Retirement strategy for small-business owners: Grab the tax break
Retirement might seem like the last priority for small-business owners. But funding your retirement plan can save 30 to 40 cents on the dollar because of tax breaks. Retirement might seem like the last priority for small-business owners. But funding your retirement plan can save 30 to 40 cents on the dollar because of tax breaks.
Edition 32 August 03-09 2012
Urges Entrepreneurs to Focus on Cash More than ever, cash is king for small business
Commercial debt management specialist Covendium gives advice to small businesses on maximizing cash flow in order to stay solvent in today’s economy.
Latino Scholarship Awards celebrates 21st anniversary Page. 10
Financial Abuses by Former Troy Housing Authority Officials
When the U.S. Department of Housing and Urban Development learns of potentially corrupt, greedy behavior such as that allegedly perpetrated by former Troy Housing Authority officials, Roger Rosenthal and William Meissner. Page. 3
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s global capital markets continue to display unprecedented volatility, and consumer confidence and unemployment remain negatively stagnant, small businesses and entrepreneurs that thought they had survived the downturn are increasingly concerned about a double dip recession. Covendium, the nation’s largest debtorside commercial debt restructuring and advisory firm, says small businesses are having trouble getting the liquidity they need, and urges them to take protective measures to ensure their future success.
nY. Business Latino • Edition 32 | August 03-09 2012
Urges Entrepreneurs to Focus on Cash
Commercial debt management specialist Covendium gives advice to small businesses on maximizing cash flow in order to stay solvent in today’s economy.
According to the National Small Business Association, 88% of their members anticipate a flat or recessionary economy in the coming year, approaching levels not seen since the beginning of the last recession. Further frustrating small businessmen and women is the reality that more than a third of them are unable to secure conventional “bank loan” financing. Of those business operators that were unable to obtain bank loan financing, less than half could even qualify for “hard money” financing terms with interest rates of 18-22%, or higher. “More than ever, cash is king for small business,” reports Jonathan Gorman, Managing Director for Covendium Consulting, the small business consulting arm of Covendium LLC. “In the past, profitable small businesses were able to work with their banks to adjust their lines of credit to meet short-term cash needs or fund their growth. Banks have been aggressively cutting back on new lending, and are reducing credit lines—or canceling them altogether—for businesses that were current in their payments and still profitable.”
to maximize their cash flow from operations, shore up their working capital (the difference between current assets and current liabilities) and develop a 13 week cash-flow forecast to ensure that cash inflows and outflows are appropriately managed.
“For too long, business growth was fueled by access to easy and inexpensive debt,” remarks Brian Clapp, Managing Director of Client Analytics at Covendium. “In today’s economy, new debt is unavailable Mr. Gorman recommends that or priced at a higher rate than businesses re-double their efforts
many small business owners imagined.” Covendium has helped many small businesses restructure their debt, but its greater goal is to help clients secure their legacy by right-sizing their capital structure, revitalizing their business and providing the tools necessary to thrive in this new economy. “Great fortunes are made during challenging times,” concludes Mr. Gorman. “Focusing on sustainable business practices and working within your means aren’t as enticing as the illusion of double-digit
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revenue growth. However, being able to produce sustainable profit growth in this challenging economy is the key to being prepared to take business from less stable competitors and thrive when the economy recovers.” About Covendium Covendium specializes in comprehensive commercial debt resolution, restructuring and business consulting for clients whose financial model has been compromised by the economic downturn and the bank liquidity crisis.
For some clients, all they need is an experienced negotiator to provide their lender with the reality of the financial situation and the tool-set to restructure their obligations. For other clients, Covendium provides business consulting and access to non-bank funding sources.Their team of professional advisors has successfully restructured billions in transactions, with dozens of banking institutions (including major national, regional and community banks) and over 30 separate non-bank financial counterparties.
