RESOURCES Social Networks 12 BENEFITS Home Biz 6 Published by the National Association for the Self-Employed NASE.org ADVOCACY More Tax Rules 26 September/October 2010 How To Keep Pace NASE Members Give Tips On Staying Competitive In The Business World HUNDREDS OF MEMBERS OF THE NATIONAL ASSOCIATION FOR THE SELF-EMPLOYED ARE RECEIVING EXCLUSIVE DISCOUNTS ON THEIR OFFICE SUPPLIES FROM PENNY WISE. Join the Club…Become a Smart Saver! • Members-Only Savings • FREE, Next Day Delivery with Orders of $45 • Over 40,000 Products & Furniture In-Stock • 100% Satisfaction Guaranteed • Specializing in Serving Small & Growing Businesses Nationwide Receive your exclusive “Members Only” Discounts on office supplies today. Call 1-800-942-3311 to place an order or to receive your free catalog. Be sure to mention that you are a member of the National Association for the Self-Employed or use Code NAS to receive your discounts. Use coupon code “PW10” and receive $30 off your first order of $150 or more! Limit one per customer. Call Toll-Free 1-800-942-3311 SPR_1647_PennyWise_Ad.indd 1 6/14/10 12:00:24 PM A member benefit of the NASE NASE.org Quick Link “Supplies” A member benefit of the NASE NASE.org Quick Link “Card Processing” 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. Sincerely, Robert Hughes At the NASE Water Cooler you can share ideas and discuss business strategies. 4 Self-employed SEPTEMBER/OCTOBER 2010 POSTMASTER: Send address changes to Self-Employed, P.O. Box 241, Annapolis Junction, Maryland 20701-0241. Self-Employed (ISSN 1041-8741, USPS 011513) is published bi-monthly by The National Association for the Self-Employed 325 7th Street, NW, Suite 250 Washington, DC 20004 nase.org Periodicals Postage paid at Washington, DC and additional mailing offices. Association Member subscriptions $2 per year (included in Association dues) Non-Member subscriptions $12 per year 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 opinion are the responsibility of the authors and do not necessarily imply opinions of the officers or members of the NASE. Benefit availability is dependent upon membership level and state of residence, and is subject to change. ©2010, National Association for the SelfEmployed, Inc. All rights reserved. No part may be reproduced without written consent of the NASE. National Association for the Self-Employed, NASE and Self-Employed are registered trademarks. 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 16 “cutting edge. ” Micro-business owners must stay on the NASE ADVANTAGE 6 Member Benefits For Your Home Biz 24 NASE News Make A Deal 30 Member Profile Multifamily Makeovers ADVOCACY NEWS 26 More Tax Rules NASE ANSWER DESK 28 ShopTalk 800 Corporate Change Business Insurance Collecting Rent 29 TaxTalk HIRE Act Section 179 Tax Penalty FEATURES 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 5 NASE Member Benefits Save Money With NASE Benefits Visit NASE.org and enter the Quick Link for benefit details. NASE.org Quick Link Center Advocacy NASE.org Quick Link Center Lifestyle Advocacy Web Advocacy 1-800-flowers.com Flowers Legislative Action Center Legislative Accidental Death Benefit ADB Tell Your Story Story Auto Coupon Book Auto Coupons Auto and Home Insurance Auto Insurance Business ABCs of Finance ABCs Budget Rent-A-Car Budget ADP Payroll Services ADP Enterprise Rent-A-Car Enterprise A-Systems Accounting Software A-Systems Grocery Coupon Order Book Grocery Background Screening Services e-Check Hertz Hertz BizFilings BizFilings Hotel Savings Program Hotel Burns Graphics – Printing Printing Legal Club – Family Plan Legal Family Business Development Grants Grants Life Insurance Life Insurance Business Insurance BusinessIns Member Rewards Rewards Credit & Debit Card Processing Card Processing Motor Plan Motor Plan Credit Cards Credit Cards Movie Tickets Movie Tickets crowdSPRING crowdSPRING Pet Insurance Pet Direct Mail, Web-to-Print Direct Mail PODS PODS E&O Coverage E&O Real Estate Transaction Savings Real Estate eCommerce eCommerce Scholarship Programs Scholarship EstateTalk™ Estate Shopping Mall Coupons Shopping FastCollect FastCollect Health Freight Savings Program Freight Ambulance Benefit Ambulance Home Office Protection Protection Ancillary Care Card Ancillary Health Reimbursement Arrangement HRA Assist America Assist Identity Theft Protection Identity Critical Illness Benefit Critical Illness IT Help Desk IT Dental Care Card Dental Legal Club – Business Plan Legal Business Health Connection Health Connection National Credit Systems NCS Health Insurance Access Health Insurance Penny-Wise Office Products Supplies Health Savings Account HSA Pitney Bowes Postage Hospital Care Card Hospital Card PowerNet Global PowerNet Hospital Confinement & ER Benefits Hospital QuickBooks® QuickBooks Lab Tests and Imaging Lab Self-Employed Magazine Magazine Physician Access Care Card Physician ShopTalk 800 ® ShopTalk Prescription Drug Discount Card Prescriptions TaxTalk TaxTalk TelaDoc™ TelaDoc TripAlly iPhone App Vision Discount Plan Vision TurboTax Online TurboTax Web Design and Hosting Web Design 6 ® Self-employed SEPTEMBER/OCTOBER 2010 Benefit availability dependent upon membership level and state of residence, and may be subject to change. visit NASE.org for complete details, limitations and exclusions. NASE Member Benefits For Your Home-Based Biz Use these NASE benefits to startup your business, launch a marketing campaign and more! Home Office Insurance NASE.org 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 to limits) for losses that occur at your residence premises home office in case of burglary, theft, vandalism, fire and more. Employer Services Business Branding NASE.org Quick Link “ADP” NASE.org 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 website. Include