Conducting Business in the Golden State [California State Tax Woes]
Do you conduct business is California? The state is known for a less-than-friendly atmosphere for clients, yet the economy is responsible for $2 trillion in business annually. With 1.37 million businesses and 17 million workers, many companies are choosing to maintain a presence despite California’s state tax system scaring many others away. In fact, another article recently concluded that California is one of the best places for new business. So what’s the real story? It’s probably something in between! The truth is, as the nation’s largest state, California is a hub for commerce, and many businesses can’t afford NOT to be here.
Why do businesses stay?
In a recent article, Joe Vranich, a corporate relocation specialist and harsh critic of the Golden State’s business climate, still says, “This is the single most beautiful state I’ve ever lived in…I have the best quality of life I’ve ever had here. And the weather, I tell people I think this is the weather we’ll find when we get to heaven.”
As a resident myself, I have to agree the state does have an appealing draw. It’s not all weather and beauty, either. There are particular fields California has a stronghold on, such as technology and entertainment. And, the state has started doing what it can to try to entice companies to stay too, by providing some credits and incentives to offset the hefty California state tax costs (see our recent blog about the state’s California Competes Tax Credit). Of course, other states offer credits and incentives as well, so some of that is just California trying to keep up.Read more
Happy New Year!
It’s the time of year to reflect on the past year, and then to make resolutions for the upcoming year. I’m working on those resolutions (aka "the plan for 2016") right now and hopefully it’ll be final in a few days. In January 2016 and beyond, stay tuned for continued blogs around multi-state tax issues affecting our clients (as we’ve always done), as well as Rainmaking topics for those of you interested in building your consulting revenues (a new venture for us in 2015).
But in the meantime, I’d like to thank all of the readers of this blog, and my clients and colleagues for your support during 2015. I couldn’t do it without you! And I’d especially like to thank my support team that helps to make Miles Consulting Group successful in so many ways. As so many of you know, when you own a small business, it’s difficult to have all the right resources in-house and so it’s important to build a great team of consultants to support you! I’m very grateful to all of you and want to thank you from the bottom of my heart. Let’s make 2016 one of the best years ever.
Thank you to my….
- Publicity team, Erika Taylor Montgomery and Emily Sidley at Three Girls Media
- Web designer Robin Fisher at Take Flight Graphics
- Logo designer, since forever, Rob Henslin at Robert Henslin Designs
- Administrative support, Marit Fox at Abundant Administrative
- IT Tech support, Ryan, Ryan, Harish, Jon and Adrienne at Team Logic IT
- Video creative director, Buddy Saupe at YourBizVid
- Coach and confidante, Barbara Mencer
- Fellow women business owners and support group at NAWBO-Silicon Valley
- Colleagues at Vistage, ProVisors and AFWA for years of leadership skills and networking opportunities
And for those of you that might be reading this – check out these folks (and organizations) in 2016! I highly recommend them all! And as business owners, let’s stick together and support one another!
Here’s wishing you all a wonderful 2016! To your prosperity!!
Fondly,
Monika
New Laws for 2016
Every year state legislatures enact a number of interesting laws. We thought we’d recap a few just to ring out 2015 and ring in 2016. Here are some changes to expect in 2016 in California, and a “feel good” favorite in Illinois – just because we love our animals in every state!
CALIFORNIA
Vaccination (S.B. 277): The amendment to the vaccination law removes the immunization exemption for personal belief for children attending public or private elementary or secondary school, day care, nursery, or development center. In response to recent disease outbreaks in the country, the legislation imposes stricter guidelines and immunization requirements for people in in a classroom setting where there is a lot of human interaction.Read more
How California's Like Scrooge: Extending Sales Tax to Services
It’s no secret California is constantly looking for new ways to increase its revenue. This past year alone, residents have seen a call for higher soda, insurance, energy, income and property taxes. It doesn’t end there, though. State Senator Bob Hertzberg also proposed extending sales tax to include services as well.
You may think, “Well, California really needs the revenue, so maybe it’s worth it.” However, if you look at the numbers, California will end the current fiscal year with a $7.9 billion surplus, even after enacting the largest spending plan in state history, which included an increase on education, paying down debt, creating new programs for the poor and adding billions to a “rainy day” fund. The Legislative Analyst’s Office also anticipates the surplus will continue over the next several years.
About the New Bill
Like Scrooge, Sen. Hertzberg’s proposal increases taxes to literally nickel and dime residents in every means possible. Falling under Senate Bill 8 (or SB 8), the proposal would tax services like childcare, transportation, haircuts and more. The actual bill itself doesn’t include a lot of detail as to which services exactly would be included, but it does claim to raise at least $10 billion in new revenue each year. Chances are, this means a wide variety of services would fall under its umbrella.Read more
Rainmaking – Accountability: Keeping Yourself Honest
If you’ve been following my Rainmaking blogs in the last few weeks, you know that we’ve talked about identifying your target market, determining active and passive strategies for reaching out to that target market, and follow up strategies. We’ve talked about following up and saying “thank you”. And recently we featured a topic on the importance of setting SMART goals.
Goal-setting is so important! And writing those goals down is imperative. There are statistics upon statistics that will tell you the hugely increased likelihood of achieving your goals if you write them down. The other important part – after writing down the goals, is to revisit them periodically. How often is that? I recommend looking at your big goals at least once per month. And if you can’t commit to that, at least once per quarter. But your tasks to complete those annual goals (i.e.; the action items that you will commit to) should be reviewed much more frequently. I recommend to review them several times per month. Yes – this is where the commitment comes in. Rainmaking doesn’t happen overnight. It happens by building relationships and nurturing those relationships over time. In order to nurture a relationship, you must continue to connect with people on a regular basis.
