Small Business Optimism Report Sept 2012

Here is a report on US Small Business Optimism ending Sept 2012. This article is courtesy NFIB National Federation of Independent Business and shows a pretty good indication of the state of small business in the US. From what we have seen most small business owners are awaiting the outcome of the presidential election this November before making any decisions about their future.

Small Business Economic Trends

The NFIB Research Foundation has collected Small Business Economic Trends data with quarterly surveys since 1974 and monthly surveys since 1986. Survey respondents are drawn from NFIB’s membership. The report is released on the second Tuesday of each month.

Small Business Optimism September 2012 Survey

Small Business Optimism: Slight Bump in August

Few Positive Signs for Future, Little Change Likely Long Term

Despite a disappointing jobs report, the NFIB Small Business Optimism Index gained 1.7 points, rising to 92.9, in August. The Index showed some positive signs; employment indicators for the fourth quarter improved substantially, as did plans for capital outlays and expectations for business conditions. However, few employers continue to think the current period is a good time to expand. The percent of owners viewing the current period as a bad time to expand due to political uncertainty reached a new record high for this business cycle at 22%.

Download the Report   Read the Press Release

Small business optimism index

This report is based on the responses of 736 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of August.


  • Capital Expenditures: The biggest news about capital expenditures was the increase in owners expecting better business conditions in six months; those expectations gained 6 points, settling at a net negative 2%. Not seasonally adjusted, 14% expect an improvement in business conditions (a 2-point gain), and 24% expect a deterioration (down 1 point). A net 1% of all owners expect improved real sales volumes—up 5 points from July, but still 11 points below February’s reading, which was this year’s high. The frequency of reported capital outlays over the past six months gained 1 point, rising to 55%. Of those making expenditures, 41% reported spending on new equipment (up 3 points), 21% acquired vehicles (up 2 points), and 14% improved or expanded facilities (unchanged). The percent of owners planning capital outlays in the next three to six months gained 3 points, rising to 24%. Still, only 4% characterized the current period as a good time to expand facilities, in contrast with 10% in December 2011 and 28% in December 2004.
  • Sales: Sales trends reports confirm that consumer spending is weak and that it slowed mid-year. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months lost 4 points, falling to negative 13%, after a 7-point decline in June. Twenty (20) percent still cite weak sales as their top business problem, historically high, but down from the record 33% reading in December 2010. Seasonally unadjusted, 24% of all owners reported higher sales and 29% reported lower sales. The net percent of owners expecting higher real sales rose 5 points and settling at a net 1% of all owners (seasonally adjusted), ending a five-month decline of 16 percentage points. However, this is a weak reading and unlikely to trigger orders for new inventory or business expansion.
  • Job Creation: Job growth in the small-business sector mirrored other national reports: the net change in employment per firm over the past few months (seasonally adjusted) was -.05, making it the third negative month in a row. With job growth essentially “zero,” the only jobs being created are by new firms to serve new consumers due to population growth. Seasonally adjusted, 12% of owners surveyed reported adding an average of 2.7 workers per firm over the past three months, and 10% reduced employment an average of 2.5. The remaining 78% of owners made no net change in employment. Forty-nine (49) percent of the owners hired or tried to hire in the last three months and 37% reported few or no qualified applicants for open positions. The percent of owners reporting hard to fill job openings rose 3 points to 18% of all owners. Not seasonally adjusted, 13% plan to increase employment at their firm (up 2 points), and 9% plan reductions, unchanged. Seasonally adjusted, the net percent of owners planning to create new jobs rose 5 points to 10%.
  • Credit Markets: There were no interesting developments in credit markets. Seven (7) percent of the owners reported that all their credit needs were not met (unchanged), 31% reported all credit needs met, and 53% explicitly said they did not want a loan (62% including those who did not answer the question, presumably uninterested in borrowing as well). Financing was the top business problem for only three percent of those surveyed; this compared to 23% who cited taxes, 20% who cited weak sales and 21% who named unreasonable regulations and red tape. Credit is not a problem for most owners and the report suggests that many “qualified” applicants are sitting on the sidelines waiting for economic conditions to improve before borrowing. Thirty (30) percent of all owners reported borrowing on a regular basis, down 1 point from July. A net 7% reported loans “harder to get” compared to their last attempt (asked of regular borrowers only), unchanged. Three (3) percent of owners reported higher interest rates on their most recent loan, and five percent reported getting a lower rate.
  • Small business expansion dataJob Creation: July looked a lot like June in terms of job growth—namely, it was negative. The reported net change in employment per firm over the past few months (seasonally adjusted) was -0.04; not as poor as June’s -0.11, but still negative at a time when growth is needed. Readings had been on the rise; from December to May they were zero or positive, suggesting that employment might be turning around. But June, and now July, have ended that possibility. Seasonally adjusted, 10 percent of owners surveyed added an average of 3.0 workers per firm over the past few months, but 11 percent reduced employment an average of 2.3 workers. The remaining 79 percent of owners made no net change in employment. Forty-eight (48) percent of owners hired or tried to hire in the last three months, and 38 percent reported few or no qualified applicants for positions. Overall, there was no meaningful job creation. The percent of owners reporting hard to fill job openings held steady at 15 percent of all owners after falling 5 points in June; May’s reading was the best in 47 months.
  • Historical Perspective: When comparing some of the July report’s numbers to those surveyed in 2000, arguably the best economy in history, a stark contrast is drawn, particular after three years of recovery and alleged expansion. A record 70 percent of owners reported capital spending in the prior six months in the January 2000 survey compared to 54 percent in July 2012. The percent of owners with a job opening peaked at 34 percent in 2000 compared to 15 percent today. A record 19 percent planned to create new jobs late in 1999 compared to five percent today. More than a quarter of owners (28 percent) thought it was a good time to expand (December 1999) compared to five percent today.


