The StartUp Blog at PartnerUp

The U.S. Department of Homeland Security (DHS) announced tougher regulations late last month regarding immigration and the duties of employers. According to the new rule, employers have 90 days to resolve a “no-match” letter, which notifies an employer that there is a discrepancy with an employee’s legal working status. If they don’t do so within the 90 days, they could face a fine of up to $10,000.

The premise behind the rule is to make employers who receive a no-match letter and don’t respond aware that they are employing an undocumented worker. To avoid liability, employers must take certain steps.

1. Check for typographical or clerical errors within 30 days.
2. If there are errors, the employer must correct the error, inform DHS or the Social Security Administration (SSA) of the correction and verify that the corrected information is congruent with social security records.
3. If there are no errors, employers must ask the employee to confirm that the records are correct.
4. If the employee states that the records are incorrect, then employers need to amend their records and verify with DHS or SSA.
5. If the employee states that the records are correct, then the employee should take the matter up with the SSA. To minimize liability, employers should also contact their local DHS office on the matter.
6. If the discrepancy is not resolved within 90 days, the employer and employee have three additional days to fill out an Employee Eligibility Verification Form as a last-ditch effort to resolve the issue.
7. If the discrepancy still can’t be explained, then the employee must be fired. DHS assumes that if the employee isn’t fired, the employer must then be aware that he or she is employing an undocumented worker and will be fined.

The new rule has not yet been finalized, but DHS is in the process of petitioning a federal district court to move forward with enforcing it. The National Federation of Independent Business strongly encourages small business owners to become familiar with the rule so that they know how to appropriately respond to a no-match letter should they ever happen to receive one.

Credit card fees are a huge pain for small business owners. Every time customers run a debit or credit card a percentage of their purchase goes directly to the banks.

For some time now small businesses have disregarded the fees, which also impact consumer prices, as a necessary annoyance. As more and more of them are being forced to watch each and every dollar, however; some in Washington are lobbying for fairness and the ability to level the playing field.

Right now few businesses can afford to reject cards because of the frequency with which consumers use them, but for small businesses these seemingly minute amounts of money can make all the difference in the future of their businesses.

Merchant card fees are broken down into “an ‘interchange fee,’ which includes an average 1.7 percent of the sale price and a flat per-transaction fee, and a separate fee that goes to the merchant’s bank,” according to a recent New York Times article. The Times offers this example:

Take, for example, a driver who pays for a $1,000 car repair with a credit card. The bank that issued the consumer’s card receives an interchange fee of $17.10 (including a 10-cent flat fee), while the repair shop’s bank gets $4, or four-tenths of 1 percent of the total sale. The repair shop pockets $978.90.

According to the Nilson Report, a payment systems industry newsletter, merchants paid $61.56 billion in electronic payment fees in 2007. Lenders received an estimated 82.5 percent of that money.

It’s because of figures like these that Rep. Peter Welch, D-Vermont, introduced legislation to crack down on these excessive merchant fees. Welch told the New York Times that “American merchants are paying the world’s highest interchange fees…with literally no protection.”

Welch’s bill will require credit card companies to disclose all rates, terms and conditions to the public. The bill will also allow the Federal Trade Commission to review the practices of credit card companies and prohibit any that violate consumer-protection or anti-competitive laws. The bill would also allow merchants to give consumers who pay in cash a discount and bans penalties on small businesses that process only a small number of transactions.

Some small business owners don’t believe that legislation is the way to go, while others are thrilled about the potential for reduced fees. What do you think?

Small business owners throughout the country have had mixed feelings about the bailout of Wall Street.  Some are strong supporters. Some are strong opponents. Most, however, supported the plan with great reluctance. Small business owners are dedicated promoters of capitalism and a free market economy, not to mention they’re not too keen about footing a $700 billion bill. Despite all of that, they understand the importance of securing credit and stabilizing the economy.

Last Friday The House finally approved the bailout in a 263-171 vote. Hours later President Bush signed it into law. Although there was unrest among small business owners surrounding the plan, most seem to be happy with its approval.

“We are pleased that Congress has heeded the call to pass bipartisan legislation that will restore confidence in our financial system. While small business owners have strong and conflicting feelings about the economic rescue package, in the end, their ability to grow their businesses depends upon stability and liquidity in the financial markets,” Todd Stottlemyer, president and CEO of the National Federation of Independent Business said in a statement. “Small business owners, whether or not they use credit to run or expand their own businesses, know that access to credit and a fully functioning financial market are important to them and to their customers, suppliers and vendors.”

What do you all think? Was there a better way to fix the problem or did the government do the right thing?

The Senate’s 14 female senators are not happy with the Small Business Administration over a proposed rule regarding government contracts for women-owned businesses. Earlier this week they sent a letter to the SBA’s acting administrator, asking that the SBA either broaden its proposed rule or withdraw the rule completely.