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tentially corrupt, greedy behavior such as that allegedly perpetrated by former Troy Housing Authority officials, Roger Rosenthal and William Meissner, particularly in today’s unyielding economic environment, the Office of Inspector General will vigorously pursue any and all actions to maintain the integrity of our programs and to ensure that departmental and public housing funds are distributed in a proper manner,” said Cary A. Rubenstein, Special Agent in Charge, U.S. Dept. of Housing & Urban Development, Office of Inspector General, NY/ NJ Regional Office. The joint investigation was carried out with the full support of the current THA administration and uncovered several misdeeds by Rosenthal and his former THA executive secretary, William Meissner. Among the findings:
DiNapoli and HUD Uncover Financial Abuses by Former Troy Housing Authority Officials The retired comptroller of the Troy Housing Authority (THA) took home $207,000 in inappropriate payments while collecting a public pension in apparent violation of state law, among other financial problems, according to a report released today by State Comptroller Thomas P. DiNapoli and the U.S. Department of Housing and Urban Development’s Office of Inspector General (HUD-OIG). Roger Rosenthal, of Latham and Florida, returned to work as “Acting Comptroller” at THA while collecting an annual New York state pension of approximately $47,000, and allegedly submitted falsified documents to avoid legal restrictions on “double-dipping,” or collecting a public pension while working for a public em-
ployer. The Comptroller’s office and HUD-OIG referred the report to the New York State Attorney General for appropriate action. “These public officials abused their positions to enrich themselves,” DiNapoli said. “My office will continue to protect taxpayers and the integrity of the retirement system. I will take strong action against those who seek to manipulate the rules for their own financial advantage. Thanks to our Investigations Unit working jointly with the HUD Inspector General, we were able to reveal this scam and work to recoup these ill-gotten gains.” “When the U.S. Department of Housing and Urban Development learns of po-
After Rosenthal retired in 2005, he was not legally permitted to earn more than $30,000 as a public employee without approval of the Civil Service Commission, nor could he enter into a consultant contract with a public employer without pre-approval by the New York State Retirement System. This review is designed to prevent re-employment in the same job under the guise of contracting. Rosenthal sought a full-time job at the THA, represented himself as “Acting Comptroller” on THA documents and billed the authority several months a year from his second home in Florida. He garnered more than $207,000 in pay and reimbursements from 2006 to 2010. He did not submit a re-employment proposal to the Civil Service Commission, as required. When questioned by investigators, Rosenthal submitted apparently falsified back-dated “contracts” that no one at the THA had seen or approved. These documents are contradicted by a Rosenthal email stating that his arrangement had always been verbal. Rosenthal’s correspondence was on letterhead which did not exist at the time it was allegedly written. Rosenthal was assisted in the scam by Meissner who, in 2009, inappropriately cancelled a job offer to a legitimate Civil Service candidate for the THA comptroller’s position, allowing Rosenthal to continue his THA employment through April 2010. Meissner, whose THA employment was terminated in April 2010, cashed in up to $32,000 of leave time that he had actually used. In one instance, Meissner claimed he was working when he was attending his daughter’s wedding in the Caribbean. Meissner and Rosenthal accepted gifts from THA vendors including fully-paid golf outings. The THA, which provides affordable housing in Troy, N.Y., is run by a seven-member board and supervised by its Executive Secretary.
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nY. Business Latino • Edition 32 | August 03-09 2012
Obama Made While In Office To Encourage Entrepreneurship And Innovation? tary veterans (http://1.usa.gov/NHNTE8), undergraduate engineers (http://1.usa.gov/ qJOiWK), and clean energy entrepreneurs (http://1.usa.gov/fm47Pr) and students (http://1.usa.gov/o0kdfS) — and is engaged in sustained efforts to attract and retain immigrant entrepreneurs who create jobs here in the US (http://1.usa.gov/NglcgG).
President Obama’s efforts to fuel innovation and entrepreneurship are wide-ranging and unprecedented. As Chief Technology Officer of the United States (a position created for the first time by President Obama), I see these efforts first-hand throughout the Administration— and as an entrepreneur who cofounded a company at age 24 and took it public ten years later, I have a special appreciation for how startups and innovation create jobs and prosperity across the country.
Speeding up “lab to market” research: The President has directed all federal research agencies to help accelerate innovation (http://wh.gov/Tuh) by speeding up grants to startups. The National Science Foundation launched an Innovation Corps (http://1.usa. gov/pQSt45) to get teams of scientists out of the lab and starting new companies. Over twenty federal agencies have cooperated to fund regional entrepreneurial ecosystems (http://1.usa.gov/qV9X0e), and are dramatically streamlining patent licenses for entrepreneurs in clean energy (http://techportal. eere.energy.go…) and biotech (http://www. ott.nih.gov/startup).
