Roaring Fork Business Resource Center

9 Tips for Preparing Your Small Business for the 2012 Tourist Season

Posted on May 14, 2012 by RoaringForkBus

As we enter the busy tourism season here in the Roaring Fork Valley, we thought our readers would appreciate the following article by Caron Beesley! Enjoy!

While growth in the travel and tourism business is still in recovery mode, the early warm temperatures across most of the U.S. coupled with an uptick in positivity over the future of the economy could make 2012 a good year for the U.S. tourist industry and the small businesses that support it.

Today, Commerce Secretary John Bryson and Interior Secretary Ken Salazar announced the Administration’s National Tourism and Travel Strategy [PDF] – delivering on President Obama’s call in January for a national strategy to promote domestic and international travel opportunities throughout the United States.

The National Strategy is a blueprint for expanding travel to and within the U.S., laying out concrete steps to be taken in five key areas. It sets out a goal of increasing American jobs by attracting and welcoming 100 million international visitors annually by the end of 2021, more than a 50 percent increase over the number expected this year. These international visitors would spend an estimated $250 billion per year, creating jobs and spurring economic growth in communities across the country. Learn more about the strategy here.

So, how can small business owners put the 2012 tourist and vacation season to profitable use? Here are some operational and marketing tips to help you start planning a successful season today.

1. Plan Your Marketing Strategy Now

While you should do everything you can to stay in touch with your customers all year, now is the time to reach out to past customers. Send emails offering coupons or showcase what’s new at your business. U.S. tourists often return to the same destinations year after year. What can you do now to bring them back to your business this year?

And learn how to drive even more tourists to your business this year by attending SBA’s webinar, May 30 at 2pm ET, on how to market to travel and tour operators featuring a guest speaker from NTA, a national association for travel professionals.

2. Hire Seasonal Workers

If your business counts on the summer season or tourist trade, then start planning your seasonal workforce now. If you’re new to this process or have questions about hiring and compensating seasonal workers (for example, do you need to pay unemployment taxes for seasonal workers?) Check out this blog – Hiring Seasonal Workers – for tips on hiring and working with seasonal workers.

3. Get Help Financing your Seasonal Working Capital Needs

If you need help meeting your short-term and cyclical working capital needs, such as building inventory for the season or paying workers, then you might want to consider a short-term loan or line of credit such as SBA’s CAPLines Program, which provides advances against anticipated inventory and accounts receivable to help businesses with seasonal sales fluctuations. The program was recently streamlined to make it easier for small business owners to get financing even if collateral is tight. Read more about the program or talk to your local SBA Office to learn more.

4. Plan to Get Involved in Local Events/Festivals

Sponsoring or participating in local festivals, carnivals and fairs is not only great for your brand, it can help introduce new and potential customers to your products and services. Start by identifying events that are the right fit for your business and have a track record of success. Local newspapers, community flyers, city or homeowner association websites, as well as your local Chamber of Commerce can help point you to upcoming events in your community. For tips on how to make the most of hosting and sponsoring events read guest blogger Rieva Lesonsky’s: Marketing Your Business with Events. Also check out: How to Legally Sell Your Goods at Fairs, Garage Sales, Flea Markets, and Craft Shows.

5. Host Your Own Event

Whether it’s tied to a holiday (Memorial Day, July 4^th) or a theme, why get your business out front by hosting your own event? Restaurants and stores can benefit most from self-hosted events, but other businesses can, too. For example, if your business organizes tours or other tourist-related activities, you could team up with other complementary local businesses to host a fair or other happening that provides an opportunity to showcase your services.

6. Take Your Business to Vacationers and Day Trippers

If you are in the food business, taking a concession stand on the road is a great way to capture tourism dollars and give new customers a taste of what you’ve got to offer back at your restaurant or store. From fairs to festivals, theaters and concerts, a concession stand is an opportunity to bring in extra dollars and spread the word. This article can help you understand how to start up a concession business: Starting a Mobile Food Concession Business.

7. Line Up Summer Giveaways

Whether your customers migrate away from you during tourist season or you are in the heart of a tourist hot-spot, use promotional items with your name, website, etc. printed on them. From frisbees to re-useable water bottles, host a competition and use these as giveaways or give cheaper items away when customers frequent your business.

