Key Highlights

• Interest rate cuts: The Federal Reserve is expected to announce a cut in interest rates this year, ranging from a quarter to half a percentage point. This is a positive change after years of high rates aimed at controlling this country’s inflation.
• Impact on loans: Small businesses should consider refinancing their existing loans at lower rates. This applies to both fixed and variable rate loans, as well as personal mortgages.
• Revisit your investments: Lower interest rates may make certain investments, like purchasing equipment or property, more feasible for small businesses. Be sure to revisit any past financial analyses and investments you’ve made.
• New loan opportunities: With lower interest rates, it’s a good time to explore loans from traditional banks, community banks, credit unions, and the Small Business Administration (SBA). The SBA guarantees loans through its network of banks, making it easier for small businesses to secure financing.
• Investment yields decreasing: While lower interest rates are beneficial for borrowing, it also means lower yields on savings like CDs and annuities. Businesses should consider locking in current rates before they decrease further.

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Key Highlights

• Current Startup Tax Deduction: Currently, startups can deduct up to $5,000 in startup costs, with expenses beyond that needing to be amortized over time.
• Qualifying Expenses: Deductible startup costs include market research, advertising, employee training, salaries and professional services incurred before your startup business officially opens.
• Kamala Harris's Proposal: Harris proposes increasing the startup tax deduction from $5,000 to $50,000, allowing small businesses to have more flexibility in when they can claim the deduction, especially after generating profits.

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Key Highlights

Check out these four strategies to better control your inventory costs:

1. Outsource Freight Management: Small business owners can save time and money on inventory management by working with logistics companies or freight brokers for shipping, instead of managing it yourself. These experts can leverage software to find the best shipping rates and provide advice on consolidating shipments and timing.
2. Invest in Inventory Management Technology: Using upgraded inventory management systems and hardware are worth the initial investment because they can help save you money in the long run. Modern systems are often enhanced with AI capabilities and can provide real-time inventory tracking, automate reordering and integrate with freight services. All of these capabilities can help increase inventory control and save money.
3. Cut Non-Profitable Product Lines: It's important to evaluate your product lines and offerings to see if there's anything you can discontinue. Gene recommends using the 80/20 rule for inventory, suggesting that businesses should discontinue product lines that don't contribute a significant amount of profit. This can help free up resources to focus on the more profitable items and reduce your overall inventory costs.
4. Eliminate Obsolete Inventory: Business owners should plan to regularly review their inventory and remove any obsolete inventory. Obsolete inventory is not only taking up valuable space but also costing you money. Gene recommends writing off this inventory as a tax deduction because it's a loss. Plus, clearing it out will help free up space for your faster-selling products.

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A recent survey titled "Small Business Problems and Priorities" from the National Federation of Independent Businesses has revealed that healthcare insurance costs is a top concern for small business owners. Here are 3 tips for employers who are looking to control healthcare costs for their business and employees:

1. Offer Health Savings Accounts (HSAs): HSA are a great option that allows employees to save pre-tax money and spend it on eligible healthcare expenses. HSA's grow tax free and offer long term benefits, making them a great tool to employees and employers.
2. Offer Health Reimbursement Accounts (HRAs): Another cost-controlling strategy for your business is setting up HRAs for your employees. HRAs allow employers to contribute tax-free funds for employees to purchase their own health insurance. This allows them to have the freedom of choice and greater control over their healthcare spending. In addition, you get a tax deduction for the money that you contribute to their HRAs.
3. Consider Captive Insurance Programs: When you join a captive program, you are joining along with hundreds, maybe even thousands, of other companies. You're all sharing the cost and liabilities together so costs tend to be more controlled. You're able to combine your experience and your costs with other companies of your industry, size or risk.

