The Small Business Jobs Act

The Small Business Jobs Act of 2010, signed into law by President Obama in late September, is designed to tackle America's continuing high unemployment rate by bolstering that sector of the American economy that has traditionally been responsible for the creation of the most American jobs: the small business sector. Small businesses, defined by the Small Business Administration (SBA) as any commercial concern with fewer than 500 employees, employ slightly over half of all private sector employees and over the past 15 years have generated close to 65% of all new jobs.

It's no secret that the recent economic downturn has hit business where it hurts. Even in prosperous times, business formation is a risky endeavor: over half of all small businesses fail within their first year, in part because their owners have an incomplete knowledge of the business law necessary to guide them through business formation. In the year 2008, the first year of the recession, almost as many of these businesses closed as were started, and many of those businesses had been in operation over ten years.

The 2008 $825 billion economic stimulus package contained very few provisions aimed at helping small businesses. The Act sought to rectify that situation by extending loan enhancements first put into place by the American Recovery and Reinvestment Act of 2009. Among other things, the Recovery Act allowed the SBA to raise the government-backed guarantee on its 7(a) loans to 90% and it also allowed the SBA to waive its $1,000 packaging fee on both its 7(a) loans and its 504 loans.

While loan modifications such as these make SBA loans a more attractive and useful option for entrepreneurs, it also makes the already complicated process of transacting an SBA loan even more complicated. Dealing with the SBA can already be problematic for startups, particularly those involved in non-traditional commercial ventures such as online businesses. In order to take the best advantage of the loan modifications, tax breaks and accelerated pay-outs offered under the new business assistance bill, startups and other businesses would be well advised to engage the services of an experienced business attorney who understands exactly how the Act can aid business formation.

Provisions of the Business Jobs Act

In addition to the loan modifications the Act contains other provisions designed to help small businesses attain access to the capital they need for operations and expansion. These include:

- A permanent increase in the size of the maximum loan available under the 7(a) and 504 loan programs from $2 million to $5 million; a corollary increase in the maximum loan amount available through the 504 loan program specifically targeted at manufacturing from $4 million to $5.5 million.

- A permanent increase in the microloan cap from $35,000 to $50,000 specifically designed to help entrepreneurs and startups.

- A temporary increase in the loan amount available to SBA Express loan recipients from $350,000 to $1 million.

The bill also introduced eight significant tax cuts for small businesses:

- The elimination of all capital gains taxes for business investments held five years or over.

- An increase in the write off for capital investments from $250,000 in Year One and $25,000 in Year Two to $500,000, and increasing the threshold for these write-offs to $2 million.

- An extension of the 50% bonus depreciation through the close of 2010.

- A health insurance deduction for the self-employed.

- Simplified rules regarding the deduction of cell phones and cell phone-related expenses.

- A temporary increase in the deduction for start-up costs from $5,000 to $10,000 (with a ceiling of $60,000.)

- For certain businesses, the ability to offset taxes - including the Alternative Minimum Tax - through business credits from the past five years.

- A decrease in penalties for tax errors that disproportionately affect businesses and small business owners (particularly sole proprietors.)

An Experienced Business Lawyer Can Help

The Small Business Jobs Act of 2010 provides significant new advantages to small business owners and to entrepreneurs who are in the process of forming a new business. Counterintuitive though it might sound, historically recessions have been excellent times to launch startups. Just ask FedEx.

However, the SBA process is extraordinarily difficult to navigate without the assistance of someone who is well versed in business law. Traditionally, the SBA has been very reluctant to make loans to startups: without a proven track record, the new small business owner is seen as a loan risk. An online business may be viewed as even a greater risk since in many cases it lacks the equipment and other capital that is viewed by the prospective lender as collateral in the worst-case scenario that a repayment schedule cannot be met. If you want to leverage the many benefits offered by the Small Business Jobs Act of 2010 on behalf of your startup, your wisest course is to consult with an experienced business attorney.

A Culture Chasm: Education and Business

Why is there such a chasm between academia and the business world to address the organizational culture phenomena? The following article covers 3 main points relative to organizational culture. First, organizational culture is defined and put into context for better reader perspective. Second, the contextual problem facing business schools along with the disconnect between internal organizational culture and what is actually taught to graduates. Third, the solution that focuses on internal dynamics at the business school, borrowing academia research and business world practice. Ultimately, once internal organizational strategy is bridged with the classroom strategy, graduates move on to incubate more prosperous entities and shunt the growing trend of health cost drivers.

