By: U.S. Health and Human Services Region VIII Regional Director Marguerite Salazar U.S. Small Business Administration Acting Regional Administrator Stan Nakano

For years, we had a health insurance market that was broken for small businesses. Because they had less bargaining power, small businesses paid an average of 18% more for the same health insurance plan offered to the bigger business down the street, and their premiums could skyrocket if a single employee got sick.

But because of the Affordable Care Act, South Dakota’s small businesses and their employees are getting better choices, starting with new protections that limit the outrageous rate hikes many small business owners faced in the past.

Beginning in 2014, South Dakota’s small business owners will have access to a new Health Insurance Marketplace—which opens for enrollment on October 1st—that will allow them to make side-by-side comparisons to find a plan that fits their budget and that’s right for their businesses and employees.

Small businesses are also seeing savings thanks to new tax credits available to help them cover their employees. Many small businesses with 25 or fewer employees have already received a tax credit of up to 35% of their health insurance costs. And beginning in 2014, this tax credit will go up to 50%. According to the Small Business Majority 13,520 small businesses in South Dakota which employ 60,500 people will be eligible for an average credit of $775 per worker.

That’s just one of the ways the law is bringing down costs for small business owners. Insurance companies must also now publicly justify every rate increase of 10% or more, which has led to a sharp decline in double-digit rate hikes. Starting in 2014, insurers will have to justify every proposed rate increase, even if it’s a 1% bump.

Additional rules require insurers to spend at least 80% of small employer premium dollars on employees’ actual health benefits, instead of the insurer’s own administrative costs. These limits have already resulted in more than $1 billion being returned to small business owners and other consumers.

Small businesses are the backbone of our communities. And in an economy where small businesses create two-thirds of jobs, owners and employees deserve a health insurance market with fairer prices, better choices and greater certainty.

Businesses with fewer than 50 employees – that’s 96% of small businesses – are not required to purchase insurance. Of the remaining 4% of small businesses with more than 50 employees, most already provide insurance. So the number of businesses that will have to begin offering employee health insurance or pay a penalty is minimal.

No business owner wants to drop coverage for their employees. For many, their employees are like a family. For others, offering health insurance is critical to attracting the kind of workers they need to succeed.

By making the health insurance market work better for South Dakota’s small businesses, the law is letting them focus on what they do best: delivering great products and services, creating jobs, and growing our economy.

To receive information and sign up for updates, South Dakota small business owners can visit healthcare.gov.

Here are a few tips that may ease the burden of tax preparation and to help you get ready for the April 15, 2013 deadline.

1. Keep Good Records Proper record-keeping year-round is the first step to ensuring your taxes are filed accurately and that you have the paperwork you need to back-up your deduction claims should you be audited.

2. Understand Your Deductions What small business deductions can you take? Do you have the documentation and original receipts to back them up? Tax credits and deductions change each year.

3. Utilize the Small Business Jobs Act Tax Provisions The Small Business Jobs Act of 2010 signed into law by President Obama has over 17 tax provisions decreasing the tax burdens for small businesses—several of these provisions will provide great savings for your business.

Also, become familiar with the recently passed tax incentives contained in the recent Fiscal Cliff deal. The solution reached by the President and Congress included extensions of several small businesses tax incentives designed to spur innovation, support capital investment, and make it easier to hire new workers.

4. Remember the tax credits within the Affordable Care Act These tax credits will allow small businesses to cover up to 35 percent of the premiums a small business pays to cover its workers. In 2014, the rate will increase to 50 percent.

5. Avoid Common Audit Traps It is very important to be aware of potential red flags and act on them before the IRS does: • Classifying Employees as Independent Contractors – Independent contractors and employees are not the same, and it's important to understand the difference. In the eyes of the IRS, misclassification can be seen as an attempt to avoid payroll taxes, and non-compliance can bring penalties and back taxes. • Home Office Deduction – This deduction is very specific and not all home-based businesses will qualify. Likewise, if you run your business from a commercial location and claim the home office deduction, you might trigger some interest from the IRS. Know how to determine if you are eligible to claim it, and what specific expenses you can write off. • Large Sum Miscellaneous Deductions – If you claim a large amount of itemized deductions relative to your income, the IRS will get suspicious. Likewise, if you bucket a large amount of miscellaneous expenses, you may raise eyebrows. Be specific and label every deduction.

6. Keep Business and Personal Expenses Separate – The IRS scrutinizes personal expenses that may have been claimed as a business expense, such as the use of a business vehicle for personal use. Be diligent about keeping good records. Maintain a separate bank and credit card account for your business.

Now is a good time to get tips and advice on how to maximize both, with help from the U.S. Small Business Administration. November’s web chats will feature experts who will give tips on how to boost holiday marketing strategies, and how to prepare now for tax filing season.