Let’s focus on three areas where the President’s leadership is making a huge impact: promoting high-growth entrepreneurship, helping accelerate technology breakthroughs, and investing in the “building blocks” of innovation. This is by no means a comprehensive list of every Administration effort to foster innovation across the United States, but every example below is specific, impactful, and well underway. Promoting high-growth entrepreneurship Unlocking capital: This spring President Obama signed the Jumpstart Our Business Startups (JOBS) Act (http://wh.gov/QBy), a bipartisan bill that allows startups to raise capital from investors more efficiently, among other initiatives, by allowing smalldollar crowdfunding investments (http:// wh.gov/3Buf), expanding mini-public offerings, and creating an “IPO on-ramp” consistent with investor protections. This is on top of an Administration commitment of $2 billion to match private investment in highgrowth companies over the next five years through vehicles such as Impact Investment Funds (http://1.usa.gov/rfYCI8) and Early Stage Innovation Funds (http://1.usa.gov/ JFf36a). The Small Business Investment Company program just had a record year in 2011 of helping over 1,000 businesses get $2.6 billion in capital.
Nurturing entrepreneurial talent: President Obama has taken executive action to make it much easier for graduates to manage student loan debt (http://wh.gov/uc1) and pur-
sue an entrepreneurial path (http://wh.gov/ TX5). The Administration has launched new mentorship and training opportunities for thousands of entrepreneurs starting new high-growth companies—including mili-
Liberating data to fuel innovation: The Administration has launched a series of Open Data Initiatives — in health (http:// wh.gov/5bg), public safety (http://wh.gov/ v9W), education (http://wh.gov/uDZ), and energy (http://wh.gov/OGKY) — to stimulate entrepreneurial innovation using newly unleashed data from government and other sources. As a model, decades ago, the National Oceanic and Atmospheric Administration (http://noaa.gov) began making weather data available for free electronic download by anyone. Entrepreneurs utilized these data (http://data.gov) to create weather newscasts, websites, mobile applications, insurance, and much more. Today, entrepreneurs are using freely available government data and building apps and services that help Americans in an expanding number of ways – e.g., apps and services that help people find the right health care provider for their fam-
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nY. Business Latino • Edition 32 | August 03-09 2012 ily, identify the college that provides the best value for their money, save money on electricity bills through smarter shopping (http:// wh.gov/REo), keep their families safe by knowing which products have been recalled, and much, much more.
Nanotechnology: The National Nanotechnology Initiative (NNI) (http://nano.gov) is investing in areas such as nano-electronics, to foster a revolution in computing comparable to the transition from the vacuum tube to the transistor.
The Startup America Partnership: In response to the President’s call to action to support American entrepreneurs, the nonprofit Startup America Partnership (http://s. co) has mobilized well over $1 billion in private-sector commitments to help support startups and has launched entrepreneurled coalitions in Startup Regions (http:// www.s.co/regions/map) across the country.
Advanced manufacturing: President Obama launched the Advanced Manufacturing Partnership (AMP) (http://1.usa. gov/Q8uopK), a national effort that brings together industry, universities, and the federal government to invest in the emerging technologies that create high-quality manufacturing jobs and enhance our global competitiveness (read the AMP Steering Committee report: http://wh.gov/xTFw). As a first step in building a National Network for Manufacturing Innovation (http://1.usa. gov/N0izNg), the Administration is funding a pilot institute for additive manufacturing (3-D printing) (http://1.usa.gov/HhHgBC). The President has also launched a National Robotics Initiative (http://wh.gov/rEt) and a Materials Genome Initiative (http://wh.gov/ yF4) to help accelerate manufacturing innovation.
Helping accelerate technology breakthroughs Biotechnology: The National Institutes of Health (NIH) has launched a new National Center for Advancing Translational Sciences (NCATS) (http://www.ncats.nih.gov/) to speed up the development of new diagnostics, treatments, and cures by building new bridges between the lab and clinic.
Space exploration: Guided by the President’s National Space Policy (http://
wh.gov/3HB), NASA, the Department of Defense, and other agencies are advancing U.S. capabilities and expanding American industry’s role in developing next-generation applications — including the historic docking of the SpaceX Dragon spacecraft (http://1.usa.gov/Nk2qQD) with the International Space Station.
Health care technology: Building on the Recovery Act (http://wh.gov/recovery) and the Affordable Care Act (http://wh.gov/ healthreform), the Administration is continuously engaged in major efforts to promote health information technology adoption, reform payment incentives to reward value instead of volume, and liberate health information for the benefit of patients while protecting privacy. Educational technologies: To advance technologies that will transform teaching and learning, the President launched the Digital Promise partnership (http://1.usa.gov/ Ole1n1) and championed a new Advanced Research Projects Agency for Education (ARPA-ED) (http://1.usa.gov/h9kob4).
