Advance Payroll Funding

Look Out for Higher 2011 Federal Unemployment Taxes

2011-12-31T01:00:00.000-08:00

Janice Koermer, Director of Full Service

As 2011 draws to a close, unemployment claims and the lengthened unemployment period remains so high, many states have resorted to searching for additional sources of income -- such as increased state unemployment tax rates, and lower FUTA credits. These increased burdens on employers were just announced and will catch many unaware and unprepared.

Every state bases an employer’s state unemployment rate on actual claim experience from prior years. The extreme unemployment experienced during this recession and resulting increased claims have resulted in higher state unemployment rates, virtually nationwide. These rates have been steadily on the rise over the last several years, and show no signs of slowing. Many states have already started sending out the 2012 state unemployment rates, and increases in rates are expected.

Some states have borrowed funds from the federal government to pay the increased unemployment claims and they have just two years to repay the loans. If the loan remains unpaid as of January 1st for two consecutive years, and a balance is still due as of November 10th of that second year, the Department of Labor will determine that they are a “credit reduction state”. Employers who pay wages in these “credit reduction states” must pay an additional federal unemployment tax when filing its Form 940. While the Department of Labor does not make the determination until after November 10th, the additional federal unemployment tax is retro-active for all wages in that state from the start of the calendar year and can add up to a significant sum.

In 2010, only three states were “credit reduction states”: Indiana, Michigan and South Carolina. This year, however, the number of states impacted has grown dramatically to 21. The states with an outstanding loan balance for two years as of November 10th, 2011 are listed below, along with the additional federal unemployment tax that will apply for wages in these states:

.9% Michigan
.6% Indiana
.3% Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, North Carolina, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Virginia, the Virgin Islands, and Wisconsin

Michigan and Indiana have a higher rate because the tax goes up .3% annually for each year the balance is outstanding. South Carolina qualified for credit reduction avoidance and will not have an additional tax required for the 2011federal unemployment tax filing. For all other states, this is the first year the loan has been past due and the .3% additional federal unemployment tax will apply.

Be prepared – check with your tax professional to understand how you may be affected!

Mobile Apps Boost Small Business Efficiency

2011-10-10T00:00:00.000-07:00

By Adam Stern, President

We’re not talking Angry Birds here. Mobile apps aren’t a fad and, contrary to initial perceptions, they aren’t just for gaming anymore. Mobile apps can help your small business run more efficiently and more profitably, and it’s time that we all start learning how to use them.

According to the Wall Street Journal, the mobile app market is expected to hit $6 billion by 2014. And a growing number of them are for business or professional purposes. I recently read that 62% of survey respondents said they used mobile apps to save time. (Eleven percent said they used them because they were “cool”, but I’m guessing even more just didn’t want to admit that!). Beyond speed, mobility, and the "cool factor", though, the fact is that the right mobile app is a business tool that can help you gain that critical edge in winning that next new contract.

As our readers in the staffing industry know, small business owners have to be on top of their game 24/7 to compete. Very often, large chunks of that time are spent on the road, visiting clients and prospects, or overseeing projects on site. Mobile apps help you keep your business in the palm of your hand. Let’s face it…our laptops are bulky, that legal pad we’ve been schlepping around for weeks is starting to fray, and if you’re anything like me, your internal memory drive (the one between your ears) just isn’t what it used to be. Smart phones and tablets are powerful, but you need a specific tool on your device in order to truly manage your business. The right mobile app can be that tool and will allow you to access and process information in real time.

In our world at Advance, we find that staffing entrepreneurs – whether owners, sales professionals, or recruiters – often need to calculate profitability of projects quickly and accurately. And the old “1.5 markup” kind of quick math just doesn’t always cut it. FUTA rates and SUTA rates, payroll deductions, insurances, VMS/MSP fees….all of these things seem to change all the time, but they are vital to determining a project’s true profit potential. So Advance just released an app to ease this challenge. If you have a few minutes, check it out at www.advancepayroll.com/mobileapps/.

What apps do you use that help your business? What apps would you like to see? If you’re just entering the fray, take a look at areas that cause ongoing frustration – for you, your clients, or your staff. Whether it’s filing work orders from the field, making marketing materials more easily available to recruiters and sales staff on the road, or managing travel plans, there’s just might be an app for that. And if there isn’t yet….there will be soon.

Finding Alternatives to Traditional Bank Loans a Must for Small Business Growth

2011-08-15T10:07:00.000-07:00

By Adam Stern, President

To many of you reading this, it is probably not news at all. Small and mid-size businesses are finding it very difficult to secure the working capital, let alone growth capital, they desire for their businesses. This difficulty for small businesses to secure capital has been growing for years, now exacerbated with the recent credit crisis and recession. As many of our readers are in staffing or contingent workforce businesses, the problem is particularly acute, since banks have always been reluctant to lend to businesses with no hard assets and inherent swings in capital needs.

As if we needed more proof that life was tough for an entrepreneur trying to raise capital, we recently read an interesting study. Twice each year, Pepperdine University’s Graziadio School of Business updates and publishes the Pepperdine Private Capital Markets Project Survey Report. The summer 2011 report derived some depressing – although not altogether surprising – findings from its over 2,500 participants:

Nearly 95% of privately-held businesses owners report having the enthusiasm to execute growth strategies, yet just 53% report having the necessary financial resources to do so.
While many are desirous of securing bank loans, 54% were unsuccessful in obtaining financing at all, and only 27% were able to obtain bank loans.