8. Partner with Local Business Groups

Reach out to your local Chamber of Commerce and local tourism associations or sector organizations that promote clusters of businesses in the same business sector such as hotels, restaurants, tour operators, B&B’s, camp grounds, and so on. Many of these offer small businesses an opportunity to participate in their targeted and collective approach to seasonal marketing.

9. Stay in Touch

Remember to stay in touch with customers year-round. If you run a seasonal business, your off-season should be one of your busiest marketing seasons. Capture customer emails (use drawings, surveys, and other sign-up incentives), send updates year-round (entice them to come back next year) and use social media (check out this “Ultimate Guide to Social Media Marketing for Small Business”) to put out teasing content and updates all year long!

For example, a popular vacation beach rental realty company in North Carolina’s Outer Banks posts Facebook updates from the beach even in winter. These include videos of the beach in wild weather, teasers when it’s nice (“don’t you just wish you were here”), updates about what’s new for the upcoming season, and promotions on early-bird rental bookings. It’s a nice reminder of a summer vacation, costs very little, and keeps them in customers’ minds throughout the year.

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed.

Posted in Marketing, Networking, Plan Your Business, Uncategorized | Tagged small business, tourism | Leave a comment

Never Marketed Your Business Before?

Posted on April 9, 2012 by Stephanie

“My business isn’t doing very well. No one knows where I am or what I offer … I know I should be advertising, but I can’t afford it, and I’m not sure where to start.”

Sound familiar? It’s a comment that we’re hearing a lot of these days at the Roaring Fork Business Resource Center. In the past few years, marketing effectively has been a struggle for a lot of small businesses – especially the ones who’ve never had to rely on marketing in the past. In more prosperous times, some businesses throughout the Roaring Fork Valley enjoyed plenty of repeat business and referrals and never had to rely on traditional marketing. And for some sectors, such as construction, property management, and real estate, there were so many opportunities that some companies were turning away business! Fast forward to 2012 … and it’s a very different picture. If you’ve never had to market your business before – here a few tips that can help get you started.

First and foremost, develop a marketing plan! There are plenty of ways to market your products or services. Before you start buying ads and posting to Facebook, it can be very beneficial to create a marketing plan first. Some key components of a strong marketing plan include:

SWOT Analysis: You don’t have to conduct an in-depth, lengthy analysis of your business – but you should do a quick SWOT analysis. What are your strengths? This could be a product or service that no one else is offering, attractive price or location, or experience your competition doesn’t have. Weaknesses? Is there a competing business offering the same product or service at a discount? Is your product becoming obsolete? Opportunities? Is the coming tourism season an advantage for your business? Have you recently acquired inventory at a good price? Threats? Will bad weather or lack of adequate inventory threaten your business? Understanding what your business has going for and against it will help you streamline your marketing efforts.

Budget: A common mistake that many business owners make is not determining an annual budget for marketing expenses. Then, when marketing opportunities arise, they simply start throwing dollars at various mediums and the next thing they know … they’ve spent more than intended and they’re not quite sure what they got for their investment.

There is not an exact science or calculation of how much every business should spend on marketing – but as a general rule of thumb, small-to-medium size businesses should expect to spend anywhere between 5 and 10% of their net income on marketing. For example, if you’re a retail shop owner with an annual net income of $500,000 last year, then spending $25,000 to $50,000 on marketing this year is within reason. Of course, each business is different and other variables may factor into how much is actually spent on marketing. For example, a business that offers a product that has fairly limited target audience may spend less on marketing than a business that offers a product or service to a wider audience.

For some businesses, affording marketing can be a challenge. You need to market in order to get sales … but you can’t pay for marketing without income from sales. Creating a budget will help you determine how much you have available and whether or not you need to seek temporary financing in order to do some initial marketing. Businesses should also view marketing as an investment in the business – continuing to market during times of strong sales can help better position your business during the lean times. And, when other companies are pulling out of advertising, you can garner even more exposure through cheaper advertising rates and less competition in the marketplace.

Goals: Outlining goals for marketing can help determine specific strategies while also setting realistic expectations. Further, goals can help a company measure success. Simply stating that you want more business doesn’t cut it – but placing realistic goals, such as “increase net revenue during peak seasons by 5 to 7%” provides your business with something to strive for and work towards.