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Clean energy: The Administration is working to accelerate game-changing energy breakthroughs by funding the Advanced Research Projects Agency – Energy (ARPA-E) (http://arpa-e.energy.gov/) and Energy Innovation Hubs (http://1.usa.gov/NHPOII), while pursuing 21st century grand challenges like SunShot (http://1.usa.gov/jignu6) (making solar energy cost-competitive with fossil fuels) and EV Everywhere (http:// wh.gov/XFe) (making electric vehicles as affordable and convenient to own and drive as today’s gasoline-powered vehicles). Investing in “building blocks” of innovation Research and development: The market innovations that drive economic progress so often depend on breakthroughs in fundamental science. President Obama has implemented the largest increase in federally funded research and development (R&D) in history (http://1.usa.gov/h1cg9G), and is making continuous investments to fuel “Big Data” (http://1.usa.gov/OlfERF) research and double funding for key basic research agencies.
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nY. Business Latino • Edition 32 | August 03-09 2012
UnderstandingRetirement the American strategy for Taxpayer Relief Act of 2012owners: small-business Grab the tax break
Retirement might seem like the last priority for small-business owners. But funding your retirement plan can save 30 to 40 cents on the dollar because of tax breaks.
If you started a business during the last few years, and then watched too much of your earnings evaporate at tax time, you might be able to change that.
mains off-limits to taxes until retirement, a much better alternative than keeping it in a bank savings account, where interest is taxed annually.
If you aren’t putting any money into a retirement savings plan for your business, you are probably giving more than is necessary to Uncle Sam and short-changing your future too. And that is easy to fix.
If you are a sole proprietor with no employees, setting up a retirement plan is almost as easy as opening a savings account. So you don’t have to worry about another headache added to the demands of the day. “You go to a broker like TD Ameritrade or a mutual fund company like Fidelity, tell them you want to set up an individual 401(k), and that’s it,” said Denise Appleby, chief executive of Appleby Retirement Consulting of Grayson, Ga. “It’s simple.”
It might seem like a mistake to stash anything away for retirement now when your business is demanding so much cash and time. But because retirement savings plans give you a tax break upfront when you contribute money to them, you can often stretch your money further simply by using one of these plans. RELATED: Can you manage your money? A personal finance quiz. “A retirement plan is critical,” said Robert Keebler, a Green Bay, Wis., certified public accountant. “For every dollar you put away, you can save about 30 to 40 cents in taxes.” And once your money is in a retirement plan, Uncle Sam won’t touch it until you retire and start pulling money out for living expenses after age 59 {. The money re-
The best plan for sheltering as much money as possible from taxes, she said, would be a solo 401(k). The amount you can save is based on a formula applied to your compensation. For example, say you earn $100,000. Just like any 401(k), you will be able to contribute up to $17,000 as an employee in 2012. And anything you contribute will lower your taxable income. And, as a sole proprietor, you get an extra benefit. As the employer, you can also contribute about $18,000 through the company to your own 401(k), Appleby said. Your
business then gets the benefit of reducing taxes by taking an $18,000 deduction.
ing other aspects of your business from a tax standpoint.
So as you combine the $17,000 and $18,000, you come up with about a $35,000 contribution to yourretirement, and you get tax benefits on the entire amount. Try the calculator at http://www. tinyurl.com/smallbiz401k.
You cannot wait until the last minute to set up a 401(k). It isn’t like an IRA or Roth IRA that can be opened and funded on the last day of tax filing season in April. It’s worth thinking in advance because you can only put $5,000 a year in an IRA or a Roth IRA; $6,000 if you are 50 or older.
If you will be 50 years old this year, or already are, you can contribute another $5,500 on a pretax basis. So in total you can contribute as much as $40,500 to a solo 401(k) and get both individual and company tax benefits. While this is done with ease, the process gets a little more complicated if your business gets to the point of hiring employees or if the money in the 401(k) exceeds $250,000, Appleby said. Then you need advice on proper record keeping and Form 5500, which must be filed to satisfy Internal Revenue Service and Labor Department requirements. The form is available at the Department of Labor website: http://www.dol.gov/ ebsa/5500main.html. Of course, by this stage of a business you should probably be turning to a certified public accountant for advice on structur-
If you forget to open a 401(k) and tax time creeps up on you, there’s another option for retirement saving that will also allow you to get a tax deduction. It’s a SEP IRA, a very easy retirement savings plan for a sole business owner. The trouble with it is that it doesn’t allow you to save as much and shelter as much from taxes as a 401(k). For example, the person who made $100,000 on a business this year would be able to put only about $18,000 into a SEP IRA, Appleby said. Another option, known as a SIMPLE IRA, is set up for small businesses, but with $100,000 from a business, the total contribution in a SIMPLE IRA could be only about $14,000. And this cannot be opened at the last minute at tax time either.