The November web chats and links are: • Nov 19, 1 p.m. EST: “Holiday Marketing Tips & Ideas” with Caron Beesley, SBA blogger, marketing communications consultant, and small business owner. Learn how to maximize your holiday profit and how to help increase sales volume. Participants can join the live web chat, and also post questions beforehand by visiting Web Chat Event: Nov 19. • Nov 28, 1 p.m. EST: “Getting Your Small Business Ready for the Tax Filing Season” with Edward S. Karl, vice president of taxation for the American Institute of CPA’s (AICPA) and the AICPA tax staff. Learn useful and practical tips for year-end tax savings strategies and tax provisions that may affect your business. Participants can join the live web chat, and also post questions beforehand by visiting Web Chat Event: Nov 28.

The web chats can also be accessed at www.sba.gov under the What’s New tab.

To see past web chats and related media content, visit SBA’s Small Business Learning Center at http://www.sba.gov/sba-learning-center/search/chat.

That’s why providing small business development assistance is one of the U.S. Small Business Administration’s primary goals. To accomplish this, the SBA has a network of resource partners and assistance centers throughout the country, within easy reach of most of the nation’s entrepreneurs.

Among these resource partners is the Small Business Development Centers located across South Dakota in Aberdeen, Pierre, Rapid City, Sioux Falls, Vermillion, Watertown and Yankton. The SBDC network is recognized as one of the finest business outreach programs of its kind in the nation.

Small Business Development Centers (SBDCs) provide a wide array of technical assistance to small businesses and aspiring entrepreneurs supporting business performance and sustainability and enhancing the creation of new businesses entities. These small businesses in turn foster local and regional economic development through job creation and retention as a result of the extensive one-on-one long-term counseling, training and specialized services they receive from the SBDCs.

The SBDCs are made up of a unique collaboration of SBA, state and local governments, and private sector funding resources and provide services such as development of business plans, manufacturing assistance, financial packages, and procurement contracts. Special emphasis areas include international trade and export assistance; e-commerce; technology transfer; assistance for veterans, including reservists, active duty, and disabled personnel returning from deployment; disaster recovery assistance; IRS, EPA, and OSHA regulatory compliance; research and development as well as market research. Based on client needs and local business trends and individual business requirements, SBDCs modify their services to meet the evolving needs of the small business community in which they are situated.

SBDC assistance is available virtually anywhere with 63 networks branching out with more than 900 delivery points throughout the U.S., the District of Columbia, Guam, Puerto Rico, American Samoa and the U.S. Virgin Islands.

In addition to the SBDC Program, the SBA has a variety of other programs and services available. They include training and educational programs, advisory services, publications, financial programs and contract assistance. The agency also offers specialized programs for women business owners, minorities, veterans, international trade and rural development.

For more information about all of SBA’s programs for small businesses, visit www.sba.gov/sd, or call the South Dakota District Office at (605) 330-4243.

DO YOU KNOW OF A COMPANY THAT HAS… A product or service that has been successfully sold in domestic markets? Management with the interest and capability to consider opportunities overseas?

We can help! Join us at our upcoming workshops…

EXPORT AWARENESS WORKSHOPS The South Dakota International Trade Center, the Small Business Administration, the Governor’s Office of Economic Development, U.S. Commercial Service, the South Dakota Small Business Development Centers, the Great Plains International Trade Association, and South Dakota Department of Agriculture have teamed together to provide a statewide series of workshops to raise awareness and to connect South Dakota companies to the resources available to begin exporting their products.

These workshops are 45-60 minutes in length and targeted towards companies that have never exported or have very limited experience with exporting.

TOP CONCERNS ABOUT EXPORTING 1. Fear of not getting paid once the product has been shipped 2. Unfamiliarity with the buyer’s language 3. Perceived loss of control when dealing with a foreign buyer 4. Production is already at full capacity 5. Decision makers are unsure of where to start.

FIND SOLUTIONS AT THESE WORKSHOPS!

Reasonable accommodations for persons with disabilities will be made if requested at least two weeks in advance. Contact Rock Nelson at (605) 941-6696 or rock@siouxfalls.com.

FOR MORE INFORMATION www.export.gov/southdakota No Charge Breakfast/Lunch provided.