As it stands, the rule gives preferential treatment for female business owners, but only identifies four industries where women are underrepresented. The four industries are household and institutional furniture and kitchen cabinet manufacturing; motor vehicle dealers; national security and international affairs; and coating, engraving, heat treating and allied activities.

“I find it inexcusable that after wasting well over seven years before issuing any proposal whatsoever, the SBA is now apparently seeking to finalize a defective rule with few, if any, improvements,” said Sen. Olympia Snowe, R-Maine, ranking member of the Senate Small Business and Entrepreneurship Committee.

The senators believe that the SBA should either propose drastic changes that accurately reflect what Congress intended (propping up underrepresented women-owned businesses) or step aside and wait for the next administration to tend to this issue properly.

Throughout the month of August, companies with fewer than 50 employees added 20,000 jobs to the job market. At the same time large and midsize employers cut 53,000 jobs, according to Automatic Data Processing, Inc., a New Jersey employer services firm. Job growth in the small business sector grew at a slower pace last month than it did during the month of July, but it grew nonetheless, which in this economy is promising. 

Even though these are just numbers, there’s a message in them, and that message is that small businesses are vital to the U.S. economy. Policymakers in Washington, especially presidential candidates, need to hear this message loud and clear. By helping out the small-business community (i.e. reducing regulations and simply making it easier for them to do their jobs), they would be working to secure the future of American workers as well as the U.S. economy as a whole. So here’s a big high-five to all you small business owners out there keeping our economy afloat. Good job!

Currently, many small businesses are unable to take full advantage of the home-office tax deduction because of its complexity. Surprise, surprise! Figuring that stuff out is near impossible for the 53 percent of American small business owners with home-based businesses. Even Albert Einstein was baffled by the tax code; it’s a complete joke.

Luckily Sen. Olympia J. Snowe, R-Maine, is attempting to alleviate some of the pain with her introduction of the Home Office Deduction, Simplification and Improvement Act of 2008 (S. 3371). The bill would create a standardized home-office tax deduction, allowing business owners to capitalize with ease. Basically they would be able to opt-in to a standard tax deduction rather than jump through hoops to get any kind of deduction at all.

The Senate would be doing the small business community a great service by helping them to simplify their already complex lives. On top of that, it would be setting an example of tax simplification for the rest of the U.S. government to follow. Unfortunately the bill is currently in committee, so it may be a while before any real change is enacted. Good luck S.3371!

Ohio voters will decide whether or not to approve the Healthy Families Act on their ballots come November. The act, which will guarantee most full-time employees seven paid sick days a year, could cause Ohio to lose 75,000 jobs over the next five years, according to a recent study by the National Federation of Independent Business.

About 20 percent of those lost jobs would occur in small businesses that employ 20 or fewer employees, even though they are exempt from the mandate. Why? Because it would cause large businesses to cut jobs or reduce production, therefore hurting small business suppliers, according to researchers. Companies that don’t already grant at least seven days will also face up to 15 percent in increased labor costs. In the long run it could cost Ohio employers $1.17 billion in added bookkeeping and management costs and $9.4 billion in lost sales, the study said. The act could also force cuts in other employee benefits such as health care or vacation.

Last November, San Francisco voters approved the nation’s first mandatory paid sick leave law, which took effect last February. Today Ohio is the only state with such an act on its upcoming ballot, but several other states are looking into mandated paid sick leave. They include Connecticut, Florida, Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana, North Carolina, Pennsylvania, Vermont and Virginia.

Voters need to be weary of jumping on the paid sick leave bandwagon. It may sound nice to have seven guaranteed sick days throughout the year, but those days aren’t going to do you any good if you become one of the predicted 75,000 who lose their jobs in the process.

The open-source software movement (also known as the free software movement) received a boost Wednesday from the federal appeals court in Washington, according to an article from the New York Times. The court ruled that “just because a software programmer gave his work away did not mean it could not be protected.”

For those of you who aren’t familiar with the ethics of software and the open-source debate, basically open-source software development occurs when programmers willingly contribute code, as well as their own time and effort, to a collaborative development process without any kind of financial compensation. In essence, they work for the fun of it.

One of the biggest obstacles facing the movement, however, is the ambiguity of open-source licensing. This recent ruling, which is a reversal of a San Francisco federal court ruling, gives the open-source community a significant bump in the right direction. Up until this point anyone was free to modify the programming created by the open-source group. Now they can still do so, but only as long as the open-source programmers retain the credit for their work and can distribute the work with their own instructions.

The ruling provides a strong legal backstop for hardworking members of the open-source community, allowing them to freely do what they’re passionate about and still receive credit for it. I would personally like to congratulate the open-source community on its victory. This is not only great for those involved in the movement, but it’s also important for society as a whole and our ability to use, adapt and learn from highly collaborative software development.

This is a hotly contested issue, so I’d like to know how you all feel about it. Whether you’re a member of the open-source community or not, what do you think of this ruling or the debate in general?