Small business insurance and the tax credit

Some people in politics want everything to be black and white. “Big government bad, small government good” and similar slogans have become rallying cries during town hall meetings and elections. Sound bites are convenient ways of getting a message across, but unhelpful when it comes to more complicated issues. On the face of it, we seem on the cusp of slipping back into recession.

To try avoid this double dip, the Fed has announced plans to buy $400 billion in long-term Treasury Bonds. It’s trying to drive down longer term interest rates. While the Fed tries action, this September sees Washington politics try inaction (again). This time, the House rejected funding for government through mid-November. If this measure does not pass by September 30, government will shut down. As if we did not need further proof of political dysfunction. . .

Hanging this “business as usual” shingle outside Capitol Hill should not distract us from the day-to-day reality of trying to keep life together in business. Yes, the Fed may be trying to keep longer term interest rates down but, with many banks under-capitalized, there’s little or no money to lend, even to those businesses with good collateral. All growth is having to be funded organically — that’s assuming we have survival under control. That means using every cent of revenue in the most effective manner. Of course, this means deciding what the most effective strategies are. At this point, we should admit a prejudice. We believe small businesses do best when the employees are all positively motivated. Note we said “positively” motivated. This is not fear of unemployment. Any boss can bully and try extracting every last ounce of effort out of people. We think staff are more willing to go the extra mile if there’s a mixture of encouragement and trust. One of the ways in which you can lift a burden from an employee’s shoulders is to offer a health plan. With more than 50 million Americans without any health insurance or access to Medicaid, there’s a constant fear of illness in the family. Give some reassurance and you will find the staff are more loyal.

No matter what you might think of the politics of the Affordable Care Act, small businesses have a great chance to benefit. As from the tax year starting 2010, there’s a tax credit of up 35% of the small business insurance costs. In 2014, this increases to 50%. You are eligible if you have fewer than twenty-five full-time employees earning less than $50,000. Putting this in context, the Small Business Administration reckons this means about 80% of small businesses in America are eligible. It seems there’s an information gap. Less than half the small businesses in a recent survey were aware of the credit.

So now’s your chance to earn the loyalty of your staff. More importantly, with access to medical care either on a preventive bases or early in the path of an illness, you will keep your key staff fitter and healthier. They will return to work more quickly after an illness. Talk to your small business insurances advisor and accountant about how to take advantage of this tax credit.

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