And it is quite a shame. When asked where they are focusing their primary efforts today, business owners responded they:

will increase revenues from current products/services (55%); and they
will expand product and service lines (21%).

So, here we are in a struggling economy, small business owners want to grow and are willing to take risks and invest, but they cannot find the financial support to do so. This is clearly a story we hear over and over when talking with entrepreneurs in staffing.

The federal government has in fact noticed….although I’m not sure they are able to do anything about it (as shocking as I know that sounds). In June, Sam Graves (R-Missouri, US Representative and Chairman of the House Committee on Small Business), clearly acknowledged the ongoing disconnect between bank credit policies and the critical need for growth capital by small businesses. "This Committee has heard, on multiple occasions, that entrepreneurs cannot get credit and small businesses face significant cuts to their existing lines of credit. Bankers have told this Committee that they have capital but are nervous about lending because regulators might question the safety of loans to small businesses."

So where does this leave us? What options are available to entrepreneurs who dream of creating and growing their own small businesses? In her 2010 book, The Small Business Owner's Guide to Alternative Funding, author, Karlene Sinclair-Robinson, debunks the taboo images often associated with financing obtained through any means other than traditional banking, and explores various alternative methods to obtain capital. From family and friends, to asset-based loans, and factoring and accounts receivable financing, this guide offers a path toward stability and growth for the small business entrepreneur. We think that she is spot on and that you will find her book very helpful.

We’re always interested in learning more about how entrepreneurs are handling this challenge. So please comment with your thoughts/ideas/questions. What is your recent experience with accessing capital to grow your business?

A Positive Word: CHANGE

2011-06-08T06:28:00.000-07:00

By Adam Stern, President

"The reality is that changes are coming ... they must come.
You must share in bringing them."
~ John Hersey

Contrary to popular belief, "change", is not a four-letter word. Change is good. Change is necessary for growth. Change is incredibly frightening.
How do you reduce or eliminate the fear factor? Confront whatever the change is head on. Learn as much as possible by arming yourself with facts, information, and examples of others who have experienced similar change. You are then prepared to create a plan to take advantage of new opportunities presented, and have conquered fear through education and positive action.

Much change has occurred in our industry over the last decade. No change in staffing, however, is as controversial, challenging, or downright frightening to an entrepreneurial provider of contingent labor as the unstoppable shift toward Vendor Management Systems (VMS), and Managed Service Provider (MSP) programs. While the concept has been around since the 1990's, the software just caught up in the last ten years, and Staffing Industry Analysts predicts that 81% of large companies will be using a VMS solution in 2011.

VMS and MSP can no longer be viewed as a trend in contingent labor, it represents a fundamental change in how large companies deal with the demands of our current economy and the ever increasing need for a flexible workforce. Get used to it, it's here to stay.

To help conquer any fear of change toward VMS and MSP programs, Advance hosted and co-presented the second webinar in its 2011 Webinar Series, The VMS/MSP Conundrum: Opportunities and Challenges for your Staffing Business, on June 17, 2011. While complex, with no single, easy solution, the information provided by Advance and its co-presenters, The Code Works, Inc., and SpringAhead, helped shoo away the boogey man by offering an overall understanding of the topic, a clear illustration of process flow, and highlighted examples of legal pitfalls hidden in MSP contracts.

What's your experience with VMS and MSP? Click here to join our Facebook group and share your story.

A Positive Word: ≈SPEED

2011-05-15T11:59:00.000-07:00

By Adam Stern, President

"I’ve always found that the speed of the boss is the speed of the team."
~ Lee Iacocca

A few months ago when I brought up the idea of ‘speed’ as a business skill and as a point of focus for our management team at a weekly meeting, reactions ranged from oblivious as to what might be the connection between ‘speed’ and ‘success’, and worry about a negative connotation.

Speed is a positive word and applies to business and success as perfectly today as it did in its original meaning years ago: to prove successful; to prosper. Not to be confused with haste, which is counterproductive, speed to action in this economic climate is the opposite of complacency and can be the critical difference between bare survival and unqualified success.

Creating a sense of speed and urgency in your business sparks passion and addresses the heart, not just the mind. As noted by author, John P. Kotter, in A Sense of Urgency, “Aim for the Heart. Underlying the urgent behavior that makes organizations succeed in a turbulent world is not only a set of thoughts. Underlying a true sense of urgency is a set of feelings: a compulsive determination to move, and win, now.”

Winning now means taking action now. This urgent attitude can permeate a team and, by necessity, eliminate energy wasted on low-priority pursuits. Management 101 teaches delegation as a key skill and it has never been more important than when behaving with true urgency. “Purge and delegate” is the battle cry and key to behaving with urgency every day.

As the team leader, set a bold goal and take steps toward its achievement daily. Expect results and demand accountability. Tap every resource at your disposal, from strategic partnerships to the ultimate speed tool, the internet and mobile apps. Refresh your website often to speed information to your customers and allow them immediate interaction to address issues now. When dealing with a VMS/MSP, speed of response is often the difference between winning or losing the business at hand.

To quote an ancient proverb, “The way to eat an elephant is one bite at a time.” I might add to that, “Chew fast!”

Do you embrace SPEED as a business skill?