Organizational culture: It's not a new idea in business schools or in enterprise. lowly but surely researchers and industry experts alike are putting together a mounting body of evidence on the importance of organizational culture. Organizational culture is not simply about managing a healthcare trend, productivity indicator, injury trend or insurance premium cost drivers or touchy feely things. Organizational culture refers to the overall leadership quality and impact on the workforce, surrounding community and connection between workforce job duties and company mission. Ask yourself: Is worksite wellness and organizational culture written (formally or informally) into the mission statement of the company? Are managers supporting workers appropriately? How does the workforce perceive the company culture and the support from the manager? How do you know the answer to any of these questions? In 2002 Accenture and Wirthlin Worldwide, found that 35% of the companies surveyed said the workforce neither knew the company strategy, nor knew how their day-to-day responsibilities aligned with the strategy. While businesses must address their own problems with people strategy and organizational culture, I'm convinced that one of the roots of the problem exists in colleges and universities.

A workforce that understands the organizational mission and perceives their company's culture to be largely supportive will be more productive than their peers at a competing company. A supported workforce will also demonstrate a stronger sense of connection to the company, the company mission, and how each individual job responsibility is tied into the company mission. According to a Gallup survey, at least 22 million American workers are extremely negative or "actively disengaged" - this loss of productivity is estimated to be worth $250-$300 billion annually. Are business schools insulated? Of course the answer is no.

Since the first MBA program started between 1900 and 1908 (depending on whether you give credit to Harvard University or Dartmouth College), business schools have likely not demonstrated the same environmental enterprise knowledge they teach their graduates about organizational culture, productivity and communications. Schools are naturally good at reacting to what the consumer wants. Good business move, but they don't graduate leaders adept at building organizational culture, nor are they themselves great examples of organizational culture. Just doing a quick search of US and International business schools' courses, I found a number of courses covering organizational culture and case studies dating back over 30 years. So why is the news of a curriculum change at Haas School of Business at the University of California-Berkeley (Haas) so revolutionary?

The problem: Business schools aren't practicing what they preach, or maybe they're preaching the wrong strategy. According to Robert Kaplan and David Norton, developers of the Balanced Scorecard, 95% of a company's employees are unaware of, or do not understand, its strategy. If the course work is in place and case studies available to provide evidence that organizational culture is a foundation to build a lasting business, why have business schools not acted similarly? Why have so many business leaders treated organizational culture as a line item of employee benefits? This leads me to believe that either the world of Business School education is flat or the navigational instruments need calibrating for the 21st century. Either way the proverbial ship that incubates leadership and innovation is traveling aimlessly at sea. The single most important foundational point to correct course is to learn, teach, live and support organizational culture.

Again, while business schools are accommodating consumer's requests for shorter, intensive programs in order to return to work quicker and offering seminar driven learning and even specialty degrees in executive management, few are looking at their own philosophy of organizational culture and how it translates into developing leaders and thinkers who will then cultivate their own organizational culture. However, a couple of institutions seem to be trending along the paradigm shift of course correction. Haas School of Business recently announced a new curriculum that focuses the business school's attention on organizational culture and the Columbia Business School (CBS) which utilizes lecturers with Indian background and philosophy to teach some of its courses. In general, Indian philosophy stresses controllable actions and processes instead of focusing solely on outcomes that are not within our control. Interesting side note: these two institutions also have a joint Executive MBA programs (EMBA). Since they both have similar outlooks and mission, it's no wonder they've partnered.

In contrast to business schools on the whole, large businesses like General Electric, Proctor & Gamble and Southwest have started scratching the surface of organizational culture and producing tremendous case studies to learn from. If the business world can address organizational culture by borrowing the research from universities and colleges that indicate its importance, why is there such a chasm between academia and the business world to address the culture phenomena? The answer may lie somewhere in the vast sea of humility.

I recognize that academic institutions and businesses don't operate in a vacuum, nor is every business leader doing better than their counterpart at every Business School. That said, innovators in the business world tend to recognize when they are not the smartest person in the room, need help leading and consequently remove themselves as obstacles to the process of progression. Look no further than General Motors or Ford Motor Company when both top executives stepped aside, in favor of new leadership to drive a new business model. Historically, Business Schools tend to get tunnel vision on solely producing graduates and not evaluating internal culture. Leaders have held themselves out to be the smartest person in the room and lead via authoritative means. In a working paper, Jean-Pierre Benoît and Juan Dubra cited, "...Dozens of studies show that people...are generally overconfident about their relative skills."