Optimism Index

Small business optimism componentsThe Optimism Index gained 1.7 points, rising to 92.9. Although an improvement, the number is still another solid recession reading. There were some positive signs however, the employment indicators for the fourth quarter improved substantially as did plans for capital outlays. However, few think the current period is a good time to expand at 4%. The percent of owners viewing the current period as a BAD time to expand due to political uncertainty reached a new record high for this business cycle at 22%.

Labor Markets

The reported net change in employment per firm over the past few months (seasonally adjusted) was -.05, a bit worse than July’s -.04 and the third negative months in a row. Both readings are essentially “zero” for job growth at existing firms. Current job creation is being driven by new firms to serve the millions of new consumers added each year due to population growth. Seasonally adjusted, 12% of the owners reported adding an average of 2.7 workers per firm over the past three months, and 10% reduced employment an average of 2.5. The remaining 78% of owners made no net change in employment. Forty-nine (49) percent of the owners hired or tried to hire in the last three months and 37% reported few or no qualified applicants for open positions.
Small business hiring plans

The percent of owners reporting hard to fill job openings rose 3 points to 18% of all owners, a good sign. Job openings are highly correlated with the unemployment rate, so the August survey offers some hope of an improvement.

Inventories and Sales

The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past 3 months lost 4 points, falling to negative 13%. Twenty (20) percent still cite weak sales as their top business problem, historically high, but down from the record 33% reading in December 2010. The net percent of owners expecting higher real sales rose 5 points, rising to a net 1% of all owners (seasonally adjusted), ending a five month decline of 16 percentage points. Still, this is a weak reading and not likely to trigger orders for new inventory or business expansion. The pace of inventory reduction slowed, with a net negative 7% of all owners reporting growth in inventories (seasonally adjusted), a 3-point improvement. With weak sales and sour expectations for any meaningful sales growth, owners continue to meet current demand which is weak. For all firms, a net 0% (unchanged) reported stocks too low, a very positive report as this indicates minimal excess inventory being held. Plans to add to inventories remained weak a net negative 1% of all firms. With expected business conditions and expected real sales still delivering poor readings, it is not surprising that inventory demand remains weak.

Capital Spending

The frequency of reported capital outlays over the past six months gained 1 point to 55%. The frequency of reported outlays has gained a few points in recent months but not enough to get out of the rut they have been stuck in since early 2008. Spending activity picked up in several categories but it was not enough to really ramp up overall spending. The percent of owners planning capital outlays in the next 3 to 6 months gained 3 points to 24%. Twenty (20) percent reported “poor sales” as their top business problem, unchanged. A few bright spots as some expectation measures improved, but to levels that are still not typical of a recovery period.


Seasonally adjusted, the net percent of owners raising selling prices was 9%, up 1 point and continuing a longer trend of more frequent reports of higher selling prices. The historic low of -24 was reached in April 2009 when far more owners were cutting prices than increasing. That’s done now. Still, recent readings are consistent with moderate inflation on Main Street. But with rising energy prices, more inflation is likely to appear in the inflation measures. Overall, there is relatively little pressure on selling prices. Eighteen (18) percent plan on raising average prices in the next few months (unchanged), 3% plan reductions (unchanged). Seasonally adjusted, a net 17% plan price hikes, unchanged from July.

Earnings and Wages

Small business earningsReports of positive earnings trends gave up one point, falling to a negative 28% in August after falling 12 points in June and July. Three percent reported reduced worker compensation and 17% reported raising compensation, yielding a seasonally adjusted net 13% reporting higher worker compensation (up 1 point). A net seasonally adjusted 10% plan to raise compensation in the coming months, up 2 points. Earnings are the major source of capital for small firms to finance growth and expansion. The past and promised increases in regulatory costs and in taxes will diminish the available financial support for growth as well as reduce the expected profitability associated with new investments in the business or new hires.

Credit Markets

There were no interesting developments in credit markets. Seven percent of the owners reported that all their credit needs were not met, unchanged. Thirty-one (31) percent reported all credit needs met, and 53% explicitly said they did not want a loan. Only 3% reported that financing was their top business problem, compared to 23% citing taxes, 20% citing weak sales and 21% naming unreasonable regulations and red tape. Thirty (30) percent of all owners reported borrowing on a regular basis, down 1 point from July. A net 7% reported loans “harder to get” compared to their last attempt (asked of regular borrowers only), unchanged.

