starting building an
auction website that would be
supported by advertising and
sponsorships, rather than by
the big fees charged by giant
auction site eBay.
Within a year, the site, (pronounced Go
Z-bay), garnered honors from
the Future Business Leaders
of America, an education
association for high school
kids that prepares students
for careers in business and
business-related fields.
Zach’s site won second place
nationally in the FBLA
competition for e-commerce.
Two years later, in 2008,
GozBay, which is run out of
Zach’s bedroom in Denver,
Pa., was getting as many as 5
million page views a month.
Then disaster.
Malicious hackers destroyed
the site’s 78,000 auctions
and physically damaged
the server’s hard drives.
Zach’s server administrator
was able to save most of
GozBay’s database.
Self-employed SEPTEMBER/OCTOBER 2010
NASE Scholarship Program
Applications For The 2011 NASE Scholarship Program
Go To
Enter “Scholarship” in the Quick Link box
Entrepreneur Scholarship
“I knew that everything I worked relentlessly on over the
past few years had just been stripped out of my hands,”
Zach wrote of the experience on his personal website.
President Robert Hughes. “The NASE is proud that
this scholarship will help Zach with his dreams for
the future.”
“My idea was to offer an auction site that didn’t have any fees.”
He decided to rebuild the auction site.
With the expertise and financial help of Chris Wilson, the
owner of a nearby IT company, and four other professionals
(a server administrator, computer programmer and two
attorneys) GozBay relaunched in 2009. Today GozBay
has hundreds of stores, tens of thousands of auctions and
more than 400,000 page views a day.
While building and rebuilding GozBay, Zach also
created websites for local companies, served as
Pennsylvania state president of FBLA and maintained
a 3.6 grade point average. He made time to participate
in volunteer activities with organizations such as the
American Red Cross and the Cystic Fibrosis Foundation.
And last year he served as the online chair for the
American Cancer Society Relay for Life.
Computer Whiz
As early as age 5, Zach showed an aptitude for business
and computers, says his father, Tom Gosling, an NASE
Member who is chief executive officer of a credit union
as well as owner of Onsite Computer Service.
At a young age, Zach started repairing computers and
building custom units for customers through Onsite. By
the time Zach was 8, he got his first eBay login. By 10 he
had an eBay store and by 13, he was selling antique cars
on eBay for a neighbor.
NASE Member Tom Gosling
and his wife, Lisa, say Zach's
computer abilities quickly
outpaced their own.
Zach’s creativity, hard work and perseverance
contributed to his selection as the NASE Future
Entrepreneur for 2010.
The scholarship program, which started in 1989 for
dependents of NASE Members, awarded Zach up to
$24,000 toward his college major in economics and
finance. He will receive $12,000 in the first year and
can renew the scholarship for $4,000 in each of the
next three years by meeting academic standards.
The NASE Future Entrepreneur Scholarship is the
largest scholarship of its kind in the U.S. and the only
one that promotes the entrepreneurial philosophy.
“Zach embodies the entrepreneurial spirit that is
thriving in young people across America,” says NASE
Self-employed SEPTEMBER/OCTOBER 2010
NASE Scholarship Program
“Everything I know about business I learned working on GozBay.”
“I sold five cars for him—two to Europe—but eBay
would take over 15 percent of each car in fees, so I
started working on a concept to build a website where I
could sell my stuff online without all the fees,” Zach says.
“My idea was to offer an auction site that didn’t have any
fees. That’s how it runs now, although we may need to
add some fees in the future, but it will still be a low-fee
alternative to eBay.”
One of GozBay’s main marketing strategies was to
attract super sellers who would offer thousands of items
for auction and bring their large customer bases, which
would quickly grow the new site.
“The hardest thing was getting people to go to the site,”
Zach says. “We had great timing because eBay had just
raised fees and redone its feedback, which a lot of sellers
didn’t like. We got a couple of power sellers to switch,
and that created a chain reaction.”
However, Zach never had any interest in computer
games, his dad adds.
“We’d check his computer to make sure there was nothing
bad on there, and all that was there was business.”
The Entrepreneurial Spirit
After the hacking destruction, and with significant
encouragement from GozBay users, Zach started to
rebuild the auction site with greater ability for unlimited
growth and more security.
“We still haven’t rebuilt the volume we had before it
crashed, but the six partners see that the investment
opportunity is potentially huge,” he says.
FBLA advisor Kristi Ryland recognizes Zach’s penchant
for business success.
Most of Zach’s friends have no idea how much time he
works on GozBay and building websites for companies,
his dad says. But Zach, who played varsity football for
three years and had an active social life, would come
home and work for hours afterward on the auction site.
“He is very knowledgeable in business and technology
and exhibits strong leadership skills,” says Ryland. “He is
very professional when it comes to his work and will stop
at nothing to make sure his customers are satisfied.”
“Everything I know about business I learned working on
GozBay,” Zach says. “It’s all about the people you know and
people who help you and you can help. It taught me that it’s
not easy to start a business; it’s a lot of work and time.”
Even though Zach’s father operates a computer business
and his mother, Lisa, is a computer programmer, Zach
quickly outpaced their abilities to help with GozBay.
Zach says he knew even before GozBay that he would
major in business with an emphasis on entrepreneurship,
but his online experience reinforced that dream. He has
chosen to enroll in the five-year business program at
Drexel University in Philadelphia, Pa., one of the nation’s
best entrepreneurship colleges, according to rankings by
Entrepreneur Magazine.
“There weren’t parents or friends who could help him
because he was so far beyond any of our abilities,” Tom
says. “We used to ask him why he liked to do this so
much. It’s because Zach is a problem solver. He likes
to figure out how to do things, and the Internet is
unlimited. It has tools and resources to learn everything
he wants to do.”
“I’m not sure what’s going to happen after college,”
Zach says, “but I definitely want to keep doing this.
I love this stuff.” n
Jan Norman is a frequent contributor to Self-Employed.
Self-employed SEPTEMBER/OCTOBER 2010
NASE Scholarship Program
NASE Gives $80,000
In College Scholarships
This year the NASE awarded a $4,000 scholarship to 20 deserving dependents of NASE Members.
These students can use their scholarships to study any subject at the college of their choice.
“I’m proud that the NASE can help these students achieve their dreams of a higher education,” says
NASE President Robert Hughes. “During these tight economic times, I know that every penny counts for
our members who are sending their kids to college. Congratulations to all of our scholarship recipients!”
2010 NASE Scholarship Recipients
Alex Borland
Smethport, Pa.
Dependent of NASE
Member Robin Borland
Not picutred:
Lesli Meekins
Port Orchard, Wash.
Dependent of NASE
Member Tina Meekins
Ashley Durham
Cleveland, N.C.
Dependent of NASE
Member Brett Durham
Hilary Mills
Orange, Calif.
Dependent of NASE
Member Susan Mills
Ryan Hayes
Jacksonville, Fla.
Dependent of NASE
Member Ron Hayes
Alexandra Naumenko
Stroudsburg, Pa.
Dependent of NASE
Member Vasily
Mary Johnston
Aransas Pass, Texas
Dependent of NASE
Member Kathryn
Emily Rapp
Sharon, N.H.
Dependent of NASE
Member Tina Rapp
Brendan Langford
San Antonio, Texas
Dependent of NASE
Member Anthony
Elaina Smith
Olathe, Kan.
Dependent of NASE
Member Betty Smith
Michael Langford
San Antonio, Texas
Dependent of NASE
Member Anthony
Shannon Smith
Arlington, Va.
Dependent of NASE
Member Mary
Ann Smith
Lindsey Maxon
Arlington, Texas
Dependent of NASE
Member Jannett Maxon
Shayna Turk
Agoura Hills, Calif.