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nY. Business Latino • Edition 32 | August 03-09 2012
CONTENT COUNCIL ANNOUNCES 9TH ANNUAL PEARL AWARDS Awards Ceremony to be Held on NYC’s Broadway
New York, NY (August 1, 2012) – As content strategies continue to dominate the marketing landscape, the Custom Content Council (CCC), the industry’s preeminent association for content marketers, has announced a call for entries for the 2012 Pearl Awards. The Pearl Awards recognize excellence in custom media in the areas of design, editorial and strategic initiatives across all distribution channels. The winners will be feted at an industry celebration in New York City on Monday, November 5, 2012. Evening festivities include the presentation of the John Caldwell Lifetime Achievement Award, recognizing a stalwart industry leader, who has made a significant impact on the custom media industry. Caldwell nominations are due on September 10th. Last year, Bonnie McElveen-Hunter, president and founder of Pace Communication and Chairman, American Red Cross, was the Caldwell recipient in 2011. Content marketing spend is now estimated at over $42 billion as measured annually by the CCC, in partnership with ContentWise. Whole Foods, Wells Fargo, Verizon, Harrah’s, Sherwin Williams, Kraft, Delta, Bloomingdale’s, Bravo, IKEA, Rubbermaid, Lowes, Mercedes-Benz and Four Seasons were among the companies receiving Pearl Awards from the 638 entries, in both B2C and B2B categories. “From travel to technology, retail, consumer packaged goods, health care and more, every industry has
embraced content marketing as a strategy that is cost effective and impacts targeted audiences,” said Lori Rosen, Executive Director, CCC. “That is why marketers of all sizes are leveraging the storytelling concept. It works and we witness the best collection of custom media through the Pearls.” Entries for awards are to be postmarked by Monday, September 10, 2012. The Pearl Awards will be presented at an awards ceremony on Monday, November 5, 2012 on Broadway at the Liberty Theatre, 234 W. 42nd Street, New York City. About the CCC The Custom Content Council (CCC) is the leading professional organization for the branded content industry in North America, with a special focus on promoting the growth and vitality of this dynamic marketing discipline. We define custom publishing as marrying the marketing ambitions of a company with the information needs of its target audience. This occurs through the delivery of editorial content – via print, Internet, and other media – so intrinsically valuable that it moves the recipient’s behavior in a desired direction. Marketers across the country, the media and other interested constituencies rely on the Custom Content Council as the authoritative source of industry news, data and trends, information on the effectiveness of custom publishing, and referrals to the leading custom content providers and vendors.
Latino Scholarship Awards celebrates 21st anniversary Parrino, now retired, who first headed it. The program can look back on outstanding accomplishments. It has awarded approximately two million dollars in scholarship assistance to talented first generation college students. Latin Community Advisory Committee and the USF Foundation worked to raise more than three million dollars in endowed funds which with their state match created a $4.7 million dollar fund. “We are so proud of the well over 300 students who are now USF and Latino Scholarship alumni who serve our community as professionals in fields such as education, nursing, medicine, law, engineering and accounting,” Feliciano said. This year, 16 students from the Latino Scholarship program graduated from USF.
When people reach the age of 21, a new sense of maturity takes over and the same can be said of the University of South Florida Latino Scholarship Awards Ceremony.
“This year marks the beginning of the program’s third decade,” noted Patsy Feliciano, director of Diversity and Inclusion who has been at the helm during the program’s second decade. She took over from Donna
“Many are pursuing graduate degrees,” she pointed out with pride. “Four are pursuing graduate degrees right here at USF. One student graduated from our master’s in architecture and community design, one was admitted to the College of Medicine, another one to the master’s in rehabilitation mental health and one to the master’s in sociology programs.”
There will be 27 new students being awarded scholarships this year at the awards ceremony, bringing the total number of students currently receiving funding to 101. Throughout the program from the beginning, each recipient has been paired with a mentor. “They provide guidance, encouragement and networking opportunities,” Feliciano said. “I believe that just as important as funding, contact with outstanding mentors has made all the difference in the success of this program through the years. “All of us give our all to support the students in all their interests and endeavors, and that attention to detail has created life-changing opportunities not only for our students but also for their families.” Proud family members and friends will be on hand Aug. 23, at 6 p.m. for the reception and 7 p.m. for the awards ceremony at the USF School of Music Concert Hall. This event is free and open to the public.