Top problems for small business

Small businesses that can't fill job openings


As expected, there was no real change in owner optimism in August since nothing happened to make owners more confident about the future. Consumers were equally unimpressed according to the University of Michigan/Reuters survey. The survey shows only 12% of consumers think the government is doing a good job and 46% feel government is doing a bad job. And while the top ranked problem (out of 75) in the recently released NFIB Problems and Priorities survey was health insurance costs, the second and fourth ranked problems were “uncertainty about the economy” and “uncertainty about government policy.” This goes a long way toward explaining why spending seems to be in “maintenance mode.” With 50/50 odds in the polls, the president will be determined by the flip of a coin. The policy outcomes depending on who wins appear to be hugely different, and consequently, owners are not betting their hard earned money on the flip of a coin. They are waiting for more certainty about the direction of the economy and policy.

Since 1986 when NFIB started the monthly surveys, the Index has been below 93 for a total of 50 months. Forty-three (43) of them have occurred in the current “recovery” which began in June 2009. That says it all about this recovery. Index readings of a typical recovery are generally above 100, the average historical reading

Always looking for something positive in these dreary numbers, the labor market readings were very solid, with the best hiring plans number in 53 months and a 3 point gain in the job openings indicator. Good for the future, but really no good news about recent months, job creation for existing firms was still basically nil. Job creation in the private sector will depend on large firm hiring, if any, and jobs at new firms that are being created by population growth. Capital spending stirred a point and plans rose 3 points, but still recession type readings. And expectations for real sales gains and for business conditions six months out did improve, but also remain at recession levels.

Some Fed officials still talk about the unwillingness of banks to lend, and for some troubled banks, that might be the case. But these are few in number compared to the number of independent banks available and bankers continue to complain about a dearth of qualified applicants, a position supported by the NFIB surveys. QE3 seems to be creeping toward existence, but opposition is stiff and logical – who hasn’t already responded to record low mortgage rates? What firms didn’t pull the trigger on a project but for a quarter point rate differential? Indeed, if banks are reluctant, it may be due to the Fed’s engineered low rates, too low for ordinary banks to risk locking in for long periods of time. Yes, there might be a third stock market pickup from QE3, but this really isn’t going to get consumers to spend more, it would just be a gift to TBTF banks and traders. And it’s likely to be a very small response. The Fed may be way off its unemployment target (not specified), but QE3 will not have an impact on employment. It will make the Fed’s “unwinding” job more difficult and exposes the Fed to the risk of discovering that “the Emperor wears no clothes.”

Small Business Trying to Duck ObamaCare Employer Rules?

Posted by DBOLLC, Sunday, July 15, 2012, 15:00  EDT

Now that ObamaCare has been found to be constatutional (as a tax), many small business owners are wondering if they will have to go out of business.

Maybe there is a way out of this nightmare –

Read the article, then follow the link in the text following the article.

Trying to duck health care’s employer rules? Don’t bother

By Jose Pagliery @CNNMoneyJuly 13, 2012: 5:10 AM ET

Splitting up a company to avoid health care reform's employer penalties won't work. Instead, to avoid bankruptcy, business owners like David Barr say they'll fire workers and cut hours.
Splitting up a company to avoid health care reform’s employer penalties won’t work. Instead, to avoid bankruptcy, business owners like David Barr say they’ll fire workers and cut hours.

NEW YORK (CNNMoney) — In the wake of the Supreme Court’s health care decision, several companies with 50 or more full-time workers have embarked on a quest.

Their aim: Get below 50 and dodge the employer mandate.

The health reform law forces them to start providing insurance by 2014 or pay stiff penalties.

Kari DePhillips, who co-owns the Content Factory, a public relations firm in Pittsburgh, was hoping she could just break up the company to sidestep the rule. Maybe one firm would do marketing while the other builds websites.

The small company is on pace to exceed the 50-worker threshold in the next few years. DePhillips doesn’t want to provide health care, and she definitely doesn’t want to pay the penalty, which would be $2,000 per full-time worker minus the first 30.

“A $40,000 fine to my company would be catastrophic,” she said.

Related: What companies need to know about health reform

The only problem with her break-up plan is that it won’t work. The government would still consider both of her companies as one. That’s because the employer mandate penalty relies on “controlled group” provisions, focusing on who controls the company — not necessarily what they do.

It’s meant to prevent skirting around the law, said Christopher Condeluci, a Washington D.C. attorney at the law firm Venable who helped draft the rule for the Senate Finance Committee.

“These rules are intended to snuff out this type of abuse,” Condeluci said. “You cannot get around the employer mandate.”

After hearing about the little-known rule, DePhillips took another stab at it: Start a second company that never existed as part of the first.

Again, resistance to the rule is futile. The penalty only looks at who owns part or all of the company.