Strategy: Clearly define what marketing opportunities your company will take advantage of in the year to come and how often. For some companies, this may mean breaking down the year on a monthly basis and clarifying what will executed during each month, as well as what the monthly expense will be. Some companies may find it be more beneficial to breakdown marketing initiatives by medium (advertising, public relations, special events) and assigning a budget to each medium. Either way, detailing out a plan for the year-to-come can keep you on track.

By laying out your marketing strategy in advance, you can ensure that all of your marketing initiatives are working together. Having a balanced approach to marketing is extremely beneficial, as there is typically not one strategy that will magically make your product sell. Remember that saying about putting all your eggs in one basket? That rings true for marketing as well. Today’s consumer is struck by marketing messages in so many ways. It’s important to touch on as many mediums as possible, but with a concise, clear message.

For example … let’s say your store is offering 20% off all summer merchandise during an annual sale the first weekend of June. Leading up to the sale – initiatives could include traditional marketing efforts, such as print and radio advertising. The traditional marketing initiatives can be supported through posts on Facebook and Twitter, as well as writing a blog entry about the latest trends in summer apparel for your website. An e-blast to everyone in your store’s database announcing the sale, with an additional coupon for “VIP customers” would be added exposure. Providing a financial contribution to a local charity in exchange for exposure in their collateral materials, website, or at an event is another way to get your company’s message out. The key is keeping the message simple and consistent amongst all mediums to avoid diluting your message. This doesn’t mean saying the same thing all year long, but saying the same thing at the same time across the channels.

And, even the best laid plans need to be re-evaluated at times. While you need to give your marketing plan time to be executed and successful, if you’re not seeing tangible results after an appropriate period, making modifications and adjustments in your plan may be required.

At the Roaring Fork Business Resource Center, we can help you create a marketing plan that is on target for your business! Call us today at 970-945-5158 or email us at info@rfbrc.org for more information.

Posted in Business Expenses, Marketing, Uncategorized | Tagged marketing, marketing budget, marketing materials, marketing plans | Leave a comment

Starting a Business in Colorado … The important first steps

Posted on March 16, 2012 by Stephanie

You’ve finally decided to stop ignoring that brilliant idea you’ve been toying with for years and go into business. Now what? For many entrepreneurs, coming up with an amazing product is the easy part. Figuring out how to structure your business, finance your operation, and distribute/sell your product or service is a whole different story.

A common mistake many new business owners make is getting caught up in the “fun” part of starting your own business. Sure, designing a new website or creating a logo with your family crest emblazed in the middle makes your business feel real for the first time and are exciting projects. Imagine how deflated that excitement will be when you find out the hours spent on that new logo was wasted time because someone else already claimed your family name?

Structuring Your Business. As soon as you’ve figured out your company’s name, you need to head straight to the Internet and log on to the Colorado Secretary of State’s website and complete a few very important steps. First, search to see if your company’s new name is available. If someone else has already reserved the name you’ve been contemplating, then it’s time to move on and select something else. For that matter, if there are names that are so similar to yours that there could be confusion in the marketplace – time to think about picking a new name as well.

If the name is available, great! Now it’s time to register it and secure it. While you were lying in bed awake at night, trying to come up with the perfect name for your company, hopefully you were also contemplating how to structure your company. Generally, you’ve got four options when selecting a legal structure: Sole Proprietorship, Partnership, Limited Liability Company, or Corporation (S-corp. or C-corp.). The IRS has some information online that can help you determine which is a good fit for your new business. And, of course, discussing your options with an attorney and a tax professional is a good idea as well.

Prepare a Business Plan. Writing a business plan with cash flow projections serves a few purposes. For one, it’s absolutely necessary if you’re seeking financial assistance (either in the form of a loan from a bank or funding from an investor). Having a solid business plan in place will also help you gain an understanding of your goals, objectives, schedules, and finances. New business owners begin the process of writing a business plan and are made aware of aspects of running a business that they hadn’t necessarily thought of originally. From a financial perspective, having a cash flow projection before launching the business can help determine if additional financial resources, such as a loan or a line of credit, are needed for start-up costs or for sustaining the business during slower periods.