The solution: Remind your workers and team daily why their work is important. Woody Johnson (owner of the New York Jets football organization), borrowed the example his family used to build Johnson & Johnson. When building their new facility, the team owners designed nearly every office to look out onto the practice fields, to remind everyone, everyday, that they were in the football business. Business schools may not have their own literal practice field, but within their own design models, business schools can utilize a set of three solutions in 2011 to change course and affect organizational culture at the root as learned from my experience in worksite wellness solutions and organizational culture analysis.

#1: Lose the job description and think amalgamated business model. Every person in America, who holds a job, knows they do more than is in their job description. Job descriptions isolate groups of workers and fail to allow for effective communication flow. Whether you're working with new hires or existing employees, the process of shifting from a job description business model to one that more closely resembles an amalgamated model leans on communication.

#2: Produce an organizational audit. Audits take on many different forms. However, they don't have to be complex or lengthy. Simple employee surveys, for example, can provide necessary black and white commentary about a litany of issues including: workforce morale, teamwork, worker perceptions of the company, worker understanding of their own job responsibilities as well as workforce strategy and business strategy.

#3: Emphasize the organizational culture within the school and the classroom. Organizations with a lengthy business history often mistake reputation for culture. Colleges and Universities are certainly no exception. A business school with a great reputation for graduating innovative business leaders may not have a great internal culture that incubates good communication flow, worker understanding of the greater mission, etc. This reinforces the need to perform some type of audit (see #2). The future of organizations lies in the ability not only to innovate, but for decision makers to understand the worksite culture and to over communicate the business strategy to its workforce. To be certain that each individual worker understands the affect their responsibilities have on the success of the company. The time to chart a better course is now. For if not now, when?

Why It Is Necessary to Keep Your Business Bank Account Separate From Your Personal Bank Account

Now a day there is a debatable issue regarding the bank accounts. When we talk about the finance and cash flow of our affairs, it comes to hear that we should maintain a separate bank account for our business instead of using our personal account for our business purposes. The points that I would like to discuss here is that why we need a separate business bank account for our work, commerce or related affairs? Is it prohibited to use your personal bank account or your business purposes? What are the draw backs for using the personal account for your business purposes? Here below we shall discuss these entire questions in detail but in short.

First of all I would like to clarify that this is not an essential to maintain a different business account for your work corporation. You can use your personal bank account for your business matters only if you are running a small scale business and you feel it convenient to use your personal bank account for your work matter.

When we start a business we utilize a specific amount that is of course provided by the owner, although the owner is the only person to whom all the finance of a business belongs to. But if we use the personal account of the owner for his racket affairs there will be a very confusing situation when we would be in need to reach the business revenues and expenses. We shall never be able to reach the exact figures of the business. It shall be very hard to identify the business expenses among the personal expenses of the owner. We shall never be able to reach out that either the entreprise or commerce is doing good figures, better or bad figures. But if it comes to partnership or corporate level business entities, it is a requirement by the IRS to maintain the separate business bank account for your business affairs so that the exact figures can be extracted for taxation purposes.

One more reason behind maintaining your best business bank account separated from personal account is the accounting concept which is known as "separate entity concept" which explains that the business and the business owner are two different bodies. This concept separates the responsibilities of a business from the responsibilities of the business owner. In this way if the business entity ever goes solvent only the business assets will be taken into consideration. So in such a situation the personal account of the owner will never be looked for raising the funds of a solvent business.

When we use to be in a business environment we use to practice specific circulation of funds. It is not necessary always to utilize the funds that only belong to the business. Sometimes the business goes out of funds. In such cases what should be done? Should the business go to the silent phase and wait for funds that the owner will generate in unexpected time limit? Can it be possible to stay out of market for a while jus for waiting for necessary funds? No, definitely this can't be happened. May be we shall never have a second chance to step in the business market. In such situation we take credit figures from banks and many other financial institutions to keep the business running smoothly. So the banks and financial intuitions provide loans to the business entities. For getting this facility it is highly recommended to have a business bank account.