That rule could also ensnare smaller firms, though. A business owner who employs 50 or more at completely different companies — say, 25 at a car repair shop and 25 at a restaurant — would have to provide insurance at both, even if each falls below the threshold.

It could also affect married couples. Tax law generally assumes a person owns interest in their spouse’s business, Condeluci said. That means small business owners who are married to each other should take steps to ensure the Internal Revenue Service, which will enforce the mandate, won’t combine their staff.

“It’s difficult to navigate the tax rules, and one misstep could pull them into the employer mandate,” Condeluci said.

It’s still unclear how the IRS will enforce the rules, according to Jennifer Kraft, a labor attorney with the Seyfarth Shaw law firm in Chicago. However, any prolonged battle would have to be sorted out in court.

The other way business owners are planning to deal with the law is a devastating one. They plan to cut staff and switch full-time employees to part-time, which the law classifies as less than 30 hours per week.

Related: Even health reform critics say, ‘Quit repeal talk’

That’s the reality for the 425 workers at David Barr’s nearly two dozen KFCs and Taco Bells across Alabama and Georgia. Barr has already done the math.

He currently provides health care for managerial staff only, and it costs him about $125,000 to cover the 30 who take it. Extending that to every full-timer would cost him another $545,782 a year.

Health reform’s creation of state insurance exchanges promises to bring down those costs, but Barr said any expenses even close to that will still outmatch his available cash.

“This business model isn’t meant to support those costs,” he said.

To minimize expenses, he’ll fire workers and cut hours to reduce the number of full-timers to 60. Then he’ll opt for the penalty instead of paying insurance. A $60,000 fine pales in comparison to the huge potential rise in health care costs.

Cashiers would be replaced by self-order kiosks, cooks with chicken breading machines. These options are too expensive now, he said, but they would make sense then.

But killing off jobs will also violate one of Barr’s guiding principles.

“We have a responsibility to provide a good position that allows people a sense of pride in their work,” Barr said. “And I’d rather provide that for many than provide health care for few.”

Possible solution to the ObamaCare dilemma?

Check this site for a possible solution:

See ObamaCare Survival

Rick Santelli Video on Obama’s “Buffet Rule”

Posted by DBOLLC, Tuesday Apr 17 29, 2012 04:29 AM  EDT

Here is a must watch video by Rick Santelli that puts the Buffet Rule versus the national debt and deficit spending in easy to understand terms (and he’s passionate/funny!).



Posted by The Right Scoop The Right Scoop on April 11th, 2012 in Politics | 47 Comments

This is fabulous. Rick Santelli explains why Obama’s “Buffet Rule” does nothing to solve any our of fiscal problems because it’s not even enough to pay off a one month deficit. But the ending, which you must watch, is classic Santelli where he just tells it like it is:

People don’t really want to hear solutions. They want to change the dialogue, bait and switch, so we get more worried about what people pay, what’s fair! You know what, how are my kid’s opportunities affected by how many millionaires there are? I don’t see that their opportunities are affected! You know what I see that’s going to affect their opportunities? 15.6 Trillion!

Watch below:


10 Quick Tax Tips For Small Business Owners

Posted by DBOLLC, Fri Apr 6 29, 2012 03:49 AM  EDT

 10 Tax Tips For Small Business 

Because it’s close to filing time we wanted to get something out, like a quick checklist before filing that return. Also, something that provides some ideas for next year.

Here is a quick article that covers the basics for a small business owner.

10 Tax Tips for Small Business Owners

by Guest on February 14, 2011

Post image for 10 Tax Tips for Small Business Owners

Are you one of those many small business owners that look at tax time as a sprint?

Meaning, you reluctantly start preparing for your taxes in March or April, but only after your tax preparer leaves several messages bugging you to get them some information.

I believe that preparing for tax time should be a marathon rather than a sprint. If we look at the preparation time for taxes as a year long, little-bit-at-a-time project instead of a two week scramble, we’d be much less stressed when it came to crunch time.

To help you stress less this tax season, and to start preparing for next year’s taxes, I’ve put together a list of ten small business tax tips.

1. Know your deductions.

So what’s deductible? Let’s find out.

Home office deduction:

Figure out the square footage of the space you use primarily for your business and divide it by your total home space to get the percentage of the following expenses that are deductible.

For example, if your office is 100 square feet and your house is 2000 square feet, you can deduct 5% of the following expenses on your tax return:

  • Property Taxes
  • Mortgage interest or rent
  • Homeowner’s insurance
  • Utility bills (electric, gas, oil, water, etc.)
  • Repairs and maintenance (like a new roof, doors or windows)
  • Any other homeowner expenses

Other business deductions:

  • Business portion of internet service at home
  • Business portion of cell phone use
  • Business mileage
  • Meals and entertainment with clients and colleagues
  • Dues and memberships to business networking clubs
  • All travel expenses for conferences
  • Online coaching, online mentoring and online learning

All money spent to invest in your business and yourself while you’re running a business is tax deductible.

2. Take all the deductions you’re entitled to reasonably.

In other words, don’t stretch things to say they are business deductions.