Dependent of NASE
Member Diana Turk
Brittani French
Wilmington, Mass.
Dependent of NASE
Member Barbara French
Kelly Gwiner
Fostoria, Ohio
Dependent of NASE
Member John Gwiner
Katherine Pajor
Hoopeston, Ill.
Dependent of NASE
Member Dawn Alane Pajor
Katherine Pierce
Oconomowoc, Wis.
Dependent of NASE
Member Douglas Pierce
Rebecca Ralphs
Caldwell, Idaho
Dependent of NASE
Member Jay Ralphs
Hannah White
Wichita Falls, Texas
Dependent of NASE
Member Jodie White n
Applications For
The 2011 NASE
Scholarship Program
Go To
Enter “Scholarship”
in the Quick Link box
Self-employed SEPTEMBER/OCTOBER 2010
By Phillip M. Perry
When consultant Jennifer Schaus joined LinkedIn
a couple of years ago, she looked upon the social
network as little more than a convenient way to keep
track of clients and prospects.
were often as simple as “Have you considered selling
your products and services to the U.S. government
to capture stimulus funding–and what is your
business-to-government strategy?”
“I saw the service as a good way to preserve my
critical business contacts in case my computer crashed
and I lost my data,” recalls Schaus, who helps clients
sell goods and services to the federal government.
The approach worked.
It wasn’t long, though, before Schaus discovered
something equally beneficial. LinkedIn members
participate in a large number of message boards with
business-related information. Schaus began to wonder
if these boards might help her market her services.
“I began to answer questions on the boards from
entrepreneurs who wanted to do business with the U.S.
government,” she says. “This looked like a great way
to provide proof of my expertise and indirectly market
myself to the person who asked the question as well as
the many people who simply read the questions.”
Social Networks Give
Micro-Businesses More
Marketing Muscle
“Open-ended questions are basic sales 101 skills,”
she says. “The dialogs that resulted from my
questions helped me learn about client needs and
tailor solutions for them.”
Today Schaus uses as many social networks as
possible to expand her business.
“I selected the networks where I would get the best
return for my time invested, since posting and
responding to messages can be a time-intensive
process,” she says. “My main priority now is
LinkedIn, followed by Facebook and Twitter.”
With a bit of time and effort, you could put social
media to work for your micro-business. Here’s how.
Schaus always included contact details—phone,
e-mail and website—in her answers.
Build Relationships
“Readers clicked over to my website for more
information about my service. I started to get
e-mails and phone calls that started with words such
as ‘Jennifer, I saw your recent advice on LinkedIn.’”
Schaus’s story typifies the experience of micro-business
owners everywhere: Social networks can be rich
sources of new clients and profitable deals. The main
ingredient in all of these media is personal interaction.
When those inquirers began turning into clients,
Schaus was bitten with the social networking bug.
She took the concept to a higher level by posting
her own questions on the boards with the idea of
generating interest in her services. Her questions
“Social media are all about people networking
online with other people,” says Frank F. Chiera,
executive vice president for social media integration
at Kel & Partners, the Boston-based public relations
agency. “It’s not about me as a business owner
Self-employed SEPTEMBER/OCTOBER 2010
Quick Guide To Social Networks
Cultivate the networks
that are popular with
your clients and prospects.
Start by visiting the sites
listed below. Search for
your clients’ names to
find out who’s using
which networks.
Don’t create a
personal page for
your business—use
Fan pages instead. Free fan
pages allow your business
to broadcast information
to customers and prospects
who choose to become
fans. You can also join
groups that facilitate
discussions around specific
topics. Networks can
consist of employees of
your business or clients
in a certain geographic
area. News feeds let you
broadcast happenings at
your business. Facebook ads
allow you to promote your
business by targeting users
with specific demographics.
Sign up for a
free account.
You won’t need
much information beyond
your name, city and e-mail
address. You’ll want to add
pitching my goods and services to clients, but rather
about starting a dialog and building relationships.”
How many social networks are there? Nearly 200
according to a continually updated list on Wikipedia,
an online encyclopedia.
Each social network tends to cultivate a distinct group of
people. The good news is that most of the networks offer
their services at no cost. They make their profits through
fees for optional premium services and advertising.
Facebook & LinkedIn
Facebook is one of the fastest growing networks. Because
of its personal orientation, the service is most often
viewed as a strong channel for business-to-consumer
marketing. Yet Facebook’s environment of personal
engagement can foster profitable business dealings.
That’s been the experience at New York City-based
HJMT Communications. Because this public relations
firm sells primarily to other businesses, you might think
its favorite social network would be LinkedIn. Not so.
“I really like the intimacy of Facebook because I feel
that personal communication is vital to building
business relationships,” says company president
and CEO Hilary JM Topper, who is also author of
“Everything You Ever Wanted to Know About Social
Media, but were afraid to ask....” (, 2009).
The facts bear her out. Of Topper’s 1,500 Facebook
friends, about 90 percent are business owners, which
makes a terrific pool of prospects and referrals. And these
business people do take time for the personal touch. On
her last birthday Topper received 50 goodwill messages.
more information such as
education and business
experience and career
accomplishments. Then
search for your business
associates and clients.
Send each of them an
invitation to become one of
your connections. Groups
consist of individuals
with similar business
interests. Discussion boards
facilitate the exchange
of information and ideas.
Sign up for a free
account and start
tweeting about
your business. Search
for your customers and
prospects by name or
e-mail and start following
them. They in turn will
start following you, and
thus will start receiving
your important tweets.
New services facilitate
the efficient posting of
messages triggered by your
blog updates. Search for
“Automation Rules and
Best Practices” in Twitter
Help for how to do this
without spamming. And
check out “Business 101 for
Twitter” at http://business.
The Water Cooler
A social network exclusively for NASE Members
Read about it on Page 24!
“I responded to each and every one,” she says.
Yet Topper doesn’t rely on Facebook alone.
“I am on 25 social networking sites and I try to build
a community on each of them,” she says. “I try to
post regularly about any topic I think will help
other businesses.”
And yes, Topper does use LinkedIn—often as a
high-tech search service for tracking down elusive
prospects. The trick, she says, is to find someone in
your own friend network with a friend in the network
of your prospect—then ask for an introduction.
Topper gives this example: “We were looking to make
a pitch to the American Heart Association. My business
development person used Google to look up the name of
the marketing director at the AHA. Then she searched
for that person in LinkedIn and discovered mutual
acquaintances in the individual’s friend network. She
then had her own friend arrange for the introduction.”
If LinkedIn and Facebook have captured a good deal
of attention over the past few years, Twitter is fast
becoming the social network of choice for a growing
number of assertive micro-business owners.
Self-employed SEPTEMBER/OCTOBER 2010
Socialize Online With The NASE
At, go to the “Get Networked” box.
Click the icon for Facebook, LinkedIn and Twitter.
We’ll see you there!
One such business is FashionPlaytes, an Internet-based
clothing design studio for girls ages 5 to 12. The audience
for FashionPlaytes consists largely of moms.
And thousands of those moms spend lots of time on
Twitter, posting messages with useful information for
their fellow mothers. These messages, or tweets, also
often contain hyperlinks that direct readers to the
posters’ personal blogs, which contain product reviews.
And it is those reviews that represent a rich opportunity
for businesses such as FashionPlaytes.
Seaman says that one secret of success when using
Twitter is to offer helpful information.
“We send a tweet just about every day to let people know
we are out there,” he says. “But we always provide useful
information such as tips and tricks on how to keep the
house clean with your pets. And I even ask if I can help
with any potential pet issues.”