Be cautious of handing over a fistful of cash to an entity claiming they can write your business plan for you. No one will ever fully understand your product/service and business better than you will, so it’s important for you to have the primary role in creating your business plan. There are number of templates available for various types of businesses. Once you delve into the process, entities like the Colorado Small Business Development Center (SBDC) Network or the RFBRC can help you refine your cash flow projections and business plan before you meet with financial institutions. For sample business plans, click here.

Obtain necessary permits and documents. Depending upon the type of business you’re establishing, there may be a number of permits or licenses required before opening your doors. Start with your city and county governments to ensure you’re operating in accordance to local laws and codes. If you’re operating out of your home, checking with your Home Owners Association to ensure you’re not violating in neighborhood rules will keep in good standing with your neighbors. You’ll also want to be fully aware of any city or state licenses, permits, and sales tax that are required. Most businesses do not require a federal licenses or permits, but you should contact applicable federal entities to determine requirements before starting your business – especially if you have a product or service that will be transported across state lines.

If your new business is structured as a corporation, partnership, LLC or a sole proprietorship with employees, you’ll need to establish a Federal Employer Identification Number (FEIN), as this number is required to process payroll or to open a commercial bank account. Then, of course, you’ll want to talk with your local banks, determine which financial institution has the best products and services that meet your needs, and open an account. Requirements such as minimum deposits and ongoing balances will vary among banks, so do your research. Establishing a strong relationship with your banker early may prove to be beneficial down the road if you need to acquire a loan.

Insurance is also an important requirement of any new (or existing for that matter!) business. There are many types of insurance policies available, but they are generally packaged as “General Business Insurance” and can run as little as $300 per year. Some businesses may require more extensive insurance such as “errors and omission” insurance. Discussing your business with your agent in detail will help ensure you’ve chosen adequate coverage.

If you’re not completely overwhelmed with all of the items on your start up to do list and are still committed to starting your own business, your next steps include finding retail, office, or warehouse space (if needed), as well as establishing and organizing your computer systems, setting up accounting and record keeping systems, and developing a marketing plan.

And, of course, contacting the RFBRC for any business counseling and guidance you may need as you move your new business forward!

Posted in Business Strategy, Start Your Business | Leave a comment

The Sane Way to Handle March Madness

Posted on March 9, 2012 by RoaringForkBus

By Chas Rampenthal

A NCAA basketball brackets pool is a great way for employees to bond. It can also be a great way for a careless boss to get in trouble.

The NCAA basketball tournament, better known as March Madness, is here again. Let’s face it, your company’s productivity is out the window until after the final game on April 2.

Inevitably, someone in your office will create a betting pool and ask colleagues to fill out a bracket predicting the winners of each matchup in the tournament. It’s fun, and it raises cameraderie, since even casual sports fans like to get in on the action. And it’s easy: The internet is full of sites that allow brackets “commissioners” to track the predictions their office mates have made and to calculate how much should be paid to the winning bettor. But wait a minute. Isn’t that gambling? And is that even legal?

The short answers are yes, it is gambling, and yes, it’s legal, provided your office pool is for bragging rights only. Once you introduce money into the equation, and offer a cash prize to the winner, the waters quickly get muddied. Here is a quick two-pointer, if you will, on how to keep your office pool on the right side of the law:

Even “social” gambling may be illegal where you live. Check your state law.

At my last count, about 20 states do not have an exception for what is known as “social gambling.” The general concept is that playing for money can be legal if it is in a purely social context. To fit within the “social context,” a pool must be structured so that nobody involved can make or earn anything other than as a player in the game. Any game that has a “commissioner fee” would knock you right out of the exception, placing your game in legal hot water.

In Alaska, for instance, the fact that you gambled is still a crime, but if you can show that it was merely social gambling, you have an affirmative defense. In Florida, the “penny-ante” exception applies only if total winnings are less than $10 per round. In Iowa, you have to be “socially acquainted” with the person you are gambling with, and no participant can win or lose more than $50 in any 24-hour period. In North Dakota, betting under $25 is legal, but once you go over $500, it’s a misdemeanor crime. So make sure to search your particular state’s social gambling laws, and when in doubt, leave the money out of it.