For example, if your spouse works in your business with you on a very part time basis, and you go out to eat together every Friday night…don’t take every meal out as a deduction just because you “probably discussed business” every time. You don’t want to become a target for an IRS audit.

3. Keep records to back up your deductions.

When people ask me what files they should keep, I say keep everything that backs up income and expenses on your tax return.

For businesses, that means keeping ALL your business files for as long as the IRS can come back and audit your tax return. Click here to get a free copy of my chart titled “What Records to Keep and For How Long”.

4. Have a well maintained filing system.

Getting ready for taxes is so much easier when all of the information you need is properly filed away and easily accessed. Vow to put together a well organized filing system this year if you don’t already have one in place.

5. Have a well maintained bookkeeping system.

Keep track of all of your invoices, deposits, checks, bills, bank reconciliations, credit card receipts and inventory on a weekly basis instead of handing over a shoebox to your accountant at the end of the year. QuickBooks is an awesome way to do this.

Sure, record keeping takes time, but I guarantee that you will get more tax deductions if you keep track of things all year long rather than trying to remember everything at the end of the year.

6. Make time in your weekly and monthly schedule for recordkeeping and filing.

As I mentioned above, entering checks and receipts into an accounting system, filing your paperwork, and reviewing your business financial statements needs to be done on an ongoing basis. Even 10 minutes a day can make a huge difference in how well your office is organized.

And, doing a monthly review of your Profit and Loss and Balance Sheet statements should reveal any glaring mistakes that can be corrected now instead of next tax time.

7. Reconcile your bank statements monthly throughout the year

Bank statements are the most reliable numbers when questioning whether or not something has been received or paid during the year.

If you reconcile them every month, you’ll know that you’ve remembered to enter a majority of your expenses and income correctly for those months. Keep these up to date and your year end tax preparation will go a lot smoother.

8. Review your tax return yourself even after you have it prepared by a professional.

Make sure you understand what’s on your tax return. After all, you’re signing your name at the bottom of it.

9. Clean out your files and throw away unnecessary papers.

I try to do this more than once a year myself, but after your tax return is done is the perfect time to decide what’s not really needed anymore.

Take the necessary tax backup and file it in several file folders marked with the tax year on them. Then, throw out the oldest year’s tax files.

10. Make your recordkeeping and filing system easier with technology.

Technology can make tax time easy for you.

For just a few of the ways technology does this, check out QuickBooks for your bookkeeping, for keeping your receipts electronically, and the Trip Cubby iPhone app to track your business mileage.


File Extension on 2011 Business Tax Return?

Posted by DBOLLC, Thur Apr 5 29, 2012 06:49 AM  EDT

You are getting close to crunch time for filing your business tax return for year 2011. Is it time to think about filing an extension with the IRS?

Here is a good basic article that covers the pros and cons and gives some good pointers for this tax season.


Should You File an Extension?
Benefits and Drawbacks of Filing an Extension

By William Perez, Guide

“Does IRS Settle Taxes?”Why you shouldn’t ignore IRS & how you can get exp to help you settle,
An extension is your way of asking the Internal Revenue Service for additional time to file your tax return. The IRS will automatically grant you an additional six months to file your return. An extension basically extends the filing deadline for personal tax returns from April 15th to October 15th. (For tax year 2011, the filing deadline is April 17th, 2012, and the extended deadline is October 15th, 2012.)

Businesses can also request an extension, which pushes their deadline to September 15th.

Note well: while an extension gives you extra time to file your return, an extension does not give you extra time to pay your tax. That is still due by April 17th, 2012. But an extension can help reduce your penalties if you cannot afford to pay in full by the deadline.

Key Benefits of Filing an Extension

6 extra months to finish up your tax return. Having extra time to finish your return is often necessary, especially if you are still waiting for tax documents to arrive in the mail or you need additional time to organize your tax deductions. Extensions also provide extra time to file your gift tax return.

Helps reduce late penalties. There’s two basic penalties the IRS typically imposes: a late filing penalty of 5% per month on any tax due plus a late payment penalty of half a percent per month. If you file an extension and then file by the extended deadline of October 18th, you’ll avoid the 5% per month late filing penalty. If you file after October 18th, the late filing penalty will begin from October 18th, which creates a deferral on this penalty.

Can preserve your tax refunds if you file after the extended deadline. Some people end up filing several years late, and there’s a three-year deadline for receiving a refund check from the IRS. This three-year statute of limitations begins on the original filing deadline (April 17, 2012). But with an extension, the refund statute of limitations is also extended by six months, which can preserve the ability of taxpayers to receive their federal tax refund even if they get behind in submitting their tax return.

Provides extra time for self-employed persons to fund a retirement plan. Self-employed persons may want to fund a SEP-IRA, solo 401(k) or SIMPLE-IRA plan for themselves. Filing an extension provides these taxpayers with an extra six months to fund their retirement plan. Note: solo 401(k) and SIMPLE plans need to be set up during the tax year (2011), but actually funding the plan can occur as late as the extended deadline for the previous tax year. With a SEP-IRA, however, entrepreneurs can open and fund a SEP-IRA for the previous year by the extended deadline as long as they filed an extension.