Valerie Fox, the company’s vice president of marketing,
says, “We have used Twitter to tap into these ‘mommy
bloggers.’ Many of them are thought leaders and
evangelists for good quality products and have Twitter
accounts with thousands of followers. So we give them
the opportunity to test our site and our products at no
cost and ask them to post candid reviews.”
Tweets can contain short hyperlinks that send readers to
articles of interest. Readers who click SeaYu’s links are
often taken to articles such as “What are the dangers for
a dog or cat with Christmas trees?” or “What are the top
10 most dangerous things for dogs regarding cleaning
products?” Once at the SeaYu website, of course, readers
can also see and order the company’s products.
The company’s grass-roots efforts to cultivate bloggers
have paid off, says Fox.
One caution from Seaman: Avoid posting tweets for
their own sake.
“We’ve generated close to 50 product reviews resulting in
millions of impressions.”
“As a user on Twitter, you have a responsibility to treat
those who follow you as you would family members,”
says Seaman. “Don’t exploit them by spamming them
every five minutes. Instead, provide information you
think is valuable.”
As the reputation of FashionPlaytes grows, more mommy
bloggers contact the company and request product trial
opportunities. Two of the firm’s seven employees each
spend from 10 to 15 hours weekly posting tweets and
communicating with followers.
The rapid success of Twitter is apparent in the numbers.
FashionPlaytes began business in November 2009;
by April of this year it had already accumulated
“Twitter has become a cornerstone of our business,”
says Fox.
Other micro-businesses also rave about Twitter. Consider
SeaYu Enterprises, makers of Clean+Green, eco-friendly
aerosol pet stain cleaning products. Founded in 2003,
SeaYu started its Twitter account only last year and has
already built a list of nearly 18,000 followers. That list
represents a tremendous marketing opportunity for a
business with only two full-time employees.
“Twitter helps us level the playing field with the big
companies,” says Dennis L. Seaman, SeaYu’s vice
president of sales and marketing. “It all goes back to your
brand strategy. Big companies can overpower the market
with advertising. A smaller business like ours needs to
start from the grass roots to reach influencers.”
Self-employed SEPTEMBER/OCTOBER 2010
Social Media’s Big Payoff
For all these business owners and many others, social
networks are becoming the driving force for successful
marketing campaigns. And they can facilitate the kind of
relationship building that can be difficult to do on a large
scale in the real world.
“Years ago we went to networking parties,” says public
relations consultant Topper. “The problem was that you
never got much beyond ‘What do you do?’”
In contrast, she says, the personal engagement available
through online social networking is much less superficial.
“Social networks provide the opportunity to know
and learn about people and develop connections,” says
Topper. “It’s a truism that you want to do business with
people you like—and that is what’s so exciting about
social networking.” n
Author Phillip M. Perry is based in New York City and uses LinkedIn to
reach potential clients across the country.
Home Office
Biz Apps For Your iPhone
By Kim O’Connor
Whether you’re in your home office or on the go, these top-notch iPhone apps are guaranteed to help you manage your
schedule, organize your data and optimize your workflow. Check Apple’s App Store for up-to-the-minute price info.
FlightTrack Pro
Delivery Status Touch
Have you ever e-mailed
yourself a file just so you could
access it on your iPhone? A
better solution is Dropbox, a
Web-based repository that
makes your files available on
your iPhone, your desktop,
your laptop and even someone
else’s computer.
It’s never been easier to
track a flight as you travel
to conferences, meetings
and vacation spots. This app
provides real-time info about
your itinerary, including
updates regarding delays, gate
changes and baggage claim.
ReQall, a memory-aid app, uses
voice recognition to convert
your spoken memos into written
text. It helps you keep track of
anything from random tidbits
(say, the first name of your
client’s husband) to due dates.
Whether you’re shipping
dozens of packages or
expecting a single delivery,
this app effectively monitors
tracking info for more than 40
shipping services, including
the U.S. Postal Service, FedEx
and UPS. Just type in a tracking
number to start counting
down the days until delivery.
Quickoffice Connect
Mobile Suite
Google Mobile App
Quickoffice handles Dropbox
files and e-mail attachments
so you can open and edit
Microsoft Office files on your
iPhone. You can also use it to
create new Word documents or
Excel spreadsheets on the fly.
Wi-Fi Finder
Google’s app offers the
simplicity of its familiar search
engine with a few nifty twists:
it’s voice-enabled and locationaware. If, for example, you
open the app and say the
word “accountant” into your
phone, the search results will
list local professionals.
OmniFocus, a powerful
task-management system, is like
a to-do list on steroids. While
it’s among the most complex
productivity apps on the
market (the manual is required
reading), OmniFocus helps you
track everything from pressing
projects to lofty goals.
TripAlly is an exclusive NASE iPhone app
you can use for tracking and calculating
all of the business miles you drive.
Automatically computes the number
of miles you drive for each trip
Tallies your miles—every day, every
month, every year
Lets you add trips manually
Calculates mileage on indirect routes
Allows you to input details such as the
purpose of the trip
Have you ever had to hunt for
a café that offers free wireless
Internet access? Whether
you’re out running errands or
away on a business trip, this
location-aware app will help
you find the perfect place to
hunker down with your laptop
and get to work.
We’ve Got An
App For You!
Free Wi-Fi Finder
NASE Members get all of TripAlly’s
features for free—a $9.99 savings!
Visit and enter the Quick
Link “TripAlly” or download it direct
at Apple’s App Store.
Evernote is like an external
brain you can use to store
Web clippings, photos and
other bits and bobs. The
app automatically processes
and indexes your information
and ideas, so everything
you input is searchable
using keywords. n
Freelance writer Kim O’Connor stood
in line all day to buy her first iPhone.
Self-employed SEPTEMBER/OCTOBER 2010
Cover Story
NASE Member Chris Lamb
says, “I read every professional
journal that crosses my desk.”
How To Keep
NASE Member Chris Lamb, who owns Lamb Exterminating
LLC in Gloucester, Va., is in an industry that’s regulated by various
government agencies and is constantly changing. He doesn’t dare allow
himself to be unaware of new laws or new technology if he wants to
remain competitive in business.
“In my industry—pest control—keeping up to speed in regard to the
technical aspect is of the utmost importance,” Lamb says. “There is no
room for error. Human lives depend on our services not just being done,
but being done in the proper manner.”
Like other successful micro-business owners, Lamb, who has been in business
eight years, knows that staying in business requires staying up to speed. The
business world is dynamic, with new technology, new competitors and new
regulations continually emerging.
Customers expect business owners to be the experts in their fields. The
owner who does not or cannot keep ahead of customers’ questions and
requests won’t stay in business for long.
Self-employed SEPTEMBER/OCTOBER 2010
By Jan Norman
NASE Members Give Tips
On Staying Competitive
In The Business World
The recent recession weeded out many
of those who fell behind in skills and
knowledge. For those companies still
in business, NASE Members say that
owners can turn to numerous sources
and systems for help getting—and
staying—up to speed.
Start Right And
Stay Current
NASE Member Renee Horner, owner
of Three E Graphic Design in
Pittsburgh, Pa., says that she started her
graphic design business nine years ago
with a fine arts education, which gave
her a good foundation of design skills.
She says she’s kept current with new
Cover Story
technologies and tools by working with
them on the job.
market share and leading products to what’s not being sold” is available
in these major publications Carter says.
In addition to a good foundation, NASE
Member Kendall SummerHawk of in Tucson,
Ariz., says systems are important.