Wherever you live, play by these prudent rules

Let the pool’s organizer know that he or she cannot take a cut. Emphasize that every dime collected has to be distributed according to the rules for the pool;
Make sure that all the players are of legal age – usually over 21;
Set up the pool so everyone is on equal terms – even the commissioner. That way, everyone’s chances of winning (or losing) are the same. If it isn’t fair, it probably isn’t legal;
Keep it small. If it is truly the “office” pool, it should be limited to co-workers only;
Keep it off the web. Even a temporary website can be classified as online betting. The pros know this, which is why all of the companies that help you set up pools online tell you that they can’t be used for gambling;
Tell winners to report gambling winnings to IRS, especially if the prize is substantial; and
Don’t do this too often. An office pool for the annual NCAA tournament is one thing. But if your office also has a pool for the Oscars, the Grammys, the US Open, the World Cup, the Commonwealth Cricket Games, and the Intergalactic Quidditch Championships, the more likely you are to get attention you don’t want.

In sum, moderation is your best defense: Too much money, too many pools, and too many bettors all raise the risk. Knock yourself out rooting for your alma mater’s or a Cinderella team this March. But don’t go mad over it.

A note from the RFBRC: In the State of Colorado, “Social Gambling” is legal. For more details, visit the state’s website here.

Chas Rampenthal is General Counsel and Vice President of Product Development at LegalZoom. He’s also a former talk radio host (KTLK AM 1150 at ClearChannel) and an entrepreneur, the founder of LegalEndeavor.

Posted in Uncategorized | Leave a comment

11 Early Warning Signs that Your Start-Up is in Trouble

Posted on February 20, 2012 by RoaringForkBus

By Greg Hayes Wednesday, 15 February 2012

We’re seeing a steady stream of businesses falling over. Last year was a horror show for many small businesses, with recent figures showing that corporate insolvencies jumped by 9.2% compared with 2010. None of these firms planned to fail and in many cases they did not see the early warning signs of problems. You may not have all of the accounting resources of a larger company, so knowing what to look out for can be a business life saver. A business can go broke for many reasons but here are 11 key indicators that problems may be on the way:

1. Budget for the year looks great but actual performance is ugly. You need an operating and cash flow budget to manage performance. One budget may not necessarily mirror the other. Your budgets need to be realistic and you need to measure performance against budget regularly and frequently. If there is a deteriorating trend, act on it early.

2. Increases in fixed costs without an increase in revenues. Fixed costs have a direct impact on your profitability. If you increase your fixed costs these need to be linked to revenue and profit expectations. You also need sufficient capital or funding to cover these costs if increases are needed to facilitate growth.

3. Falling gross profit margin. Your gross profit margin is the difference between your sales minus cost of goods sold. Every dollar you lose in gross profit is a dollar off your bottom line. Watch your discounting strategies as they can have a major impact on your gross profit levels.

4. Funding your business with debt rather than equity finance. If your business is funded on debt it’s easy to strip profits out of your business with interest costs. There’s nothing wrong with debt funding. It just needs to be managed. Watch your funding mix and review debt regularly.

5. Falling sales. If sales are falling, rather than launching into knee-jerk marketing campaigns have a look at what the actual problem is – competition, product mix, market changes?

6. Delaying payment to creditors. If sales are okay there could be a number of reasons why cash is tight. Debtor cycles are often a problem that needs to be addressed. When you start to defer creditor payments this is an early signal that things are not well.

7. Issuing checks in excess of your banking facilities. Trying to pay today’s bills with tomorrow’s cash. High growth businesses often come under pressure but the solution is negotiating with suppliers and the bank.

8. Poor financial reporting. If you don’t recognize a problem is occurring you can’t address it. You need to have good coverage across your numbers and have access to regular financial reports.

9. Growing to death. Growth, like anything else in the business needs to be planned. The faster you grow, the higher the risk.

10. Substantial bad debts or dead stock. Customers that won’t pay their bills and stock that you can’t sell. Credit policies need to be enforced. Remember, the sale is not complete until the money is in the bank. Managing dead stock is about planning. Make sure you have a tight stock policy in place that is measured and monitored.

11. Not paying tax debts. The Tax Office is not a “quasi bank”. It might seem easy to miss a tax payment, but it will come back to bite you.

When a business gets into trouble the key is early detection and then making sure that your solutions are focused on the real problems. This will give you a chance of recovery. Too late is generally fatal.