Additional time to recharacterize an IRA contribution. As long as your IRA is funded by the April deadline, you can change the nature of the IRA by the October extended deadline. Essentially, you can turn your traditional IRA contribution into a Roth IRA, or a Roth IRA contribution into a traditional IRA contribution. This is helpful if you’re not sure if your eligible for one type of IRA. You can even use this provision to recharacterize a Roth conversion back to a traditional IRA.

Provides additional time to make various elections on your tax return. There are a wide variety of decisions that can be made on the tax return, such as deciding whether to depreciate equipment or take a Section 179 deduction, and whether to carryback or forward any business losses. Those decisions must be made when the tax return is filed. Filing an extension gives you extra time to make those decisions.

Filing an extension can improve the accuracy of your return. There’s an inevitable rush to get tax returns finished by the deadline, and taxpayers and accountants alike can make mistakes when rushing. With an extension, this gives you and your accountant extra time to go over the return and make sure everything is complete before sending in the return.

Extensions can help reduce your tax preparation fees. Some accountants raise their fees in the weeks leading up to the deadline, only to drop their fees during the slow spring and summer months. Price-sensitive taxpayers may be able to save money by shifting their tax preparation to a time when their accountant is charging a lower fee.

Is There a Downside to Filing an Extension?

Extra time to file doesn’t mean extra time to pay. An extension will give you extra time to file your return, but any tax is still due by the original deadline. An extension can help reduce penalties, but any outstanding balance will still be charged a late payment penalty (0.5% per month) and interest (right now at 3% annually).

Some people aren’t eligible for extensions. Taxpayers who were approved for an offer in compromise must file by the April deadline during their five-year probationary period. If you don’t file by the April deadline, the IRS can revoke your offer-in-compromise and re-instate the original amount you owed.

An extension won’t give you extra time to fund an IRA. Contributions to a Traditional IRA and/or Roth IRA are due by the original April deadline.

An extension won’t give married couples extra time to switch from joint to separate returns. Married taxpayers who filed jointly by the April deadline can, if they wish, switch to the married-filing-separately status by April 17th by amending their tax return.

Be sure to file a return, even if you don’t think you need to. I’ve only seen this happen once, but I still want you to know about it. If you file an extension, the IRS might think you need to file a tax return. If you end up not filing a tax return (perhaps because you don’t meet the filing requirements), the IRS might get confused and ask you to file a return anyway, on the presupposition that you filed an extension to ask for additional time to file.

Filing an Extension is Pretty Easy
Individual taxpayers can file an extension using Form 4868. Extensions can also be filed online, which has the benefit that you’ll receive a confirmation code from the IRS notifying you that your extension was received.

Businesses request an extension using Form 7004.

Request Form 7004 – automatic extension for business – IRS site

Obamacare’s Impact on the States


Posted by DBOLLC, Thur Mar 29, 2012 07;21 AM  EDT

 Here is an excellent video which features Governor Mitch Daniels (Indiana) Republican, that points out the threat posed by Obamacare.


Here is a website that may hold some ideas for how to survive Obamacare

See Obamacare Survival

3 Economic Misconceptions

Posted by DBOLLC, Sun 18 Feb, 2012 09;21 AM  EDT

 3 Economic Misconceptions

This article is a real surprise, and is contrary to the constant media spin that you hear on the main stream media.

It may also give you some hope that the good old US of A is not totally destroyed (yet). and maybe there is still some hope that we can bring it back!

3 Economic Misconceptions That Need to Die

By THE MOTLEY FOOLPosted 3:35PM 02/13/12

GasolineBy Morgan Housel
At a conference in Philadelphia last October, a Wharton professor noted that one of the country’s biggest economic problems is a tsunami of misinformation. You can’t have a rational debate when facts are so easily supplanted by overreaching statements, broad generalizations, and misconceptions. And if you can’t have a rational debate, how does anything important get done? As author William Feather once advised, “Beware of the person who can’t be bothered by details.” There seems to be no shortage of those people lately.
Here are three misconceptions that need to be put to rest.
Misconception No. 1: Most of what Americans spend their money on is made in China.

