SHARE:
Making The Grade
To help ease that burden, businesses are turning to creative solutions:
Business Cooperation. SFMA President Wolfe set up a so-called training alliance for the group's 180 members. Here's how it works: A company arranges for training on a topic such as statistical process control, soldering or diversity awareness. After workers sign up for the program, there's still space available. So, the company allows other SFMA members to send their workers to the training. Wolfe says, "The class holds 25, and a company has 18 workers signed up. Why not let those seven extra spots be filled by workers from other companies?"
Computer-Based Training (CBT). Multimedia computer training products on CD-ROM allow workers to learn at their own pace and return for a refresher when necessary. For small businesses, a key consideration is that up-front costs of CBT programs have dropped dramatically [FT, "No More Teachers, No More Books...," Sept. 1996].
Community Colleges and Vo-Tech Centers. At Florida's 28 community colleges and 45 vocational-technical centers, there's a new emphasis on meeting the training needs of businesses. Enterprise Florida's Performance-Based Training Program sets up financial incentives for educational institutions that train workers for high-wage occupations in demand locally. That's a departure from traditional education funding.
Temporary Workers. Small businesses that don't have the time or inclination to train workers in basic business skills are turning to temp agencies, says Wolfe, the SFMA president. The temp agencies test, and in some cases train, workers before sending them to a job.
Florida's Quick Response Training Grants. This state program targets new and expanding businesses that need customized training to create or retain high-wage jobs (115% of state or county average wages). Money is available for companies relocating to Florida, expanding or retraining workers. Routine, ongoing staff development training doesn't qualify. Businesses must team up with public educational institutions, which administer the money and coordinate training. Only $4 million in Quick Response money is available, far less than in other states, according to Lanny Larson, president of Enterprise Florida Workforce Development. He says, "We always have applications way in excess of the money we have."
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NETWORKING
A Global Gathering
In April, Miami will become the first U.S. city to host a meeting of the World Association for Small and Medium Enterprises (WASME), a New Delhi, India-based non-governmental group that promotes entrepreneurship.
Working with a former United Nations Industrial Development Organization official, Florida Atlantic University's Small Business Development Center (SBDC) got the go-ahead to host the group.
The four-day conference, April 6-9, at the Hotel Inter-Continental will focus on financing, international trade, technology and special entrepreneurial programs. There will be workshops on venture capital, microlending, trade opportunities and technology transfer. A trade fair, with exhibits by entrepreneurs and consultants, will be held on the final day.
"WASME started out to promote small business in developing countries," says Nancy Young, director of FAU's SBDC. Today, the 16-year-old organization focuses on growing small businesses worldwide. Organizers expect more than 500 attendees, including Vice President Al Gore.
To register ($500 including some meals) or get more information, call the SBDC at (561) 362-5620.
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FINANCE
"Angels" And The Needy
ntrepreneurs have the ideas; investors have the money. Now the Small Business Administration (SBA) has come up with an Internet link to help the two find each other, a task that until now has been a hit-or-miss proposition.
The Angel Capital Electronic Network (ACE-Net), a subscription service expected to cost $250 to $1,000, will allow "angels," or investors, to search online by a number of criteria, including type of company, technology, market, investment size and geographic location. Investors also may design their own search criteria; ACE-Net operators will respond by e-mail when a suitable company is listed.
Entrepreneurs can be listed on the ACE-Net if they have a small corporate stock offering that qualifies for one of the Securities and Exchange Commission's registration exemptions (Regulation A or Regulation D, Rule 504) and have completed the SEC's Small Corporate Offering Registration (SCOR) form. The network's listings will include primarily established business owners who need $250,000 to $1 million. "It's not for the entrepreneur looking to raise $10,000 or $50,000," says Jere Glover, chief counsel in the SBA's Office of Advocacy. While both entrepreneurs and investors pay to be on the network, the search process is a one-way proposition: Unlike angels, entrepreneurs cannot roam the network looking for an investor. ACE-Net, developed in consultation with the SEC, state securities regulators and the North American Securities Administrators' Association, is expected to begin operating this winter or spring. More information is available only through the Internet (http://www.sbaonline.sba.gov or http://ace-net.unh.edu).
Meeting angels the old-fashioned way ...
Enterprise North Florida and the North Florida Technology Innovation Center of Gainesville are teaming up with the First Coast Venture Capital Group to host the 1997 North Florida Venture Capital Forum on March 5 and 6 in Jacksonville.
Fourteen fast-growing companies from North Florida will make presentations, hoping to attract investor money. For entrepreneurs not making presentations, there will be networking as well as four one-hour seminars on start-ups and managing growth. Cost for the forum, to be held at the Omni Jacksonville Hotel, is $200. For more information, call Enterprise North Florida at 904/987-5548.
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ON THE WEB
Florida's Small-Biz Development Centers
University of Central Florida, Orlando,
407/823-5554
http://pegasus.cc.ucf.edu/~sbdcucf
University of South Florida, Tampa,
813/554-2341
http://www.enterprisecorp.com/sbdc
University of West Florida, Pensacola,
904/474-2908
http://www.cob.uwf.edu/~webpage/sbdc.htm
University of North Florida, Jacksonville,
904/646-2476
http://www.sbdc.unf.edu
Florida Atlantic University, Boca Raton,
561/362-5620
http://www.fau.edu/divdept/sbdc/default.html
Florida International University, Miami,
305/348-2272
http://www.fiu.edu/~sbdc
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WORKSHOP - inventions
Discovery Zone
When inventors come up with ideas, they often become fearful that someone will steal them out from under their noses. Tampa Bay Inventor's Council President Dave Kiewit describes the refrain he hears: "I've got this incredible secret, and I can't tell you a thing about it."