Step 1: Goals as Swim Lanes
In my Rainmaking program, I refer to the annual goal setting process as developing your swimlanes for the year. What’s a swimlane? It’s simply a visual term to denote a spreadsheet, with goals down the left hand column and quarters listed across the top. Each quarter is a “lap” in your annual goal process.Read more
Focus on Alaska
As the holiday season, Christmas and a new year come our way, there has been the inevitable emergence of cold weather imagery in stores, restaurants, etc. The mascot of the season, of course, is none other than Santa Clause! Do you ever stop and think of where Santa Clause came from and lives? People say it’s the North Pole. But could that famous workshop maybe be in Alaska?
For our State of the Month, we decided to take a journey up north and show you our largest state. This might just be the place where Santa spends most of his days.
Business Climate
Alaska’s land area of 663,300 square miles is more than twice the size of Texas, yet despite its incredible land size, its population of 735, 601 (as of 2014), is one of lowest in the nation. A much smaller Rhode Island has a bigger population (1.055 million) than Alaska. Nonetheless, its lack of citizens does not speak poorly of its business environment.Read more
RAINMAKING – Are you being SMART?
As we find ourselves in the middle of a hectic holiday season with the year-end quickly approaching, I find that I’m juggling balls in the air more than ever. When it comes to running your business, many activities occur daily that need to get done but don’t necessarily provide measurable value. It can be overwhelming at times. So it’s important to regularly take a step back and refocus on your broader goals. We all want to be “successful” in our businesses. However, being successful can mean different things depending on each person’s perspective.
As I’ve developed the Jumpstart Your Rainmaking program, I’ve focused on providing the tools to be successful in the area of generating a steady flow of clients. And that starts by setting measurable goals so that throughout the hectic year we can regroup with ourselves and maintain focus on the bigger picture. The program encourages people to dream big and aim high. But we also encourage people to consider setting their goals under the SMART model. Many of you are already familiar with SMART goals – those that are Specific, Measurable, Attainable, Realistic/relevant, and Timely. I debated even talking about them because so many people think that just because they’ve heard of SMART goals they are actually setting them. And I didn’t want to have to be the one to tell you that you might not be setting the right kind of goals, particularly around Rainmaking! Here’s what that might look like as you do think of setting your revenue generation goals for the upcoming year.Read more
Extending Online Tax to the Cloud
We’ve written about online sales tax multiple times before, but it’s a complicated topic without a simple solution. And that’s why we keep coming back to it! In the past we’ve discussed how states are attempting to extend the definition of nexus to broaden their online tax reach, or potential legislation coming through Congress. But one area we haven’t really taken a look at is the question of cloud-based services. How do they fit into the online sales tax debate?
About Cloud-Based Services
More and more, consumers are opting for digital versions of software, music, DVDs and games over physical copies. They purchase the rights to use these goods online and stream them directly from the “cloud” to their computer, tablet or smartphone without ever holding a tangible item that can be taxed in the traditional manner.
Consumers aren’t the only ones relying on the cloud. Businesses are continuing to move their company’s storage to the ominous “cloud,” hiring third-party cloud-based organizations rather than needing to rely on their own data-management. Many companies are therefore entering the software-as-a-service (“SaaS”) models.Read more
Jumpstart Your Rainmaking
As a professional, do you ever find yourself getting a little complacent? Do you find that there are days when it’s easier just to stay in the comfort zone than to venture out and stretch your boundaries? Of course! We all do. But when we have too many of those days in the comfort zone – and they stretch to weeks or months (hopefully not years!), it can be difficult to re-energize yourself and move forward with goals, visions, etc. That’s why, it’s so important to have a written plan for your goals and to revisit it regularly. And that’s true not just for your business or professional goals but also your personal goals. How often have you said something like, “This is the year that I learn to speak French!” But then you don’t buy the books, or the online classes, or register for a live class. And at the end of the year – amazingly, you don’t speak French!
One of my goals during 2015 was to finally (finally!) fulfill my dream of developing a training program for accountants to assist them with generating sales and building their practices. I unveiled my “Jumpstart Your Rainmaking” program in late October, and am excited to put it into full motion (see below) in 2016! But to avoid some confusion for my clients and long-time colleagues, I wanted to share a little more. Read more
California Competes Tax Credit Program
For some companies, the California Competes Tax Credit Program may be a gift from the government during this holiday season (or early 2016). This program is designed to assist companies that plan to re-locate to or stay and expand in the state of California. It appears that more businesses should take advantage of this program which has a budget of over $200 million in tax credit annually. There are three filing periods for the current fiscal year of 2015-2016:
- July 20, 2015, through August 17, 2015 ($75 million available)
- January 4, 2016, through January 25, 2016 ($75 million available)
- March 7, 2016, through March 28, 2016 ($50.9 million plus any remaining unallocated amounts from the previous application periods)
The upcoming committee meetings to review and approve applications are as follows:
- April 14, 2016
- June 16, 2016
Even though the first filing period has passed, it is not too late to apply in January. In the most recent committee meeting held in November, less than $45 million out of the $75 million available was requested for approval. A total of 59 large companies filed for $33 million in tax credits and only 30 small businesses filed for $10 million of tax credits. The California government has created this pool of tax credits for businesses to thrive in the industry, and a huge portion of it is left untouched.Read more