Greg Hayes is a director of Hayes Knight and specializes in taxation & business planning advice.

Posted in Business Strategy, Small Business, Start Your Business | Leave a comment

Top 10 Small Business Tax Trends for 2012

Posted on February 2, 2012 by RoaringForkBus

By Barbara Weltman, Big Ideas for Small Business

Can a discussion of the federal deficit, now in excess of $15 trillion, be separated from a discussion on taxes? Of course not! Therefore, taxes will continue to be an important topic on the federal level because of the dichotomy between raising taxes to address deficit concerns vs. keeping taxes low to help create jobs and improve the economy.

Which will win out in 2012? Much depends on what happens in the November elections. Until then, however, there are some important trends in taxes worth noting:

1. Taxes will remain a political football. The wrangling in the Super Committee, which failed to reach a consensus by the November 23, 2011, deadline, demonstrates the ongoing political nature of taxes. As a general rule, Republicans are against raising taxes, while Democrats want to raise taxes on the so-called wealthy (many of whom are small business owners). This acrimony is not likely to disappear.

Taxes will surely be a key issue in the presidential race. While it’s too early to tell who will be the Republican candidate, each contender has offered his or her own tax solution (www.atr.org/presidential-candidate-tax-plan-comparison-a6588). Here are some key points from a number of the candidates:

Mitt Romney: Supports the Bush-era tax cuts, wants to roll back tax rates by 5 percent, and wants to eliminate the estate tax.
Newt Gingrich: Opposes higher taxes (suggests an optional 15 percent rate, meaning taxpayers could choose the current system or his option), wants to eliminate the capital gains tax, favors tax incentives for R&D, and wants a 12.5 percent corporate rate and a 15 percent rate on small businesses.
Rick Perry: Wants an optional 20 percent tax.
Ron Paul: Favors a 15 percent corporate tax rate and a 35 percent tax on small businesses.
Herman Cain: 9-9-9 plan (9 percent income tax, 9 percent corporate tax and 9 percent national sales tax).
Michelle Bachmann: Supports the Bush-era tax cuts.

2. Tax audits are on the rise. According to one KPMG survey, tax audits of businesses have increased. Corporate executives who were surveyed reported a 61 percent increase in federal tax disputes; 37 percent reported an increase in state tax audits.

What continues to be a popular audit topic is worker classification to determine whether a company is properly treating a worker as an independent contractor or whether the worker should be treated as an employee. The IRS is not alone in this endeavor; it is getting help from the U.S. Department of Labor and various states with which there are information-sharing agreements.

3. Uncertainty about health care rules remains. The fate of the Patient Protection and Affordable Care Act of 2010 (“Obamacare”) is uncertain. The U.S. Supreme Court has agreed to hear a case brought by the NFIB and 26 state attorneys general involving the constitutionality of the law. It will hand down a decision by the end of June 2012. In the meantime, businesses must still deal with the law.

For small businesses, the key feature of Obamacare was the creation of a tax credit for helping to pay for employee health coverage. The credit was meant to be an incentive for small businesses to continue or increase their payment of health coverage for employees. The Treasury Inspector General for Tax Administration concluded that the credit has been a bust. When the law was passed, it had been expected that 4.4 million businesses would use it; as of mid-October 2011, only 309,000 had done so. The NFIB has suggested that the current credit be replaced with a new credit that is easier to understand and compute. There may be sentiment in Congress in 2012 to move toward a better small employer credit for health care.

4. Some favorable business tax rules will be extended. Numerous tax rules are set to expire at the end of 2011. Likely, many will be extended, at least through 2012. However, action on extension may not occur until 2012 (i.e., extension will be retroactive to the start of the year). Some of the key provisions include:

100 percent bonus depreciation and up to $500,000 of first-year expensing (the Section 179 deduction).
100 percent exclusion for gain from the sale of qualified small business stock (stock in certain C corporations held more than five years).
Research credit.
Work opportunity credit for hiring individuals from certain targeted groups (only certain veteran groups are set to apply after 2011).

There is bipartisan support for the extension of various business tax breaks, and the American Growth, Recovery, Empowerment and Entrepreneurship (AGREE) Act of 2011 has been introduced by members from both sides of the aisle in Congress to see that this happens. It is too soon to predict whether the measure will be enacted.