the price you want to pay and deadline for your project. Then watch as top-tier designers present actual designs created specifically for your project. ■ ■ A 20-percent discount on W-2 processing; tax filings for Forms 940, 941 and state unemployment insurance; state income tax filings; tax depositing; and more Easy access to human resources consultants who can answer any state HR questions you have ■ Templates for employee handbooks ■ Pay By Pay insurance service that simplifies the administration of your workers’ compensation policy CrowdSPRING offers a network of more than 47,000 creative minds to make sure you get the 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. Save More Than $15,000 NASE Members can save more than $15,0 00 a ye ar using their NASE benefits. Go to NASE.org or call 80 0- 6496273. Use Your NASE Benefits Today Online: By Phone: ■ ■ ■ Log in at NASE.org Get benefit descriptions and ordering information Call NASE Member Services toll-free at 800-649-6273 Benefit availability dependent upon membership level and state of residence, and may be subject to change. Visit NASE.org for complete details, limitations and exclusions. Self-employed SEPTEMBER/OCTOBER 2010 7 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, GozBay.com (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. 8 Self-employed SEPTEMBER/OCTOBER 2010 NASE Scholarship Program Applications For The 2011 NASE Scholarship Program ■ Go To NASE.org ■ 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 9 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. 10 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 Naumenko Mary Johnston Aransas Pass, Texas Dependent of NASE Member Kathryn Johnston Emily Rapp Sharon, N.H. Dependent of NASE Member Tina Rapp Brendan Langford San Antonio, Texas Dependent of NASE Member Anthony Langford Elaina Smith Olathe, Kan. Dependent of NASE Member Betty Smith Michael Langford San Antonio, Texas Dependent of NASE Member Anthony Langford 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 NASE.org Enter “Scholarship” in the Quick Link box Self-employed SEPTEMBER/OCTOBER 2010 11 Marketing Schmoozing For Sales 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.” 12 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 Marketing 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. Facebook 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. LinkedIn 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....” (iUniverse.com, 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. Twitter 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. twitter.com/twitter101. 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.” Twitter 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 13 Marketing Socialize Online With The NASE At NASE.org, 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 1,200 followers. “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 14 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. Dropbox FlightTrack Pro ReQall 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. Free $9.99 Free $2.99 Quickoffice Connect Mobile Suite Google Mobile App Free $14.99 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. Dropbox FlightTrack ReQall Delivery OmniFocus Quickoffice Google 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 $19.99 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. Free TripAlly Evernote Free 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. Evernote 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 NASE.org 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 15 Cover Story NASE Member Chris Lamb says, “I read every professional journal that crosses my desk.” How To Keep Pace 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. 16 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 KendallSummerHawk.com 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, SCORE.org. 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 17 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. 18 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 http://ocregister.com/jan. 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 requesting ■ 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 NASE.org ■ Enter “Grants” in the Quick Link box Self-employed SEPTEMBER/OCTOBER 2010 19 Finances Bootstrap 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 20 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. Finances “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. 1. 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. 2. 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. 3. 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 21 Finances The NASE Consultants Can Help The NASE micro-business 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 NASE.org and click “Knowledge Center.” ABCs of Finance ShopTalk 800 TaxTalk 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 BookSwim.com, 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. 22 ■ 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 ■Depression ■ 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 NASE.org. 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. Organizations 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. ■StrengthforCaring.com, with resources, articles on better health for caregivers and a discussion forum n Self-employed SEPTEMBER/OCTOBER 2010 23 NASE News 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 NASE.org. 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! 24 Self-employed SEPTEMBER/OCTOBER 2010 NASE News Complete This Survey And Get Free Publicity! mber NASE Me Profile he Secret Cac as. in Austin, Tex Enterprises of Overton is the owner ™ pibelt.com. er Kim Overton sells the SPIbelt , www.s when out NASE Memb belt and es the of y produc thought here to hold I originally Her compan and had now Ibelt. out the SP Tell us ab personal item (SPI ) belt. 