For inventors with both thought-out concepts as well as those with just dreams, the University of South Florida's Small Business Development Center has put together a help session: The 1997 Suncoast Inventor's Forum, a day-long program on March 25 in Tampa, will cover patents and licensing, financing, marketing, finding manufacturers and other topics.
For information or to register ($65 including breakfast and lunch), call 813/554-2341.
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TAXES
Surviving An Audit
Tips from a tax attorney on what to expect when the Department of Revenue comes calling.
By Lisa M. Raleigh
or a small business owner, nothing quite matches the cold fear in the pit of the stomach upon receiving an audit notice from the Florida Department of Revenue. Even owners whose business practices are beyond reproach may feel like fleeing the country.
In fact, a state tax audit shouldn't cause you to panic. About 2% of all Florida tax returns are audited annually, based on random selection. Many are "office audits," in which the returns are reviewed in Tallahassee and the taxpayer is contacted and asked to send supporting documentation by mail. A smaller percentage of returns receive "field audits," in which auditors come to the taxpayer's premises and review the records there, making copies of anything needed for the audit file and returning the rest.
The audit
The "Notice of Intent to Audit Books and Records," the first notification from the Department of Revenue, usually is signed by the auditor who will conduct the audit or his supervisor. There will also be a laundry list of documents attached to the notice. Call the auditor to set up a convenient time, date and place to begin the audit. Trying to put off the audit until next year probably won't work, but you can have at least 60 days to get your records together. Ask any questions you may have about what you need to produce. Because a state audit looks back five years, much of the documentation requested may be in storage. Find out which records the auditor needs and save yourself some headaches.
If your records are in shoeboxes, get them out and show them to the auditor. Do not volunteer information, but answer questions truthfully. Shoebox records are not necessarily less complete than computer records.
However, I've handled several hundred state tax liability cases, and this is what I've seen: Too many small business owners use the same record-keeping methods at $2 million a year in sales as they did at $2,000 a year. If an auditor cannot track your sales transactions through your company's records, then neither can you. An audit could be the best business lesson you ever had. Hire an accountant, straighten out your records, and keep accounts like the successful business person you are. You may find that good record-keeping is invaluable.
When you owe money
A "Notice of Intent to Make Audit Changes" is the first formal notice that you may have a tax liability, although many auditors will tell you informally while the audit is still underway. You will be asked to pay the tax, 12% interest per year on back taxes and (gulp!) a 50% civil penalty. If you think you owe the tax, you can pay what you owe immediately and don't have to wait for a "Notice of Proposed Assessment." This saves some interest charges. However, if you hope to have the penalty waived or reduced, don't pay any part of it, as it is easier to get a reduction than a refund.
If you are being audited for the first time, have generally been in compliance with the tax laws of the state, and relied on an accountant for tax advice, you have a good chance of having the penalty reduced or even eliminated. You may need some legal help, but the new penalties are so high the fees you incur may be worth it. For most people, the story ends by paying some extra tax and interest. There are exceptions, though.
If you can't pay
Some business owners get an assessment, know they owe it, but can't pay. You can try and negotiate the penalty downward with the auditor, but generally you will have to enter the appeal process to get a reduction in interest or tax.
You will want to hire a professional if you have a substantial liability. What "substantial" is depends on the size of your business, but you may profit by some expert advice even if you only owe as little as $10,000.
Finding someone with expertise in dealing with state tax problems is not as simple as for federal tax issues. The Florida Bar has a tax certification program, but it concentrates on federal taxes. As a small business owner, you cannot afford to pay an attorney to take the time to learn about state tax law ? you need someone who already knows the field. Ask your colleagues for references and try calling the Florida Bar for the most recent issue of the Tax Law Bulletin, where you generally will find state tax articles by experienced attorneys. This is not the time to use your cousin Mort the divorce lawyer.
Keep good records, stay cool, and you won't need to flee the country, even if you may still feel like it when the notice of audit arrives.
Lisa M. Raleigh is a Tallahassee attorney who works in the Attorney General's Office.
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SMALL BIZ EXPERIMENT
Is A Medical Savings Account For You?
When small businesses weigh their healthcare options, they generally must choose between low-cost managed care, such as HMOs and PPOs, and higher-cost fee-for-service indemnity plans. Starting this year, however, businesses in Florida and across the nation with 50 or fewer workers have another choice ? medical savings accounts, or MSAs.
Although MSAs have been around for some time, there's new interest due to Congress' recent enactment of a four-year pilot program that changes the tax status of MSAs for employees of small businesses. Employees now may use pre-tax earnings to fund their MSAs and roll over any unused money each year into an IRA-type retirement savings account. For now, only 750,000 individuals or families may participate in the pilot program.
Here's how it works: As with a 401(k), employees who participate in an MSA contribute pre-tax earnings into a "savings account." Money in the account is used to pay routine doctor bills, lab work, prescriptions and other medical expenses. Employees also must have a high-deductible health insurance policy that will kick in for major medical expenses such as hospitalizations and surgical procedures. Congress has mandated that the deductible must be between $1,500 and $2,250 for individuals and $3,000 and $4,500 for families.
For employees, the advantage of an MSA is that it gives them the freedom to pick their own doctors, negotiate fees and shop around for the best prices on prescriptions and lab work, among other things. Plus, employees who manage their health costs well over a number of years ? and who stay healthy ? can end up with a substantial amount in retirement savings that, like an IRA, remains sheltered from taxes as long as it remains in the account. Any withdrawals before age 59 1/2 that are not for medical bills are subject to a 10% penalty. For small business owners, the lower premiums of a high-deductible health plan often will decrease the business' healthcare costs.