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nY. Business Latino • Edition 32 | August 03-09 2012
What ObamaCare Means for Your Taxes Medicare Tax Right now, the Medicare tax on salary and/or self-employment (SE) income is 2.9%. If you’re an employee, 1.45% is withheld from your paychecks, and the other 1.45% is paid by your employer. If you’re self-employed, you pay the whole 2.9% yourself. Starting in 2013, an extra 0.9% Medicare tax will be charged on: (1) salary and/or SE income above $200,000 for an unmarried individual, (2) combined salary and/or SE income above $250,000 for a married joint-filing couple, and (3) salary and/or SE income above $125,000 for those who use married filing separate status. For self-employed individuals, the additional 0.9% Medicare tax hit will come in the form of a higher SE bill. Medicare Tax on Investment Income
ObamaCare provisions you can already take advantage of
ObamaCare is a 2,700-page thicket of legalese around which an extraordinarily polarizing debate over the nature and reach of federal power has swirled. But often lost in the debate are the law’s specific benefits — and unbeknownst to many Americans, several of its provisions have been quietly implemented over the past two years. Just this week, an estimated 47 million women across America gained access to eight new medical services at no out-of-pocket cost. Here, five ObamaCare provisions you can already take advantage of: 1. Free preventative care for women As of Aug. 1, insurance plans are required to cover free annual physicals for women, HIV testing and counseling, HPV DNA testing, screenings for gestational diabetes, screening and counseling for domestic violence, breastfeeding medical support, counseling for sexually transmitted infections, and FDA-approved contraceptive products. That last item has been a source of major controversy, with conservatives claiming that the Obama administration is forcing religious employers to violate their beliefs and cover the costs of birth control. The government has exempted houses of worship from the requirement, and has also extended a one-year reprieve to other religiously associated employers. 2. Insurance company rebates As of Aug. 1, insurance companies are required to spend at least 80 percent to 85 percent of their customer premiums on direct medical costs. If companies fail to do so, they must send the leftover cash back to customers in the form of a rebate. The
average rebate across the nation is expected to be around $150. 3. Free mammograms and colonoscopies Since September 2010, insurers have been barred from levying out-of-pocket costs on patients receiving mammograms and colonoscopies, two of the most widely used forms of preventative care. 4. Staying on your parents’ plan Since September 2010, children have been allowed to stay on their parents’ insurance plans until they turn 26. 5. Get insurance for kids with pre-existing conditions Since September 2010, insurance companies have been banned from denying coverage to children with pre-existing conditions, which include heart disease, cancer, asthma, and high blood pressure. By 2014, the provision will extend to all Americans with pre-existing conditions. It is also illegal for insurance companies to terminate coverage for any other reason than customer fraud — and insurers are barred from capping the number of benefits a customers can receive in a lifetime. President Obama’s Affordable Care Act, which was deemed constitutional Thursday by the Supreme Court, includes some major tax changes that will take effect next year. Here’s a refresher course on how sweeping health-care reform will impact individual taxpayers like you.
Right now, the maximum federal income tax rate on long-term capital gains and dividends is only 15%. Starting in 2013, the maximum rate on long-term gains is scheduled to go up to 20% and the maximum rate on dividends is scheduled to increase to 39.6% as the so-called Bush tax cuts expire. [Related: Could the Republicans really repeal Obamacare?] But that’s not all. Also starting in 2013, all or part of the net investment income, including long-term capital gains and dividends, collected by higher-income folks can get socked with an additional 3.8% “Medicare contribution tax.” Therefore, the maximum federal rate on long-term gains for 2013 and beyond will actually be 23.8% (versus the current 15%) and the maximum rate on dividends will be a whopping 43.4% (versus the current 15%). Yikes! The additional 3.8% Medicare tax will not apply unless your adjusted gross income (AGI) exceeds: (1) $200,000 if you’re unmarried, (2) $250,000 if you’re a married joint-filer, or (3) $125,000 if you use married filing separate status. The additional 3.8% Medicare tax will apply to the lesser of your net investment income or the amount of AGI in excess of the applicable threshold. Net investment income includes interest, dividends, royalties, annuities, rents, income from passive business activities, income from trading in financial instruments or commodities, and gains from assets held for investment like stock and other securities. (Gains from assets held for business purposes are not subject to the extra tax.) For example, a married joint-filing couple with AGI of $265,000 and $60,000 of net investment income would pay the 3.8% tax on $15,000 (the amount of excess AGI). If the same couple has AGI of $350,000, they would pay the 3.8% tax on $60,000 (the entire amount of their net investment income). $2,500 Cap on Health-Care FSA Contributions Right now, there’s no tax-law limit on contributions to your employer’s healthcare flexible spending account (FSA) plan (although many plan impose their own limits). Amounts you contribute to the FSA plan are subtracted from your taxable salary. Then you can use the funds to reimburse yourself tax-free to cover qualified medical expenses. Good deal! Starting in 2013, however, the maximum annual FSA contribution for each employee will be capped at only $2,500. Higher Threshold for Itemized Medical Expense Deductions Right now, you can claim an itemized deduction for medical expenses paid for you, your spouse, and your dependents, to the extent the expenses exceed 7.5% of AGI. Starting in 2013, the hurdle is raised to 10% of AGI. However, if either you or your spouse is age 65 or older at yearend, the 10%-of-AGI threshold will not take effect until 2017.