Industry specific information needs to be complemented by skill specific
sources. One such source is SCORE, a national group of volunteer
business counselors who provide free one-on-one counseling, specific
to the individual micro-business owner’s need. If a local community
doesn’t have a SCORE chapter or the local chapter can’t provide the right
expert for a specific business, e-mail counseling is available through the
organization’s website,
During the last nine years she’s built a $2
million coaching service that specializes
in helping women business owners with
Internet marketing, pricing and business
development. By having systems and
teams of experts in place, SummerHawk
knows which projects she can say yes to
and what is beyond her firm’s capabilities.
She’s learned it’s better to acknowledge
that she can’t handle every job.
“This has allowed me to pick and
choose opportunities without feeling
overwhelmed,” she explains.
A third foundational element for keeping
pace is to develop the habit of continually
learning about emerging strategies in a
specific business and industry, Lamb says.
“I block out time every day for this.”
To stay knowledgeable about industry trends, NASE Member Carter relies
on his trade association, the National Automatic Merchandising Association.
News about proposed laws, new machinery, technology and more is available
online and in e-mails that the association sends to members.
Graphic artist Horner says micro-business owners shouldn’t be
intimidated by new technology that can help them keep pace in the
marketplace. And learning how to use new technology is often just
a mouse click away.
NASE Member Victor Carter relies
on his trade association to stay
knowledgeable on industry trends.
Customers expect business owners
to be the experts in their fields.
Choose Multiple
Sources Of Information
To be competitive and successful,
micro-business owners must stay on the
cutting edge instead of behind the times.
And that requires embracing
new information.
“Believe it or not, I read every
professional journal that crosses my
desk or comes via the Internet,” he adds.
“Regardless of the source, all the above
provide me with information about
new products, technology, techniques,
resources and general information
pertinent to my business.”
Industry specific trade publications and
websites are most important to NASE
Member Victor Carter, who has owned a
vending machine route, Mr. All Worlds
Inc. in Sachse, Texas, for 14 years.
“In the vending industry, everything
from new equipment they’re making to
Self-employed SEPTEMBER/OCTOBER 2010
Cover Story
“Online tools are made for people who don’t know how to do it,” she
says of learning new technology.
She’s right. Software publishers provide help and tutorials for their
products. And increasingly, third-party experts and publications are
uploading reports, how-to videos and question-answer forums in which
micro-business owners can learn the latest tricks, add-on applications
and workarounds. Much of this information is free.
For example, a novice website designer who wants to learn how to put
Micromedia Flash animation on a site can Google “flash tutorials” and
find hundreds of suitable sources.
Turn To Individuals And Groups
So much information is available, especially on the Internet, that the
challenge for micro-business owners often becomes identifying trusted
sources of information, Lamb says.
The 14 million U.S. visitors to Twitter
are not necessarily the most qualified
sources of information for keeping
business owners informed. They might
introduce concepts or new technologies
from another community or country.
But like the Internet itself, these users
may dump too much useless information
on a busy entrepreneur.
However, trained, knowledgeable people
are great resources for keeping current
on any aspect of a business.
Pest control expert Lamb relies on his
own employees. He collects much of his
own information, “but whenever my
employees spot something in print or on
the ‘Net, they note it and add it to the
pile,” he says.
Lamb also employs an in-house tax
specialist and a human resources
manager, two people whose primary
responsibilities are to keep Lamb and his
company up to date on these everchanging subjects.
“These issues are simply too sensitive to
leave to just anyone who can hang their
shingle outside their door,” he says. “This
is well worth every penny I spend on it. I
need to spend my time running my part
of the business. I need to know that the
remainder is being handled properly.”
Having such expertise is important. But
equally valuable for the micro-business
is making sure that the expertise spreads
completely and accurately through all
the employees and strategic partners.
For example, Lamb says his pest control
company “follows a program called
integrated pest management where we
apply fewer pesticides and spend much
NASE Member Marla Duran tapped an
unusual source to get her clothing design
company up to speed in social media.
Self-employed SEPTEMBER/OCTOBER 2010
Cover Story
of our time evaluating the environment
so that it can be manipulated to a point
where pests will not survive, but humans
and pets will thrive. Knowing how to do
this takes time. Training my employees
is vital here.”
NASE Member Marla Duran of
Behlehem, Pa., says that interns
have proven helpful in keeping her
business current.
Duran designs, manufactures and sells
original women’s clothing under her
own label, Marla Duran. She’s also
appeared as a contestant on the popular
television show “Project Runway.”
Duran tapped an unusual source to get
her clothing design company up to speed
in social media. Her business served as
the semester project for a marketing
class at Lehigh University.
“Students divided into groups to help
target [social media] strategies for
building my brand and staying in touch
with my clients,” she says.
Business consultant SummerHawk
says she stays current by harnessing the
power of a “mastermind group of high
achievers and fast implementers.”
Author Napoleon Hill defined the
concept of mastermind groups in his
early 1900s book “Think and Grow
Rich,” in which he referred to a
mastermind alliance as a group of people
who help a person achieve a goal.
Talking about her contemporary
mastermind group, SummerHawk says,
“This keeps me feeling fresh, staying
focused and accountable for getting
accomplished what I say I will.”
Lamb prefers a networking group whose membership is limited to
one person within a given occupation or industry, such as one human
resources consultant or one heating and air conditioning service.
Lamb is the only pest control operator in his group.
“Work is referred among us,” he explains. “Word of mouth is a
powerful tool.”
Vending machine operator Carter says that he has come to rely on an
informal group of local competitors to keep pace in the market.
“We share information about who’s selling what and good places to
prospect for customers. A few rogues wouldn’t care about helping other
business operators, but most are cordial to each other.”
Graphic artist Horner also uses an informal group, but not of
competitors. She works with people in complementary fields such
as marketing and Web design. These colleagues are willing to share
knowledge with Horner about how to set up specific projects. In turn,
the information they provide makes their work easier when Horner
creates the graphics on their specific projects.
Horner also depends on these specialists when she doesn’t want to keep
current on a specific skill or line of work that’s out of her area of expertise.
“I don’t want to get into Web programming. There are people who do
that every day, and I hire that part of a project out,” she explains.
What if you don’t have a group of experts to tap?
“Create your own,” suggests marketing and networking expert Hank
Blank in Laguna Niguel, Calif.
He couldn’t find a useful, informative group of networkers in his own
community. So he sent out an e-mail to a handful of people he knew
and trusted, asking them to meet at a local Starbucks.
Six people showed up for the first gathering. Now the event routinely
attracts 125 people who have heard about the group by word of mouth
and the Internet. They share business leads and the latest information
about technology, marketing and social media.
It’s just another way for them to stay up to speed and successful. n
Jan Norman is a freelance writer who thinks talking to small-business owners is the best way to
keep current on what’s really happening in the world. Read her blog at
The NASE Can Help
Need new equipment to bring
your micro-business up to speed?
Want to hire help for social
media marketing or invest in
new technology to keep your
company current?
Apply for an NASE Business
Development Grant. NASE Members
can apply for grants of up to $5,000
to meet specific business needs.
When applying for a grant, you’ll
be asked to submit:
Your résumé and a business plan
A detailed description of your
specific business need and its
associated cost
The grant amount you’re
Details about how you will
use the grant funds
The potential impact of the grant
on business growth and success
Supporting documentation
You could be the next grant
recipient! To apply online:
Go to
Enter “Grants” in the Quick
Link box
Self-employed SEPTEMBER/OCTOBER 2010
Your Way To
Business Success
Do-It-Yourself Financing Is Back!
“It takes money to make money,” the old saying goes.
But in today’s tight credit climate, getting the money needed
to grow and expand a business has become difficult, if not
nearly impossible—at least from traditional financing sources
like banks and private investors.
In this environment, many micro-business owners and
self-employed individuals are turning instead to a different
kind of financing that’s really not financing at all. Known as
bootstrapping, it involves generating cash internally rather
than borrowing it from an external source such as a bank.
