Small Business Reading Room

Friday, July 16, 2004

IRS Extension of Time to File - Time's Almost Up!

If you requested an automatic four month extension of time to file your Federal income taxes, your time is coming due.

Most people file taxes on April 15th.

Four months sure can fly !

Only 30 days left until August 15th.

posted by Larry at 9:57 AM - permalink 0 comments

Monday, July 12, 2004

Delaware Headquarters Management Corporations

On June 18th Delaware Governor Ruth Ann Minner signed the Headquarters Management Corporation Act (HMC).

This act creates Headquarters Management Corporations. These HMC's are fully taxable Delaware Corporations that make an election to be an HMC and are certified as such by the Director of the Delaware Division of Revenue.

The corporations activities must be limited to investment activities and/or the provision of headquarters services. ( Headquarters management services may include: accounts receivable and payable, employee benefit plan, insurance, legal, payroll, data processing, purchasing, financial and securities accounting, reporting, and compliance services, and the maintenance and management of intangible investments, such as stocks, bonds, patents, trademarks, and trade names, of other members of its affiliated group.)

An HMC then has a number of tax credits available to it that may significantly reduce its' tax liability. Adding five or more new employees and adding $350,000.00 of expenses may not sound like a way to save money, but in the tax world it can generate significant savings. The difference is that Delaware wants you to spend the money HERE instead of THERE.

The initial fee and minimum tax for these special entities will be $5000.00. So they are not meant for the little guy. This is Delaware's way of trying to further solidify the nexus of holding companies to defend against other states efforts to tax the profits of the holding companies. The new law offers tax credits and an alternative calculation of taxable income for job creation and economic development expenditures. (The credits and alternative calculation of taxable income are in lieu of other credits available in Chapter 20.)

Please be sure to have your accountant review the new law to see if there might be significant tax savings available to your corporation.

Text of the act.

posted by Larry at 3:21 PM - permalink 0 comments

IPO's '90s Style Making a Comeback?

In a recent analysis of business trends published by The Wharton School at the University of Pennsylvania, the successful IPO (initial public offering of stock) of Salesforce.com was hailed as a return to sanity, not a return of irrational exuberence.

The article argues that this offering is a precurser to the upcoming Google IPO. Salesforce.com hosts customer relationship software and the first day runup in price was a very nice, but not crazy, 56%.

Will Google do so well? Better?

posted by Larry at 9:06 AM - permalink 0 comments

New Living Wage Law in Santa Fe, New Mexico

Santa Fe New Mexico has become the first city to enact a living wage (minimum wage) law that covers ALL persons employed in businesses that have more than 25 employees.

Previous city enacted minimum wage laws covered only city and contract workers.

Business leaders are expecting employers with 25 - 35 employees to lay off enough workers to avoid the law. Alternate ways of avoiding the law, should it survive legal challenge, are to move out of the city or split enterprises into less than 25 employee chunks. The text of the law is available at the Santa Fe website.

Given the dire predictions made by the business community in Santa Fe, you would think they should have been more in touch with the political process. This is just another area, like marketing, finance and production, that a small business must attend to. Even the great Bill Gates could not avoid political/legal entanglements for long.

My advice is to get to know your local politicians. Stay in touch with them and let them know what issues you care about. You ignore this powerful force that could affect your business at your peril.

posted by Larry at 8:58 AM - permalink 0 comments

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