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nY. Business Latino • Edition 32 | August 03-09 2012
Build Your Business Plan Are you interested in starting a business? Creating a business plan is one of the most important steps you will take because the plan serves as your road map for the early years of your business. The business plan generally projects 3-5 years ahead and outlines the route a
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SBA’s Business Plan Tool provides you with a step-by-step guide to help you get started. Not only can you save your plan as a PDF file, you can also update it at any time, making this a living plan to which you can often refer. You can also use your completed business plan to discuss next steps with a mentor or counselor from an SBA resource partner such as SCORE, a Small Business Development Center or a Women’s Business Center.
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nY. Business Latino • Edition 32 | August 03-09 2012
UNITED STATES HISPANIC
RESULTS OF MENENDEZ’S MAJOR FORTUNE 500 DIVERSITY SURVEY: REPRESENTATION OF WOMEN AND MINORITIES ON CORPORATE BOARDS STILL LAGS FAR BEHIND NATIONAL POPULATION WASHINGTON – U.S. Senator Robert Menendez (D-NJ), Chairman of the Senate Democratic Task Force and the lone Hispanic Senator, today unveiled the results of his survey on women and minority representation among the senior management of Fortune 500 companies, as well as their use of minority and women-owned businesses in the contracting and procurement process. The survey found that women and minority representation on corporate boards continues to lag far behind the national population percentages. Menendez’s survey was one of the most successful of its kind, garnering input from 219 corporations on the Fortune 500 list and 71 on the Fortune 100 list. The study found minorities to represent a total of 14.5% of directors on corporate boards and overall have less representation on executive teams than they do on corporate boards. Hispanics are least proportionately represented on boards and fared even worse on executive teams. They comprise 3.28% of board members and and 2.90% on executive teams, about one-fifth of the 15% they represent in the U.S. population. Among minority groups, African Americans have the highest representation on boards compared to their population, but saw greatest decline in representation from boards to executive management teams, from 8.77% to 4.23%. Women on the other hand fared better on executive teams than on corporate boards, with 18.04% and 19.87% of representation respectively, but these figures still represent less than one-half of their proportion of the national population. Senator Menendez and others also offered concrete recommendations, including the creation of a task force with select corporations, executive search firms, board members, and other experts to help companies move in this direction. “As Chair of the Senate Democratic Hispanic Task Force, one of my top priorities has always been promoting and expanding diversity at all levels of our economic, political and social sectors, and the basic understanding that has resulted from this
survey will help guide us in doing so,” said Senator Menendez. “This report clearly confirms what we had suspected all along – that American corporations need to do better when it comes to having the board rooms on Wall Street reflect the reality on Main Street. We need to change the dynamic and make it commonplace for minorities to be part of the American corporate structure. It is not just about doing what’s right, but it’s a good business decision that will benefit both corporations and the communities they’re tapping into and making investments in. That’s why I’m offering my recommendations and to work one-on-one with companies who want to move those numbers and company executives who want to make a difference in the community.” “At the United States Hispanic Chamber of Commerce (USHCC) as an organization that represents more than 200 local Hispanic Chambers across the United States, and speaks for 3 million small and minorityowned businesses throughout the nation, we believe that embracing diversity is not just the right thing to do, but is a smart business decision. To us, diversity is not an abstract concept – we measure success by the qualified Hispanic employees hired, developed, advanced and flourishing with their corporate employers and we applaud Senator Menendez’s leadership in holding corporate America accountable to their commitments to diversity.” Said Javier Palomarez, President & CEO of the US Hispanic Chamber of Commerce. “Our country is very rich in diversity, and our economic progress resides largely in our ability to harness that diversity. In our industry we experience first hand the enormous amount of untapped investment talent, thirsty for opportunities to prove to institutional investors its ability to compete and deliver. We commend Sen Menendez for his vision and leadership, and invite corporate America to see these efforts as an opportunity to find new competitive advantages. By exploring the utilization of fresh and capable diverse talent Corporate America wins and our country’s economic progress accelerates.” Said Monika Mantilla, President & CEO of Altura Capital, and New America Alliance Board Member. “Ethnic diversity on public company boards is ultimately good business. When 40% or more of your customers in America are going to be minorities, companies, to be competitive, need the insights and expertise of Board members who understand how to market to those segments. Senator Menendez is to be commended for making this issue one of public discussion and dialogue.” Said Roel Campos, former SEC Commissioner and Board member of the New America Alliance.