How do these owners bootstrap their way to success? Primarily
by tightening up financial management practices.
The dictionary definition of bootstrap is “to rely entirely on
one’s efforts and resources,” which is an apt description of
financial bootstrapping in the business world.
“From my past experiences, I’d rather build value in my
business myself from the bottom up than build it from raising
Self-employed SEPTEMBER/OCTOBER 2010
By Don Sadler
capital and then playing catch-up,” says Brandon White,
the president of Lateral Line Inc., a performance fishing
apparel business based in Easton, Md.
White and his brother have been bootstrapping Lateral
Line for the past three years, leveraging cash flow to grow
the business.
“There is a time and place to raise money,” White notes,
“but bootstrapping is the way to start. While it may seem
like a badge of honor to have raised venture capital, the
real badge comes from creating and building a profitable
business yourself.”
Josh Turner, principal at Gateway CFO Solutions LLC, a
financial consulting firm in St. Louis, Mo., says the current
credit crunch has caused bootstrapping to go mainstream.
“I work with a lot of small-business owners, and I’m a
small-business owner myself, and I can tell you that
bootstrapping is the norm in today’s economic climate,”
Turner says.
“Traditional bank debt and lines of credit are very difficult for
most small businesses to obtain, which often makes internal
funding via bootstrapping the only financing option.”
Bootstrapping activities are limited only by your imagination,
but usually fall into one of three categories.
Credit and Collections
Tighten Up
Failing to tighten credit and diligently go after outstanding
accounts receivable is analogous to leaving cash on the table.
Start by establishing a credit policy that spells out the specific
criteria by which you will and will not grant customers the right
to pay their bills after they’ve received your product or service.
For instance, you could give customers 30 days to pay their
bills before you consider their accounts overdue.
While being proactive on the front end will help you avoid
extending credit to high-risk customers, it may not eliminate
deadbeats completely. The key to collecting past-due
receivables, experts say, is to move quickly—because the longer
they drag out, the less chance you have of ever collecting them.
So if your payment terms are net-30 days, and a check hasn’t
arrived on day 31, contact your customer immediately.
Karl Hoffower, the director of business development for
Failure Prevention Associates in San Jose, Calif., goes one
better: He calls net-30 customers twice even before the
payment due date.
“We make the first call three days after the invoice is sent to
make sure the accounts payable department got the invoice,”
he explains. “Then we call again at 20 days to make sure that
the invoice is in line for payment at 30 days. This way, we have
time to work out any potential problems in a timely manner.”
Need to speed up collection of your accounts receivable?
Follow these tips.
Send out invoices immediately. Ideally, this should be done
as soon as goods are shipped or services delivered. Each day
you wait is a day’s cash flow that is lost.
■ Clearly state payment terms and the due date on the
invoice. Don’t assume customers know when a payment is
due. If your terms are net-30 days, count out 30 days
from the invoice date and include this due date next to
the amount due.
■ Follow up on past-due receivables promptly. Studies
show that the likelihood of collecting receivables drops
drastically over time. You have more than a 90-percent
chance of collecting after 30 days. But after 90 days, your
odds of collecting the amount due drop to 74 percent.
And after six months, you have just a 50-percent chance
of collecting your money.
Payment Terms
Use Them To Your Advantage
In the same way that you may offer payment terms to your
creditworthy customers, your vendors and suppliers may also
offer such terms to you.
Not taking advantage of them is the same thing as saying
“No, thanks” to a short-term, interest-free loan.
Keep in mind that most suppliers will want to see a history
of on-time payments from your business before extending
payment terms, especially if yours is a startup company.
However, if you can produce a solid business plan that
demonstrates you have a keen understanding of your
company’s finances, you may be able to negotiate payment
terms upfront.
You might be able to create your own terms by paying suppliers
and vendors with a business credit card (assuming they accept
plastic). If you pay off the balance each month before the due
date, a credit card also becomes an interest-free short-term
loan. Keep in mind, however, that the interest rate can be
high if you don’t pay the balance in full each month. Also
be sure to make payments on time, since card issuers can jack
up the interest rate drastically based on just one late payment.
Cost Cutting
Look At Every Expense
If there’s a silver lining to the painful recession of the past
couple of years, it’s that most businesses have a newfound
respect for cost cutting.
Janet Boulter is president of Center Consulting Group in
Denver, Colo. Her firm helps companies improve their
business practices and profitability. She tells her clients to
look in every nook and cranny for potential waste.
“Take a fresh look at the products and services you purchase,
everything from office products to cell phone plans, and
re-evaluate the benefits,” she advises.
Among her specific recommendations:
Renegotiate your office lease and/or sublease your
unused office space. It’s a tenant’s market in many areas
of the country right now.
■ Scrutinize travel expenses. Can you replace some
face-to-face meetings with video conferences instead?
■ Reexamine subscriptions. Make sure that they’re
providing enough value to justify their cost.
■ Pare back entertainment. Do you really need to take
clients out to fancy and expensive dinners or concerts?
Most won’t be offended if you scale this back a little.
Self-employed SEPTEMBER/OCTOBER 2010
Can Help
consultants can
help you bootstrap
your way to business
success. You have
unlimited access to
the consultants
included in the
cost of your NASE
Membership. Visit and click
“Knowledge Center.”
ABCs of Finance
ShopTalk 800
Get one-on-one guidance
from the financial
consultants at ABCs of
Finance. Simply submit
your question online and
receive a personalized
reply. The financial
consultants can help you:
The micro-business
consultants at ShopTalk
800 have the answers you
need about bootstrapping.
Call or go online to get
personalized replies to all
of your questions about:
Even bootstrappers
have to understand
their tax responsibilities.
The certified public
accountants at TaxTalk
can help you:
Identifying costs you
can cut
Create a business budget
Decide whether leasing
or buying equipment is
the best move for you
Determining the
effectiveness of your
marketing programs
Evaluate your cash flow
And much more
Writing and distributing
press releases
Maximizing online
review sites
Plus many other topics
Use technology to increase productivity. Trying to
save money on technology can be penny-wise but
pound-foolish. Updating old computers and software
can pay for itself quickly through increased productivity.
George Burke, a co-founder of, the popular
online book rental club, says the company was launched
with just $7,000 in startup capital.
“Since the beginning, some of our biggest challenges have
revolved around growing and operating the business
without spending much money,” he says. “Although we’re
a multi-million dollar company now, we still keep a close
eye on expenses in all areas of the business.”
A few of the cost-cutting measures Burke and his partners
implemented during the startup phase:
Operating out of a partner’s basement instead of leasing
expensive warehouse and office space
■ Using intern labor, primarily college students working
between classes and during holidays
■ Hiring a website developer in Romania to build the
company’s initial site and inventory management software
for $3,500 (compared to quotes of nearly $100,000 from
similar U.S. developers)
■ Furnishing its offices with Craigslist free and
“curb alert” postings
What about marketing, you may ask?
This is one of the first areas where business owners often look
to cut costs. But experts urge caution.
Making the wrong cuts here can significantly impact sales
and revenue. Instead, take a close look at the effectiveness of
your marketing programs. Reduce or eliminate any that aren’t
generating measurable results. Here are three practical ideas
for stretching your marketing budget.
Self-employed SEPTEMBER/OCTOBER 2010
Determine whether
you qualify for the
home office deduction
Find tax deductions
you might overlook
Identify the tax forms
you need to file
And more
Use online review websites. Satisfied customers may be the
best advertising money can’t buy. You can maximize your
word-of-mouth marketing efforts by asking customers to
post feedback about your business on an online review
website. These sites allow customers to post reviews and
buyer ratings on a company’s performance and/or the
quality of its products and services.