5. State and local governments scrounge for new sources of revenue. The federal government is not the only government thirsty for more revenue. Many state and local governments are in dire need and are looking for any way to raise revenue. A number of localities are turning to gambling in order to generate more revenue, and the Nelson A. Rockefeller Institute reports that gambling revenue is on the rise. Many are looking to institute online gaming. A bill to make New Jersey the first state to legalize online gambling was passed in the state legislature, but vetoed by Gov. Christie. The issue may be brought up again in New Jersey and in other states. Other states are expanding gambling venues (e.g., historic Saratoga Raceway in Saratoga, New York, added slot machines).

6. Unemployment taxes will go up for some employers. Employers in 20 states will be paying higher federal unemployment (FUTA) taxes. The reason: Their states borrowed from the federal government to pay for unemployment benefits and have not yet repaid the borrowed sums. As a result, employers in these states cannot use the full credit state unemployment taxes when figuring their FUTA liability. In 18 states (Arkansas, California, Connecticut, Florida, Georgia, Illinois, Kentucky, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Virginia and Wisconsin, the credit is reduced by 0.3 percent; in Indiana, the credit is reduced by 0.6 percent; and in Michigan, the credit is reduced by 0.9 percent.

7. Estate planning for business owners remains challenging. The estate tax rules are fixed only through 2012. This means that after 2012, the rules are set to revert to pre-Bush-era rules. Instead of the $5 million exemption that applies for 2011 ($5.12 million in 2012), the exemption will be only $1 million. Many believe that estate tax is particularly harsh for small business owners. If they die with estates (including their business interests) that are valued at more than the exemption amount, their families may be forced to sell off business interests to raise the funds to pay the estate tax. Often this results in the demise of some family-owned businesses.

Expect to see renewed interest in abolishing the estate tax entirely (a platform of some Republican presidential candidates) or at least maintaining the current exemption level. As 2012 draws to a close, the debate likely will grow louder on the question of estate tax.

8. Filings will be almost exclusively online. Starting with the 2012 tax season, paid tax return preparers are required to e-file client returns if they expect to file more than 10 forms in the 1040 series and/or 1041 (the income tax form for trusts and estates). Thus, almost all individuals who use paid preparers will have their returns filed electronically.

E-filing isn’t limited to personal income tax returns. Businesses can e-file employment tax returns. They usually must e-file returns related to their retirement plans and excise taxes, as well as for certain other federal tax purposes. This trend will surely continue.

9. Low interest rates will have an impact. Due to low interest rates used by the IRS, such as for penalties for underpaying estimated taxes, there is less incentive to avoid the penalties. For example, the IRS interest rate charged on underpayments in the fourth quarter of 2011 and the first quarter of 2012 is only 3 percent. Thus, an owner of pass-through entity, such as an S corporation or limited liability company, who pays income tax on his/her share of business profits on the personal return likely will be paying less estimated taxes. Even if this results in an underpayment that is subject to penalty, the amount of the penalty (3 percent) is small compared with the value of retaining the cash that could be needed for cash flow.

Caution: Be sure to have sufficient funds available when it’s time to pay the balance of the taxes due. Failure to pay by the April filing due date triggers both penalties and interest.

10. The U.S. tax system will continue to become more and more complex. According to one PWC report, America has a very complex tax system for business taxes. The U.S. ranks 69th out of 183 countries in complexity; it was 23 places better as recently as 2009. While other governments continue to reform their tax systems, ours continues to grow more complex as new tax rules are added year after year. The complexity serves as a disincentive for foreign capital to invest in U.S. companies. However, referencing the first trend in this article, politics and the compromises that it demands likely will help to keep the U.S. tax system complex.

Bottom line: Taxes will continue to be an important issue for small businesses in 2012. Hopefully, but not likely, advocacy groups and sanity will prevail to move toward simplification and lower taxes. However, stay alert to specific opportunities that could help you.

About the Author:

Barbara Weltman is an attorney and author of J.K. Lasser’s Small Business Taxes and The Complete Idiot’s Guide to Starting a Home-Based Business. She is also the publisher of Idea of the Day and monthly e-newsletter Big Ideas for Small Business and host of Build Your Business radio.