Vectra Bank Colorado Small Business index up slightly in August

The Vectra Bank Colorado Small Business Index for Colorado registered 87.6 in August, up from a revised 87.3 in July, according to data released Thursday.

“Colorado continues to outperform much of the rest of the nation in terms of job growth,” Jeff Thredgold, corporate economist for Vectra Bank Colorado, said in a statement. “The state’s latest 1.3 percent year-over-year growth rate would normally be nothing to write home about. But considering the U.S. economic struggles of the past year, Colorado’s employment performance is notable.”

Colorado’s unemployment rate was estimated at 5.2 percent in July, up from 5.1 percent in June and 3.8 percent a year ago, according to the state Department of Labor and Employment. Total employment has risen by 31,400 jobs during the past 12 months.

The unemployment rate is the most heavily weighted component of the index. A higher Colorado jobless rate is a positive contributor, as it suggests greater access to labor for small businesses.

The U.S. economy lost an estimated 84,000 net jobs in August, and the U.S. unemployment rate rose to a five-year high of 6.1 percent.

If the economy grows faster than expected, the Federal Reserve could raise a key short-term interest rate target by the end of the year. But if the economic outlook worsens or the credit markets freeze up again, as they did in late 2007, the Fed could cut rates again.

The Colorado Small Business Index assumes that most small businesses are net borrowers of operating funds. As a result, higher short-term interest rates would be a negative development for many small businesses, while lower financing costs would help.

The index measures business conditions from the viewpoint of the Colorado small business owner or manager. A higher number is associated with more favorable business “conditions” for Colorado’s small businesses. The index uses 100.0 for calendar year 1997 as its base year.

The U.S. Small Business Index rose slightly in August to 71.1 from the revised number of 70.1 in July.

Small businesses face retirement plan deadlines

By Joyce M. Rosenberg, AP Business Writer
NEW YORK — Small business owners who are thinking about setting up retirement plans for their employees should be aware that there are two important deadlines coming up in October that affect the plans known as SIMPLEs and SEPs.

Under the Internal Revenue Code, Oct. 1 is the date by which a business must set up a SIMPLE, or Savings Incentive Match Plan for Employees. And, for owners who received extensions of the filing deadline for their 2007 returns, Oct. 15 is the date by which they must set up a SEP, or Simplified Employee Pension, in order to take a deduction for 2007. It's also the date by which 2007 contributions to existing SIMPLEs and SEPs must be made, again, for owners who received extensions.

SIMPLEs and SEPs are among the most popular retirement plans for small businesses because they are easy to create and maintain. Unfortunately, in the current difficult economic climate, many small owners might decide to forgo a retirement plan. Tax professionals urge owners to try to cut something else in the budget first.

Gordon Spoor, a certified public accountant in St. Petersburg, Fla., said he's drafted returns for small business owners that include, for example, a $20,000 retirement plan contribution, and gotten the response, "things are tightened up in this economy; I don't want to do that."

Spoor then tries to get these owners to contribute $10,000. His concern is that if an owner puts off creating a plan, or doesn't make an annual contribution, the retirement plan will just keep going by the wayside, year after year.
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"You look back 10 years and you haven't been doing it for 10 years," he said, warning owners that they shouldn't fall into the trap of thinking, "I'll be able to make it up next year."

Spoor also doesn't believe that because Wall Street is so volatile now, that it's a bad time to be setting a stock retirement plan. Over the years, even money invested in a down market has grown, and in fact, many professionals believe a dip is a good time to be buying stocks.

"Don't let what's happening to the market be your excuse," Spoor said.

And retirement plans don't have to be based on stocks or other investments. An owner can set up a bank account and put cash in for employees; the returns might be smaller over time, but at least there's a plan in place. Moreover, a company can change to a different type of plan later on.

A retirement plan should be considered in the context of the entire business, not just how much money you can deduct on a tax return. Owners would do well to talk to a professional such as an accountant or tax attorney, and perhaps also a human resources consultant to be sure that they're choosing the right plan for their company — a retirement plan is an important recruiting and retention tool that can affect how well a business competes for top workers.

The SEP plan is extremely easy for a small business to create and maintain because it has the least amount of paperwork and reporting requirements of all the retirement plans; an owner can simply go to a bank or other financial institution and set up the account. A SEP allows a company to deduct up to $45,000 for the 2007 tax year and $46,000 for 2008 for contributions to an employee's account.

The SIMPLE provides for employers to match employee contributions in much the same way as a 401(k), and a SIMPLE can actually take the form of a 401(k) if an owner decides to do something more complex. The IRS places more restrictions on a SIMPLE than on a SEP; for example, a SIMPLE can only be created by a company with 100 employees or less.

While the deadline for setting up a SIMPLE is nearby, owners have until Dec. 31 to set up the even more complex plans known as qualified plans, which include profit-sharing and defined benefit plans. But they are more costly to maintain and many small business owners prefer to stay with the simpler plans.

Owners seeking more information about the various retirement plans available to them can find an IRS primer, Publication 560, Retirement Plans for Small Business, on the agency's website, http://www.irs.gov.

The IRS also has a free CD-ROM, Individual Retirement Arrangement Resource Guide for Small Business Owners and Individuals. Instructions for ordering it can be found at http://tinyurl.com/66n6db.

The Labor Department also has information online for small business owners at http://www.dol.gov/elaws/pwbaplan.htm. The site explains the types of plans available, and the responsibilities, such as annual paperwork requirements, that a company must fulfill for each.

New AT&T virtual help desk targets small businesses

AT&T Inc. has created a round-the-clock technology help desk targeting small businesses.

The Dallas-based communications giant says for an initial setup cost of $89 and a monthly fee starting at $19 per computer, AT&T Tech Support 360 will provide live, technical service for setup, configuration and troubleshooting for equipment ranging from laptops to routers and BlackBerrys.

AT&T (NYSE: T) tech support professionals will be available via a phone or online and will remotely connect to and access customers’ computers for diagnosis and troubleshooting.

“This innovative service provides customers with a virtual IT director to help them avoid the costs of bringing technicians in-house or wasting time trying to fix problems themselves,” says Roman Pacewicz, senior vice president, AT&T Regional Business Marketing.

The service plans will be sold both as one-time services and as yearly subscription plans.