■ Maximize your public relations efforts. It costs little
or nothing to publish press releases about interesting
developments at your business and distribute them to the
local media. Also, try writing bylined articles about trends
and developments in your industry and submitting them
to trade publication editors.
■ Reduce your ad size and/or frequency. This can help you
save money without sacrificing results. Brainstorm with
your advertising sales rep for ways to save money while still
generating qualified leads.
The Bottom Line Of Bootstrapping
Deborah Osgood is co-founder of CKO Knowledge Institute in
Exeter, N.H. For the past decade she’s also been a volunteer with
SCORE, the nonprofit association that counsels entrepreneurs.
“The fact is that eight out of 10 businesses are started without
outside financing,” Osgood says.
She encourages micro-business owners to “draw a straight line
to the revenue—what sells, how much, and where and when
does it sell? The sooner owners understand that it’s revenue
that sustains a business, the sooner they’re off to a long a
prosperous venture.” n
Don Sadler is a self-employed writer who bootstraps his freelance writing business
by promptly invoicing his clients and diligently following up on receivables. Reach
him at [email protected]
Your Health
Double Duty
If you’re the parent of a special
needs child, you’ve proven that
you can handle a tough—and
rewarding—job. Perhaps you’ve
also chosen self-employment so
you can spend more time with
your child.
It’s a challenging combination,
but with the right tools, it
could be the best possible way
to make a living while caring
for your youngster.
Unfortunately, information
aimed at helping you handle
your unique situation is scarce.
This article will begin to
bridge that gap by helping
you find the resources you
need to succeed and prevent
burnout along the way.
The Statistics
Nobody really knows how
many people are in your shoes.
The U.S. government reports
that more than half of U.S.
businesses are based out of an
owner’s home. How many of
those businesses are operated
in households with children,
let alone children with a
disability or health issue?
The question hasn’t been
answered, and the issue
hasn’t been studied.
About 10 million U.S.
children, or 14 percent of
the total, have special health
care needs, reported a 2008
survey by the government’s
Health Resources and
Services Administration.
More than 20 percent of
U.S. households that include
children have at least one
special needs child.
Tips To Prevent Burnout
Caregiver burnout happens
when the stresses of caring
for your special needs
child are greater than your
coping skills. The same can
be said for running your
home-based business.
Combine the two and your
chance of burnout doubles.
Watch for these common
signs of burnout:
Anger and irritability
Mood swings
Tension headaches
Neck or back pain
■ Chronic fatigue
■ Sleep difficulties
■ Withdrawal from others
No one person and no one
action can magically make
your stress go away. But
taking these four steps
will help you cope.
1. Learn and practice
stress-management and
relaxation techniques.
2. Exercise regularly. The
time you spend walking,
working in the garden, lifting
weights or working out to
an aerobics DVD will pay
huge stress-relief dividends.
3. Eat a healthy diet. It’s
common to self-medicate
with comfort food, but the
resulting weight gain will
For More Information
Are you caring for a special needs child while running your
business from home? Find organizations, books and websites
that can help. It’s all covered in the NASE special report
“Self-Employment And Caring For Special Needs Children.”
Go to Click “Health Resource Center.” You’ll
find the report in the green “Wellness” box.
increase your stress and
reduce your energy level.
4. Ask for support from
friends, family members,
other parents, your faith
community or paid caregivers.
That Can Help
Support is critical to your
sanity as a parent and your
success as a business person.
The following organizations
can provide help—or
can point you in the
right direction.
National Dissemination
Center for Children With
Disabilities, with statespecific information
■ Technical Assistance
Alliance for Parent
Centers, with links to
regional and national
parent centers
■ Easter Seals Child
Development Center
Network, the largest
provider of inclusive child
care in the U.S.
with resources, articles on
better health for caregivers
and a discussion forum n
Self-employed SEPTEMBER/OCTOBER 2010
Social Networking Exclusively
For NASE Members
the famous Sea Dogs Biscuit, named after the
Boston Red Sox AA affiliate in Portland.
You’ll also find ProBest Pest Management,
a Phoenix, Ariz., company that specializes
in diagnosing and treating your home for
pesky pests.
Venacity Technologies Inc. is at the Water
Cooler too. This Des Plaines, Ill., firm provides
professional IT software development services
to small- and medium-size businesses on an
as needed basis.
Join these and other NASE Members at the
Water Cooler. Start marketing your business
and making deals today.
Use the new NASE social network to find
more customers, get marketing ideas from
other NASE Members and build your brand.
It’s all at the NASE Water Cooler.
Make A Deal!
At the Water Cooler, you can create or join
groups that share your industry, your interests
and even your ideas.
One of the newest groups is “Have I Got
A Deal For You.” If you want to promote
your products and services to fellow NASE
Members, this is the group to join.
Simply go to the Water Cooler page at Under the Featured Groups tab,
click “Have I Got A Deal For You.” From there,
just post a short description of your offer
in the comments section and link to your
profile page.
You can make the most of the group by
offering a special one-time deal or discount to
your fellow NASE Members.
And as an extra plus, the NASE Water Cooler
team will tweet your deal on Twitter through
@NASEdeals! So, if you have a Twitter
account, be sure to include that, too.
Gather ‘Round The
Water Cooler!
What kind of businesses will you find at the
Water Cooler?
The Ice Cream Dugout for one. Located in
North Windham, Maine, The Dugout features
great baseball themed sundaes, drinks and
Blog On!
Are you blogging about your micro-business?
Share your words of wisdom (and your
marketing message) with other NASE
Members at the Water Cooler. It’s easy to
import your blog to your Water Cooler page.
On your “My Stuff” page, click “Blog” on the
left navigation. Then click “Import a Blog”
and follow the instructions.
Don’t Wait!
The Water Cooler is free with your
NASE Membership.
It’s your opportunity to promote your
micro-business, network with other NASE
Members, find new business strategies
and test out fresh ideas. n
Join the Water Cooler today.
It’s free with your NASE Membership!
Self-employed SEPTEMBER/OCTOBER 2010
Complete This Survey
And Get Free Publicity!
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Tell us about your business and you could be featured in an upcoming issue of Self-Employed.
Return this form to Editor, Self-Employed, NASE, P.O. Box 241, Annapolis Junction, MD 207010241. Or, complete the form online at Use the Quick Link “Publicity.”
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Website Address:
Business Address:
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How many employees do you have?
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Self-employed SEPTEMBER/OCTOBER 2010
Advocacy News
More Tangled Tax Rules
Coming To Your Micro-Business
Found deep within the new health reform
law is a little known provision that will
increase tax regulation on America’s small
businesses beginning in 2012.
Yes, that’s right. Not only did policymakers
pass a health reform bill that will provide
little to no bottom-line savings for the
self-employed and micro-businesses, but
they also paid for a portion of their so-called
reform efforts by heaping additional IRS
reporting requirements, paperwork and fines
onto the backs of our nation’s job creators.
The new provision centers on IRS Form
1099, the paperwork that businesses
use to report payments for services to
unincorporated independent contractors.
Under the new health reform law, the
use of Form 1099 will greatly expand,
creating a paperwork nightmare for
micro-business owners.
A recent online survey by the NASE found
that the self-employed and micro-businesses
(those with fewer than 10 employees)
are overwhelmingly expecting this new
regulatory burden to greatly or somewhat
increase the amount of time and money
they spend on tax preparation.
Current 1099 Rules
The IRS currently has a reporting
requirement for businesses that hire
independent contractors.
If a business hires a contractor and pays
the contractor more than $600 in a tax year
for services, the business must file a Form
1099. One copy of the Form 1099 goes to
the contractor to remind her that taxes must
be paid on the amount of income received.