CHAMBER OF COMMERCE USHCC Reaffirms Need for Comprehensive and Substantive Federal Contracting Reform Washington, DC – The United States Hispanic Chamber of Commerce (USHCC), the national advocate for nearly 3 million Hispanic-owned businesses, reaffirms its longstanding commitment to comprehensive and substantive federal contracting reform. Today, an obscure organization criticized the USHCC and Representative Nydia Velázquez, Chairwoman of the Committee on Small Business of the U.S. House of Representatives, on the commitment to such reform. “Chairwoman Velazquez has been on the frontlines of reforming the federal marketplace to drive out practices like contract bundling, fraud in size standards, awards of small business contracts to large businesses, and huge no-bid Halliburton- style contracts. To attack the principal champion of reform is plain silly,” said David C. Lizárraga, Chairman of the USHCC. “The USHCC believes in real solutions to the problems small businesses face in the federal marketplace. Chairwoman Velazquez had our support on contracting reform in the 110th Congress, and we look forward to lending it again,” said Augustine Martinez, President & CEO of the USHCC.
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nY. Business Latino • Edition 32 | March 01 -07-2012
the Best Jobs of 2012 the year’s hottest JoBs are hiring in droves, Paying well, and Providing room to grow By Jada a. graves
Telecommuting and flex-time privileges might have made the world of work more comfortable, but they’ve also made the lines between our work life and the rest of our life less visible. this isn’t an open letter of complaint, however. the truth is that we’re a society that lives, and loves, to work. So it’s important to be a society that loves the work it does.
Each year, U.S. News compiles a list of the Best Careers based on the Labor Department’s employment projections. And this year, we continue to base our picks for the Best Jobs of 2012 on professions that should hire abundantly over the next several years. To better help you make a smart career choice, we’ve also started ranking our selections. Jobs from quick-to-hire industries made our list: business, creative services, healthcare, science & technology, and social services. John Chal-
lenger, CEO of the outplacement company Challenger, Gray & Christmas predicts many of these sectors will overlap, with one industry standing the tallest. “Healthcare has become the core industry in this country, just like manufacturing in another era,” he says. “It’s a confluence of forces causing this, including the science involved in uncovering new frontiers, the aging of the population, and government’s commitment to providing healthcare to a broader generation of people. That causes job growth in several sectors.”
Growth might be one of the reasons to interview for one of these positions, but our rankings give you some context as to why you’d want to stick around. We use a formula that compares projected growth for the future to employment rates of the present. We then weigh in average salaries from the Bureau of Labor Statistics (BLS), and job satisfaction, as determined by the job review website Glassdoor. According to company spokeswoman Samantha Zupan, it’s crucial to include professional fulfillment as a measure of a good or bad
occupation, particularly as Glassdoor’s scores are pulled from the actual reviews of those who currently work or have previously worked one of our Best Jobs. “Who better to ask and learn from than someone who has held the job?” Zupan says. “Job satisfaction ratings ... can give perspective on what you might expect before saying ‘yes’ to a job offer or before you pursue a particular career path.” The outcome is a diverse set of occupations which rank in ways that
might surprise you. For example, the No. 4 job, medical assistant, requires no extensive training and has a median salary that’s well below $40,000 a year. But it beat out several highprofile, high-paying positions (like lawyer and financial manager) that didn’t make the top 25. Our No. 6 pick, Web developer, can expect reasonable growth and offers a competitive salary, but it got the biggest boost to our top 10 for having the strongest job satisfaction scores of any other profession.
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nY. Business Latino • Edition 32 | August 03-09 2012