Fact: Just 2.7% of personal consumption expenditures go to Chinese-made goods and services. 88.5% of U.S. consumer spending is on American-made goods and services.
I used that statistic in a recent article, and the response from readers was overwhelming: Hogwash. People just didn’t believe it.
The figure comes from a Federal Reserve report. You can read it here.A common rebuttal I got was, “How can it only be 2.7% when almost everything in Walmart (WMT) is made in China?” Because Walmart’s $260 billion in U.S. revenue isn’t exactly reflective of America’s $14.5 trillion economy. Walmart might sell a broad range of knickknacks, many of which are made in China, but the vast majority of what Americans spend their money on is not knickknacks.The Bureau of Labor Statistics closely tracks how an average American spends their money in an annual report called the Consumer Expenditure Survey. In 2010, the average American spent 34% of their income on housing, 13% on food, 11% on insurance and pensions, 7% on health care, and 2% on education. Those categories alone make up nearly 70% of total spending, and are comprised almost entirely of American-made goods and services (only 7% of food is imported, according to the USDA).Even when looking at physical goods alone, Chinese imports still account for just a small fraction of U.S. spending. Just 6.4% of nondurable goods — things like food, clothing and toys — purchased in the U.S. are made in China; 76.2% are made in America. For durable goods — things like cars and furniture — 12% are made in China; 66.6% are made in America.Another way to grasp the value of Chinese-made goods is to look at imports. The U.S. imported $399 billion worth of goods from China last year, which is 2.7% of our $14.5 trillion economy. Is that a lot? Yes. Is it most of what we spend our money on? Not by a long shot.

Part of the misconception is likely driven by the notion that America’s manufacturing base has been in steep decline. The truth, surprising to many, is that real manufacturing output today is near an all-time high. What’s dropped precipitously in recent decades is manufacturingemployment. Technology and automation has allowed American manufacturers to build more stuff with far fewer workers than in the past. One good example: In 1950, a U.S. Steel (X) plant in Gary, Ind., produced 6 million tons of steel with 30,000 workers. Today, it produces 7.5 million tons with 5,000 workers. Output has gone up; employment has dropped like a rock.

Misconception No. 2: We owe most of our debt to China.

Fact: China owns 7.6% of U.S. government debt outstanding.
As of November, China owned $1.13 trillion of Treasuries. Government debt stood at $14.9 trillion that month. That’s 7.6%.
Who owns the rest? The largest holder of U.S. debt is the federal government itself. Various government trust funds like the Social Security trust fund own about $4.4 trillion worth of Treasury securities. The Federal Reserve owns another $1.6 trillion.
Both are unique owners: Interest paid on debt held by federal trust funds is used to cover a portion of federal spending, and the vast majority of interest earned by the Federal Reserve is remitted back to the U.S. Treasury.
The rest of our debt is owned by state and local governments ($700 billion), private domestic investors ($3.1 trillion), and other non-Chinese foreign investors ($3.5 trillion).
Does China own a lot of our debt? Yes, but it’s a qualified yes. Of all Treasury debt held by foreigners, China is indeed the largest owner ($1.13 trillion), followed by Japan ($1 trillion) and the U.K. ($429 billion).
Right there, you can see that Japan and the U.K. combined own more U.S. debt than China. Now, how many times have you heard someone say that we borrow an inordinate amount of money from Japan and the U.K.? I never have. But how often do you hear some version of the “China is our banker” line? Too often, I’d say.

Misconception No. 3: We get most of our oil from the Middle East.
Fact: Just 9.8% of oil consumed in the U.S. comes from the Middle East.According the U.S. Energy Information Administration, the U.S. consumes 19.2 million barrels of petroleum products per day. Of that amount, a net 49% is produced domestically. The rest is imported.Where is it imported from? Only a small fraction comes from the Middle East, and that fraction has been declining in recent years. Last year, imports from the Persian Gulf region — which includes Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates — made up 9.8% of total petroleum supplied to the U.S. In 2001, that number was 14.1%.The U.S. imports more than twice as much petroleum from Canada and Mexico than it does from the Middle East. Add in the share produced domestically, and the majority of petroleum consumed in the U.S. comes from North America.This isn’t to belittle our energy situation. The nation still relies on imports for about half of its oil. That’s bad. But should the Middle East get the attention it does when we talk about oil reliance? In terms of security and geopolitical stability, perhaps. In terms of volume, probably not.

A Roomful of Skeptics
“People will generally accept facts as truth only if the facts agree with what they already believe,” said Andy Rooney. Do these numbers fit with what you already believed? No hard feelings if they don’t. Just let me know why in the comment section below.

Motley Fool contributor Morgan Housel owns shares of Wal-Mart. Follow him on Twitter@TMFHousel. The Motley Fool owns shares of Wal-Mart Stores. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Wal-Mart.

Standing Up Against The Thugs At The IRS

Posted by DBOLLC, Fri 16 Feb, 2012 08;21AM  EDT

Sanding Up Against The IRS

It is imperative that you as a small business owner keep up with what the federal government has planned for you. More and more it is apparent that this Obama administration has decided to just go around any restrictions that might be imposed by Congress.

This latest ploy really shows the real fundamental plan – which is to put so much control on the small to medium business environment that ultimately you will have no control over your business and will be totally at the whim of the federal government.

Three Cheers for this Lawsuit against the Thugs at the IRS

Early in 2010, I wrote about a reprehensible IRS plan to create a cartel in the tax preparation industry, which would screw small firms and entrepreneurs to help line the pockets of big companies such as H&R Block.

And, earlier this year, I specifically criticized the IRS Commissioner for moving ahead with this scheme, which I also suspect is motivated by a desire on the part of the IRS to have a group of captive tax preparers who will be timid about protecting the interests of taxpayers.