Another copy goes to the IRS, which uses the
form to ensure that the contractor accurately
complies with the tax code by paying
the proper amount of taxes on income.
The NASE survey found that
micro-businesses reportedly received an
average of four Form 1099s from clients
or customers and issued an average of
two Form 1099s to contractors in the most
recent tax year.
But that will change drastically under the
new expanded regulation.
New 1099 Rules For 2012
In 2012, the Form 1099 reporting requirement
will be expanded to all businesses. Every
business will be required to issue a Form 1099
to any vendor of services or property to which
the business has paid more than $600 a year
for those services or property. The Form 1099
must also be sent to the IRS.
The payments that are included under this
new regulation are not only those made
directly by check, but also those made by
other means such as credit cards.
Tell Us What You Think
We want to know what you think about the new Form 1099 rules scheduled to take effect in 2012. Send an e-mail to
[email protected] or join the Expanded Form 1099 Reporting Requirement group on the NASE Water Cooler. Tell us:
Will this increase the number of 1099s you’ll have to issue?
Will the rule change increase the amount of money you must pay a tax professional?
Will the rule change increase the time you spend on tax preparation?
Do you plan to contact your elected representatives about the impact of the new rules?
We’re listening. And the NASE legislative team will use your responses to advocate on your behalf in Washington, D.C.
Self-employed SEPTEMBER/OCTOBER 2010
Advocacy News
The use of Form 1099 will greatly expand, creating
a paperwork nightmare for micro-business owners.
According to the Small Business Legislative
Council, basic business expenses paid to
vendors such as airlines, hotels, rental car
companies and restaurants are all subject
to this new reporting requirement.
You might not think of them as vendors
of goods and services, but they are and
they must be accounted for under this new
reporting requirement. Also, for those who
are in the business of selling or distributing
goods, all suppliers of products are
considered vendors under the new law.
In order to issue 1099s, a business must have
the vendor’s taxpayer identification number.
If a business has trouble getting the TIN from
a vendor, the business will be required to
withhold payments to any such vendor until
it receives the TIN. This added withholding
requirement will be a huge regulatory burden
for the self-employed and micro-businesses.
For example, Peterson Construction Inc.
pays a cell phone company more than $600
per year for business services. Peterson
Construction Inc. will now have to obtain
the taxpayer identification number of that
cell phone company, then issue a Form 1099
to it and the IRS indicating the amount
they spent on services. Should Peterson
Construction Inc. be unable to obtain the
cell phone company’s taxpayer identification
number, they would have to withhold a
portion of their payment to company and
send that portion to the IRS.
Should a business not file the proper Form
1099s, significant IRS penalties will apply.
The Cost To
Business Owners
When the NASE asked micro-business owners
how much the rule changes would cost their
small companies, the numbers were startling.
With the new reporting requirements,
NASE survey respondents revealed that
they will have to issue roughly 27 Form
1099s, mostly to large corporations. That’s
a big jump from the average of two 1099s
that survey respondents said they currently
issue—and a 1,250-percent increase in the
amount of paperwork that will be required
of small-business owners come 2012.
Since the amount of accounting work
needed to comply with the law would rise in
proportion to the number of forms required,
80 percent of respondents expected the
amount of time spent on preparation to
somewhat or greatly increase. Likewise, 74
percent forecasted the cost of their current tax
preparation to somewhat or greatly increase.
The NASE Position
For many years, the NASE has supported
legislative initiatives to decrease the
paperwork burden on micro-businesses and
the self-employed.
The Small Business Paperwork Mandate
Elimination Act has been once such initiative
that we have supported with gusto because it
fights the 1099 changes. Lawmakers cling to
the 1099 measure because it is one of several
funding streams to pay for health care and is
reported to raise $17 billion.
The focus of Congress and the administration
should be to provide relief to largest segment
of small businesses—the self-employed and
micro-businesses—while also fostering policy
that encourages prospective entrepreneurs
so that we may spur innovation and growth
within our economy.
Instead, this new regulatory burden is
just one example of what seems to
be systemic underhanded behavior by
Washington, D.C. Policymakers publicly
tout the importance of small business in this
economic climate. Yet these same lawmakers
quietly issue backdoor rules and regulations
that are ultimately pulling the rug out from
under America’s entrepreneurs. n
Kristie L. Arslan is
Executive Director of
the NASE Legislative
Office and manages
the NASE legislative
affairs program in
the association’s
Washington, D.C.,
office. She works closely
with federal legislators, the administration and smallbusiness advocacy organizations to ensure that the
legislative priorities of the NASE and micro-businesses
remain a priority in Congress. You can contact Arslan
at [email protected]
Learn More From The NASE
The NASE wants to keep you up to date on how the changes to the 1099 rule may affect you and your micro-business.
Subscribe to Washington Watch, the NASE’s weekly e-newsletter, for the latest information.
Visit and click the Advocacy tab. Then click “Washington Watch” and “Subscribe.”
Self-employed SEPTEMBER/OCTOBER 2010
NASE Answer Desk
I registered my corporation in
Nevada using a Nevada company
as a registered agent. I’m located in
Colorado. Can I unregister in Nevada and
register in Colorado?
The basic answer to your question is yes.
Few businesses actually benefit from being
registered in Nevada. However, before you
make the final decision, talk with a tax
professional to help you determine if there’s
any financial benefit for you.
If there’s no benefit, file a dissolution of
the corporation with the Nevada secretary
of state office. Then file to incorporate
in Colorado. If you’ve filed as a foreign
corporation in Colorado (as required by state
law), convert your corporation to a domestic
corporation by filing a request with the
Colorado secretary of state. You can find
the forms you need online at
Collecting Rent
I recently leased an out of state property that I own. After one month I received
a letter in the mail with the keys to the property and a note that the tenant no
longer wanted the property. What are my options for collecting the rent that’s due?
If you live within an hour or so drive of the property, you could try to locate
the person and file for the rent due in small claims court. If the property is
several hours away, it’s probably not worth your while to attempt collecting.
In either case, you must know where the ex-tenant now lives. If you can’t locate him
there is no way you can serve a claim on him. Even if you can locate him and get a court
judgment in your favor, there’s no guarantee that he has the money to pay you. And if
you hire an attorney, any money you collect would probably be eaten up in legal fees.
If you own rental property that you can’t actively manage, consider hiring a
management company. They will take about 20 percent of the rental fee in return
for handling all of the tenant headaches.
company or a corporation for personal liability
reasons. Talk with a tax professional to help
you with the decision.
Second, consider liability insurance that will
cover you in case of injury to any person or
physical damage during an event.
I’m an event planner and use vendors
for flowers, entertainment, etc. I’m
concerned about my personal liability.
What type of insurance do I need? Also,
if I hire employees, do I need insurance in
case they get hurt on the job?
You should consider two areas
of protection.
First, if you are operating as a sole proprietor,
you need to form either a limited liability
Get Your
You should also consider requiring vendors
who you hire to provide proof that they have
liability insurance coverage. If you use a vendor
frequently, ask them to list your business as
an additional insured on their policy.
Employees are covered under workers’
compensation insurance. It may or may not
be required in your state. But if you don’t
carry workers’ comp, your business (or
you personally) could be held liable if an
employee is injured on the job. n
Gene Fairbrother is
the lead micro-business
consultant for the NASE
and directs the activities
of the NASE ShopTalk
800® program. He has
consulted with more
than 85,000 businesses
on issues dealing with
marketing, finances and strategic development.
Fairbrother has authored three books and more than
300 articles on micro-business issues.
