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Small Business Briefing

Payroll-tax cuts aimed at small business Add to ...

The latest news and information for entrepreneurs from across the web universe, brought to you by the Report on Small Business team. Follow us on Twitter @GlobeSmallBiz

A break to benefit small business

U.S. President Barack Obama has laid out a new jobs plan designed to encourage businesses to invest and hire more through payroll-tax cuts, The Wall Street Journal reports.

An employer's share of the payroll tax would be temporarily cut in half to 3.1 per cent from the current 6.2 per cent on the first $5 million (U.S.) of a firm's payroll in 2012. Documentation provided by the White House points out that about 98 per cent of companies in the United States have payrolls of $5 million or less, which puts the bulk of this benefit squarely in the hands of small businesses. The plan also eliminates payroll taxes for firms that hire new workers or increasing current wages, though that break would be limited to the first $50 million of a company's payroll increase from the prior year.

A White House aide said the focus on small business is justified, because in many cases the community has been held back by economic headwinds.

"We think economically there is significant differentiation between the largest companies that are sitting on significant cash, and many smaller companies who have faced a perfect storm in terms of more difficulty getting work and capital," a senior administration official explained during a briefing for reporters before Mr. Obama's speech.

It's yet another signal that small businesses south of the border are expected to play a crucial role in any economic recovery. But back in June, a story in Entrepreneur raised the question of whether a payroll-tax reduction would really lead to more hiring. Breaks small businesses received earlier in the downturn don't seem to have created a job boom in the United States.

And a CNN Money headline a day before Friday's announcement was not optimistic: "Obama's 17 tax breaks for small business: Big whoop!"

"It's nice that you announce these things, but the question is how many actually make a difference," said Bill Dunkelberg, chief economist with the National Federation of Independent Business. "If I give you this cash gift in some form through all these tax credits, why would you suddenly desire to go hire somebody?"

But a section of the story entitled "Dear Mr. President" pointed out that "for companies looking to hire, a payroll tax credit would be a boon: Small business owners who are growing and already planning to hire would be able to pay their new hires more or hire more quickly if a payroll tax credit were enacted."

One thing's for certain, cash-strapped small businesses will remain hard-pressed to suddenly start a hiring boom. But every little bit helps.

IBM sets up technology incentive program

IBM is putting up $1-billion (U.S.) in financing to help small and medium-sized businesses purchase certain IBM systems and services, according to a story on the PC World website. "SMBs face difficulties in access to financing. They may not have the wherewithal to go get financing or credit, or they may not have time," said Ed Abrams, IBM vice president of mid-market business. "By making finance available to credit-worthy clients, we can help them fuel their business growth." IBM is applying the loans to the purchase of 29 IBM systems and services, including offers for cloud services, big data and analytic systems. IBM Global Financing will handle the loan processing and paperwork. The financing incentives will be available over the next 18 months. IBM Credit LLC will provide the loans in the U.S., and various banks will provide the loans in other parts of the world.

'Small but mighty innovators'

Marketing magazine is providing an online sneak peek at content from its Sept. 12 issue by highlighting seven "small-but-mighty innovators" it claims are "shaking up the marketplace" with mobile rewards, live-event gaming and accounting software. Check out its "rising stars of the Canadian digital media world." This link takes you to part two, but links back to part one.


The changing face of marketing

INSPIRE is a one day event hosted by Small Business BC designed to educate owners on the changing the face of marketing: how to apply apps, QR codes, social media, crowdsourcing and more to their own companies. Keynote speaker, Rob Barnett, Co-founder of Straydog Marketing and Design, will discuss the latest trends in communication and digital marketing strategy with a specific focus on QR codes. Two panel discussions will highlight and explore the use of mobile applications for small business and the use and benefits of crowdsourcing. The event will be held in Vancouver on Sept. 30 from 12 pm to 3:30 p.m.

Get the best price for your business

If you are a business owner over 50, you need to consider your business succession strategy now to ensure you maximize the value you receive on exit, say the organizers of Selling Your Business, which is taking place in Vancouver on Sept. 22. Buyers, they add, are now searching for acquisitions. Learn how to get the best price, negotiate the best terms and avoid critical errors when you sell your business. Registration fee includes a one-hour consultation with each speaker, to be held within 30 days.


Canadians set up shop in West Bank

Starting and running a business in a conflict zone comes with its own set of hurdles: political tensions, bureaucracies, trade barriers, checkpoints, telecommunications obstacles, along with many of the other usual difficulties of working in foreign countries. They add to the challenge for young entrepreneurs already on a steep learning curve. Meet some Canadians who have decided to try their hand at setting up business in the West Bank and Gaza, believing in the need to strengthen the Palestinian private sector.


Help with hiring

There are solutions out there for companies experiencing high turnover or difficulties in hiring. “The words a company chooses when it writes up a job posting are incredibly important,” Robin O’Connor, owner of Calgary-based Staffing Strategies, said in April, 2011. “They’re the first impression of an organization, of the job itself. So if all you’re doing is using facts to describe the position, and there’s no enthusiasm, no indication of ‘we’re a great company to work with, and here’s why,’ that can really hinder a recruit right off the get-go.”

Got a tip on news, events or other timely information related to the small-business community? E-mail us at yourbusiness@globeandmail.com

Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT

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Follow on Twitter: @seanstanleigh


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