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 NASE.org. Use the Quick Link “Publicity.” day and on a run one a patent in early 2007 uary pany in Febr my keys. I filed ched the com about $2,000. e officially laun . is a small tup costs wer ed in The SPIbelt that looks cool that has reel 2007. My star belt, but one travelers, product line rate a ers, Think utility ope have runn I We years! gned for ces such Now about two per, SPIbelt is desi y special medical devi $1 million in carr , one bookkee just want e sales reps tions people who people who rela thre t or p, with to clien a pum nds manager, as an insulin reet yet expa a production ree. It’s disc and it myself. to be hands-f ne or even a passport manager and for a pho es it perfect the size of t, which mak hugs your wais and exercising. en an ing You’ve be use while runn I’m enjoying my business now more than ever: Agree Disagree 2. Technology has reduced the cost of running my business: Agree Disagree 3. Traditional values like honesty are still important in business: Agree Disagree 4. Customers still appreciate the personal touch: Agree Disagree 5. Social media has improved my business marketing: Agree Disagree Adapting to change has been crucial to the success of my business: Agree costs My startup ber 2009 er/Decem emb yEd Nov SElf-Emplo Disagree Member Name: Member Number (See your magazine mailing label): Telephone – Office: Cell: Fax: E-Mail: Website Address: Business Address: City: State: Business Name: Number of years in business: ZIP: Describe your current business, including products and services offered: How many employees do you have? How long have you been an NASE Member? Please list the NASE benefits you’ve used: How has the NASE helped your business? Would you be willing to be interviewed for articles in Self-Employed? Yes No Wha com rece cus That o n life. W the NASE whe I star ted with trainer, before of kid onal was a pers med have had and elt, launching SPIb ge. The NASE disc chan to ng dev no reason in the beginni with ked ch is rep I wor t person, whi poin my on is still s me posted keep He t. grea my H upgrades to changes and e coverage. Being e ranc health insu to feel E allows me y I can with the NAS lth-wise, so W protected hea my business. ing u focus on runn M 30 6. It’s all about lo clients. As cater to thei your busine something you have a on spendin spend you great prod reach out spending ber NASE Memfour t for abou w have years. Ho s fit ne the be u? helped yo I Think about your years in business and how things have changed since you started your company. Now circle your answers to these six statements: 1. Any bus for fello busines n Self-employed SEPTEMBER/OCTOBER 2010 25 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. 26 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 NASE.org and click the Advocacy tab. Then click “Washington Watch” and “Subscribe.” Self-employed SEPTEMBER/OCTOBER 2010 27 NASE Answer Desk Corporate Change Q 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? A 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 Colorado.gov. Collecting Rent Q 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? A 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. Business Insurance company or a corporation for personal liability reasons. Talk with a tax professional to help you with the decision. Q 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? A 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 Questions Answered 28 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. Online: On the phone: n Go to NASE.org and log in n Call 800-649-6273 n Click the Knowledge Center link n 8 a.m. to noon Central time n Get confidential answers via e-mail n Monday through Friday Self-employed SEPTEMBER/OCTOBER 2010 NASE Answer Desk HIRE Act Q A 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 IRS.gov. If you’ve hired an employee this year, make sure you look into this new credit. Section 179 Q 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? A 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 NASE.org and clicking the Advocacy tab. Tax Penalty Q 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? A 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. TaxTalk Answers Your Questions Online n CPAs answer your specific questions via confidential e-mail n Unlimited access to TaxTalk at no additional charge n Get answers within one business day n n Go to NASE.org and log in Your questions and answers are automatically saved in your confidential online tax archive n Click the Knowledge Center link Self-employed SEPTEMBER/OCTOBER 2010 29 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 InteriorAffairsSA.com. Follow her on Twitter: @InteriorAffairs. Tell us about your business. 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 something out of nothing 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 30 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 NASE.org, 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 www.thebancorphsa-nase.com. Contact us at [email protected] or 1.877.226.2925. A member benefit of the NASE NASE.org Quick Link “HSA” NASE.org www.NA Twitter.com/NASEtweets www.Twitter.com/NASEtweets http://tax.NASE.org http://tax.NASE.org http://health.NASE.org http://health.NASE.org http://watercooler.NASE.org Where do self-employed and home-based business owners get the latest news and trends if they work by themselves? The NASE 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 NASE.org 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!
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