On the phone:
Go to and log in
Call 800-649-6273
Click the Knowledge Center link
8 a.m. to noon Central time
Get confidential answers via e-mail
Monday through Friday
Self-employed SEPTEMBER/OCTOBER 2010
NASE Answer Desk
Can you explain the tax benefits
of the HIRE Act?
The Hiring Incentives to Restore
Employment (HIRE) Act that passed
this year created two new tax benefits to
encourage employers to hire and retain
new workers.
Employers who hire unemployed workers
after Feb. 3, 2010, and before Jan. 1, 2011,
may qualify for a 6.2-percent payroll tax
incentive. The incentive effectively exempts
employers from their share of the Social
Security tax on wages paid to these workers
after March 18, 2010.
In addition, for each unemployed worker
retained for at least a year, business owners
may claim a new hire retention credit of up to
$1,000 per worker when they file their 2011
income tax returns.
The IRS has a new form, Form W-11, Hiring
Incentives to Restore Employment (HIRE) Act
Employee Affidavit, which will help employers
claim the special payroll tax exemption.
The new law requires that employers get
a statement from each eligible new hire,
certifying under penalties of perjury, that she
was unemployed during the 60 days before
beginning work or, alternatively, worked
fewer than a total of 40 hours for anyone
during the 60-day period. Employers can
use Form W-11 to meet this requirement.
It’s available at
If you’ve hired an employee this year, make
sure you look into this new credit.
Section 179
I thought that the Section 179 limit
was just $134,000 for this year. But
I’ve heard it was increased. What’s the limit
for 2010?
The cap on the Section 179 deduction
was scheduled to be reduced from
$250,000 to $134,000 for 2010.
But, the Hiring Incentives to Restore
Employment (HIRE) Act keeps the maximum
Section 179 deduction at $250,000, which
is the same as 2009.
This deduction is for qualifying depreciable
business assets placed in service in tax years
starting in 2010. The result is that microbusinesses can deduct significantly larger
amounts of the cost of qualifying property
instead of depreciating that property over
several years.
Without further action from Congress, the
Section 179 limit will drop dramatically in
2011 to just $25,000. Let your Congressional
representative know how important this
deduction is to your business by visiting and clicking the Advocacy tab.
Tax Penalty
I have an S corporation. I didn’t file my
federal corporate taxes until June. Will I
have to pay a penalty for late filing?
If you didn’t request and receive an
automatic six-month extension for filing
your corporate taxes, then yes, you’ll be
subject to a late filing penalty.
The penalty is imposed on any S corporation
or partnership that files a return past the due
date, including extensions, or files a return
with incomplete information.
For the tax year 2009, the penalty is $89 and
is owed by every partner or shareholder for
each month or fraction of a month that the
return is late, up to a maximum of 12 months.
So even though your return is late, still file as
soon as possible.
For taxable years beginning after Dec. 31, 2009,
the late filing penalty increases to $195. n
Keith Hall is a certified
public accountant and
the NASE National Tax
Advisor. He operates a
private tax and financial
consulting firm in Dallas,
Texas. Hall is one of the
CPAs involved with NASE
TaxTalk, where more
than 10,000 small-business questions are answered
every year. He has more than 26 years of consulting
experience with small businesses, including more than
18 years working with the NASE.
Answers Your
Questions Online
CPAs answer your specific
questions via confidential e-mail
Unlimited access to TaxTalk at
no additional charge
Get answers within one
business day
Go to and log in
Your questions and answers
are automatically saved in your
confidential online tax archive
Click the Knowledge Center link
Self-employed SEPTEMBER/OCTOBER 2010
NASE Member Profile
Multifamily Makeovers
Nicole Pulley has been an NASE Member for two years. She owns Interior
Affairs in San Antonio, Texas. Her website is Follow
her on Twitter: @InteriorAffairs.
Tell us about your
Interior Affairs is an interior decorating
company specializing in decorating for the
multifamily housing industry. Focusing on
model units, clubrooms, leasing and business
centers, offices, fitness centers and spas, we
aim to beautify every interior aspect of an
apartment community.
I began Interior Affairs in 2006 on a part-time
basis while working as director of education
for the San Antonio Apartment Association.
With over 14 years of experience in the
multifamily industry, I’m able to meet the
unique needs of apartment owners and
communities. In 2008 I left my position at the
association to run my business full time.
What was a particularly
challenging project
you’ve worked on?
I got a contract to decorate a property in
Granbury, Texas, which is about 250 miles
from San Antonio. I had to make sure we had
absolutely everything we needed to complete
the project because we were traveling to
an unfamiliar place. We drove four and a
half hours, stayed in a hotel and completely
decorated a clubroom, offices and a model
apartment in three days!
To create
out of
is truly
a labor of
love for me.
How has the NASE
helped your business?
The first thing I did when I joined the NASE
was purchase health insurance. The NASE
made it convenient and affordable. I was also
able to save money by switching to a new
carrier for my general contractor insurance
policy through the NASE. But the greatest
benefit I’ve received through the NASE was
being awarded a Business Development Grant.
Starting a new business with personal funds
can be difficult. The grant allowed me to
market, advertise and grow the company, and
I was even featured on a local television show.
Does your business give
back to the community?
Working with affordable housing properties
and being involved in the community
is important to me. I like to work with
organizations that share my vision of
providing quality housing to everyday
working folks, while giving back to the
communities which we serve. I look forward
to being able to donate recreational and
educational items to apartment communities
I’ve decorated in under-privileged areas.
This is another way Interior Affairs sets itself
apart from the competition—by providing
affordable decorating services to our clients
and giving back locally.
What’s the greatest
reward you get
from your work?
I enjoy the seeing the transformations. I like
walking into a space that is in dire need of
updating and being able to bring it back to
life. I can look at an old piece of furniture or
a scrap piece of wood and visualize how I can
update it and make it a thing of beauty. It’s
easy to enhance something that is already
nice, but to create something out of nothing
is truly a labor of love for me. n
Get Profiled Here
Self-employed SEPTEMBER/OCTOBER 2010
Tell us about your business and you could be featured
on this page. Send your name, e-mail address and a brief
description of your business to [email protected] Or use
the form online at, Quick Link “Publicity.”
Offering a High Deductible Health Plan (HDHP) can help
decrease healthcare expenditures and increase tax savings. If
you are interested in offering health benefits to your employees
but need an affordable alternative to a traditional plan, you
may want to explore the option of implementing an HDHP and
Health Savings Account (HSA). Give your business the benefit
this year and enroll with The Bancorp HSA-NASE.
HSA Benefits to the Employer:
• A reduction in healthcare costs
• A reduction in payroll tax liabilities
• Additional savings on administrative costs
• Shared costs between the employee and employer
• Employee involvement and awareness in healthcare costs.
To learn more about offering an HSA, please visit our site at
Contact us at [email protected] or 1.877.226.2925.
A member benefit of the NASE Quick Link “HSA”
Where do self-employed and home-based business owners
get the latest news and trends if they work by themselves?
Water Cooler
At the Water Cooler, you can:
Looking for one place to connect with
other small-business owners, promote
your business and get the latest smallbusiness news from the NASE? Join the
NASE Water Cooler! The Water Cooler
is a social network exclusively for NASE
Members—and it’s available at no
additional cost to you as a member.
Join today—it’s free
with your NASE Membership
Go to and log in
Click “Water Cooler”
Create a profile for your
business that can be found
through search engines
such as Google, Yahoo!
and others
Create personal and
business profiles that let
other Water Cooler and
NASE Members find out
about you
Search the business profiles
of fellow members to
find other products or
services you might need
Start a group to get to
know other business
owners in your area
Join groups of similar
businesses to discuss
ideas, pricing and
marketing strategies
Bounce ideas off of
fellow business owners
in discussion forums
And much more!