With thuggish moves like that, no wonder the IRS wants to flush $15 million of our tax dollars down the toilet in a futile effort to improve its public image.

But there is some good news. The Institute for Justice has filed suit against the IRS for its disgusting behavior. This video explains.

One point from the video that should be emphasized is that the IRS is taking this step without any congressional authorization or instruction. But if you read this link about an IRS regulation that would force American banks to put foreign law above US law, you’ll know that the tax agency is capable of rogue behavior.

By the way, the Institute for Justice is a great organization that effectively fights for individual rights. Check out this IJ video on asset forfeiture laws (which basically enable stealing by the government).

And since we’re on the topic of theft by government, this IJ video on property rights, eminent domain, and the Kelo decision also is very much worth watching.



Seasonally Adjusted Lies

Posted by DBOLLC, Sun 18 Feb, 2012 05;21AM  EST

 Is The Federal Government Lying To You?

 Once again Bill points out one of the many ways that the government manipulates the employment figures to make you “feel better” about the economy.

Posted by Bill Tatro on Feb 15, 2012
Seasonally Adjusted Lies

It never ceases to amaze me how politicians believe that telling the truth is somehow a guarantor of a short career.

I remember quite distinctly when Presidential candidate John McCain looked directly into the television camera and told the American public that “all was well.”

At the time, he was leading the race for the Presidency.  Did he know the truth, or was it wishful thinking?  The rest, they say, was history.  Back to the Senate, neighbor.  (Yes, I’m honored to say that John McCain is actually my neighbor.)

Fast forward to the present.

We are being constantly bombarded with seasonally adjusted numbers that are designed to make all of us feel good.  Coupled with a Plunge Protection Team (PPT) controlled stock market in order to create Bernanke’s wealth effect, and theoretically our economy is well on the road to recovery.

Unfortunately, when the governmental seasonal adjustments are removed, certain indisputable facts still remain.  Unemployment is a good example.

With the utilization of the government’s statistics regarding less people in the workforce, we experience a so-called ongoing drop in the unemployment rate.  Conversely, using historic methodology without adjustments, unemployment continues to rise.

Keep in mind that people just don’t disappear!  Next, retail sales.  The government’s seasonal adjustments supposedly illustrate a continuing trend of consumers who are enjoying a renaissance of spending.

However, examining the stated numbers without the shenanigans clearly shows the largest one-month drop in retail history.  A great Black Friday, a terrific Cyber Monday, and a holiday season to write home about?  Definitely not!  Finally, let’s discuss job creation.  This particular governmental adjustment is very interesting because according to the administration one job loss and one job gain cancel each other out in the national figures.

Inflation or Deflation ?

Posted by DBOLLC, Sat 04 Feb, 2012 05:51AM  EST

 Inflation or Deflation?

Inflation or Deflation

Here is another article posted at by Bill Tatro, who we think is a very astute financial writer and radio show host.  Many times he spots things that you will not find on the mainstream media outlets.

Tatro  digs deep to find things that the government and financial markets would rather you not know. He has the ability to pull all the pieces together into an understandable picture thereby providing the ability to stay ahead of the game.


Inflation or Deflation? But Wait…

Posted by Bill on Jan 25, 2012

[box] The question continues: Will it be inflation or deflation? Actually, the real question is: Will it be hyperinflation or deflation? When such illustrious proponents of hyperinflation such as Marc Faber, Peter Schiff, and even the venerable Warren Buffett seize the microphone and take such a convincing position, it is very difficult for a deflationist such as myself to compete and put forth my point of view. It’s not that my arguments don’t hold water, because they most assuredly do. Just consider the facts which include the dramatic decline in the velocity of money, the almost total absence of lending and borrowing, and the continual reduction in economic structural pricing. These details give the case for deflation a very solid platform. Regrettably, the personalities, reputations, and panache of Faber, Schiff, and Buffett, seem to overwhelm even the most rock-solid of rebuttals. Therefore, I thought it was time to bring out the big gun, my daughter Nicole. No, I did not want her to explain that rising and falling prices are neither inflationary nor deflationary but simply byproducts of each, rather, I wanted Nicole to explain why deflation is the most feared of the “-tions” from the perspective of those who ultimately drive this economy, the end consumer. According to her, it’s very simple. If Nicole believes prices will be lower tomorrow than today, she will wait to buy. It’s no more complicated than that. For over twenty years, Japan has experienced what my daughter and every other shopper has engrained in their soul. It’s called wholesale vs. retail. For a strong dose of reality, Faber, Schiff, and Buffett need to observe how the world is shopping. The widespread belief that you could pay less money tomorrow than today is precisely why sales, production, employment, and increased wages will screech to a grinding halt. No amount of liquidity, credit, or printing of money will help if people believe the bargain is just around the corner. Consumers will simply wait. With a further understanding of this straightforward concept, the legends will start to see things my way. By bringing out my big gun, I knew they didn’t stand a chance. Sorry boys![/box]

So, the question for us is how much longer till we get hit by the massive Tsunami of hyperinflation?