Locations & Dates: Aberdeen Nov. 7. 12 p.m. – 1 p.m. Alonzo Ward Hotel

Madison Oct. 31. 12 p.m. - 1 p.m. Heartland Consumer Power District Office

Pierre Oct. 25. 12 p.m. - 1 p.m. Pierre Chamber

Rapid City Oct. 30. 12 p.m. - 1 p.m. Rapid City University Center

Sioux Falls Oct. 23. 7:30 a.m.-8:30a.m Cherapa Place

Vermillion Oct. 23. 12 p.m. - 1 p.m. Red Steakhouse

Watertown Nov. 8. 12 p.m. - 1 p.m. LATI Theatre Room

Questions? Rock Nelson rock@siouxfalls.com (605) 941-6696

SBA’s participation in this cosponsored activity is not an endorsement of the views, opinions, products or services of any co sponsor or other person or entity. All SBA programs and services are extended to the public on a nondiscriminatory basis.”

Like a chess game, success in business starts with decisive and correct opening moves. And although initial mistakes are not fatal, it takes skill, discipline and hard work to regain the advantage.

To increase your chance for success, take the time up front to explore and evaluate your business and personal goals. Then use this information to build a comprehensive and well-thought-out plan that will help you reach these goals.

The process of developing a plan will help you think through some important issues that you may not have considered yet. Your plan will become a valuable tool as you set out to raise money for your business. It should also provide milestones to gauge your success.

Getting Started

1. Before starting out, list your reasons for wanting to go into business. Some of the most common reasons for starting a business are: • You want to be your own boss. • You want financial independence. • You want creative freedom. • You want to fully use your skills and knowledge.

2. Next you need to determine what business is “right for you.” Ask yourself these questions: • What do I like to do with my time? • What technical skills have I learned or developed? • What do others say I am good at? • Will I have the support of my family? • How much time do I have to run a successful business? • Do I have any hobbies or interests that are marketable?

3. Then you should identify the niche your business will fill. Conduct the necessary research to answer these questions: • What business am I interested in starting? • What services or products will I sell? • Is my idea practical, and will it fill a need? • What is my competition? • What is my business’s advantage over existing firms? • Can I deliver a better quality service? • Can I create a demand for my business?

4. The final step before developing your plan is the pre-business checklist. You should answer these questions:

• What skills and experience do I bring to the business? • What will be my legal structure? • How will my company’s business records be maintained? • What insurance coverage will be needed? • What equipment or supplies will I need? • How will I compensate myself? • What are my resources? • What financing will I need? • Where will my business be located? • What will I name my business?

Your answers will help you create a focused, well-researched plan that should serve as a blueprint. It should detail how the business will be operated, managed and capitalized.

One of the most important cornerstones of starting a business is the business plan. SBA’s extensive Web site offers a tutorial on preparing a solid plan with all its essential ingredients. You can find it at www.sba.gov/training.

Once you have completed your plan, review it with one of SBA’s resource partners – Small Business Development Centers located in Aberdeen, Pierre, Rapid City, Sioux Falls, Watertown and Yankton, the Women's Business Center, SD CEO, in Spearfish or a SCORE volunteer in Aberdeen, Rapid City and Sioux Falls. The plan is a flexible document that should change as your business grows. For more information about all of SBA’s programs for small businesses, www.sba.gov/sd or call the South Dakota District Office at (605) 330-4243.

OUR NEXT COLUMN: SCORE COUNSELORS KNOW THE SCORE!

The SBA is a United States government agency that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters". The agency's activities are summarized as the "3 Cs" of capital, contracts and counseling.

SBA loans are made through banks, credit unions and other lenders who partner with the SBA. The SBA provides a government-backed guarantee on part of the loan. Under the Recovery Act and the Small Business Jobs Act, SBA loans were enhanced to provide up to a 90 percent guarantee in order to strengthen access to capital for small businesses after credit froze in 2008. The South Dakota District Office had record lending volumes in 2010 and 2011.

The U.S. government is the largest single purchaser of goods and services in the world buying everything from armored tanks to paper clips. Every year the federal government awards at least 23 percent of all prime government contracts to small businesses with specific statutory goals. The SBA helps lead the federal government's efforts to deliver 23 percent of prime federal contracts to small businesses. Small business contracting programs include efforts to ensure that certain federal contracts reach woman-owned and service-disabled veteran-owned small businesses as well as businesses participating in programs such as 8(a) and HUBZone.

SBA has at least one office in each U.S. state. In South Dakota, our main office is in Sioux Falls with a one-person office in Rapid City. In addition, the agency provides grants to support counseling partners, including Small Business Development Centers located in Aberdeen, Pierre, Rapid City, Sioux Falls, Watertown and Yankton, the Women's Business Center, SD CEO, in Spearfish and SCORE Chapters, a volunteer mentor corps of experienced business leaders, in Aberdeen, Rapid City and Sioux Falls. In South Dakota, our resource partners provide training and counseling statewide. For more information about all of SBA’s programs for small businesses, visit www.sba.gov/sd or call the South Dakota District Office at (605) 330-4243.

NEXT WEEK’S COLUMN: HOW TO START A SMALL BUSINESS!