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Key Podcast Highlights

• PTO Usage Trending Down: A survey by Sorbet revealed that 62% of Americans didn't use their paid time off (PTO) in 2023, which was a 57% increase from the prior year. Additionally, 5.5% of American workers didn't use any PTO in 2023.
• Traditional PTO Policies: Common PTO policies include "use it or lose it" plans, where unused PTO will either expire or carry over to the next year. In recent years, these policies are actually becoming less favored due to their complexity and administrative burden.
• Growing Popularity of Unlimited PTO Policies: More companies are adopting an "unlimited PTO" policy, also known as "professional judgement PTO" plans. These policies allow your employees to take as much time off as they need, with supervisor approval, promoting flexibility and trust.
• PTO as a Retention and Recruitment Tool: Professional judgement PTO plans are often offered to employees who have been with the company for a certain amount of time (e.g. five years). This approach to the policy could help retain your experienced employees and attract new talent.
• Mental Health and Internal Control: Ensuring your employees are taking the time off they need is crucial for their mental health and maintaining internal controls, especially for your company's financial roles. Supervisors should encourage their direct reports to take at least a couple weeks of time off each year to prevent burn out and promote work-life balance.

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Key Highlights

• According to a recent Gallup survey, 75% of the global workforce is either not engaged or actively disengaged at work, and it's costing the world economy $8.9 trillion annually.
• It's becoming increasingly critical to improve employee engagement and productivity. Many employers are considering "emotional salaries", which include the non-monetary job aspects like workplace culture, career growth, and work-life balance.
• Providing competitive salaries is essential, but offering key benefits like health insurance, retirement plans and flexibility is proving to be just as important in retaining talent.
• Small businesses may consider offering improved emotional salaries through greater flexibility. For example, include allowing time off for personal matters, offering mental healthcare benefits and fostering a positive workplace culture with open communication and employee events.
• A strong workplace culture where employees feel valued and heard is a key part of emotional salaries. Business owners can help improve this by making themselves available to employees and involving employees in decision making. A positive culture can help retain employees even when larger companies might be offering higher salaries.

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Key Podcast Highlights

How Can I Prepare My Business for Hurricane Season?

• Have a disaster recovery plan: This should be a written document that outlines all the procedures, processes, emergency communications and key contacts if a disaster strikes.
• Back up your business data regularly: As a part of your disaster recovery plan, you'll want to make sure your business data is backed up on a regular basis. Having cloud-based systems or hosting your files with outside managed service providers can help ensure your data is protected. If it's stored on a cloud-based system or through a third-party, you can access it from anywhere.
• Consult a civil engineer: A civil engineer can help guide business owners on suggested improvements to your water damage protection systems, especially if your business is located in a flood zone (like drains or drainage pumps).
• Reach out to your insurance provider: Your business insurance carrier can help guide you through risk management upgrades to their business, like automatic gas shut offs and water damage protection sensors. These upgrades can help them lower your chances of having to file costly property damage claims in the future.
• Get commercial flood insurance through The Hartford: Even if you already have business property insurance, that's not enough to protect you against floods. In addition to business property insurance, you'll likely need flood insurance if your business is located in an area that experiences hurricanes. The Hartford provides commercial flood insurance through the federal government’s National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA). Congress established the NFIP in 1968 to protect property owners from suffering financial losses due to flooding.

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Key Highlights

• In mid-June 2024, auto dealership around the country were affected by a massive ransomware cyber attack on a popular software owned by CDK Global.
• CDK Global's software is commonly used by car dealerships to manage tasks like scheduling to tracking vehicle sales and orders.
• CDK Global revealed that nearly all 15,000 car dealerships that use their software across North America were affected by this cyber incident.
• The cyberattack involved the hackers freezing the system and demanding a ransom of $25 million, which CDK Global ended up paying through Bitcoin to the hackers.
• Overall, the cyberattack resulted in over $1 billion in losses for dealerships across the country.
• One of the best ways to protect your small business against costly cyber attacks and data breaches is to get cyber insurance. With The Hartford, you can add cyber insurance to your Business Owner's Policy (BOP) or general liability insurance policy.

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Key Highlights

How To Get A Loan From The Small Business Administration (SBA)

• The Small Business Administration (SBA) in not a lender, but they can guarantee money that's being lent to out by a network of their preferred and certified lenders around the country.
• There's two loan programs that small business owners should know about: 7A loans and 504 loans
• 7A loans are the most popular type of small business loan program from the SBA. You can borrow up to $5 million from a bank that's guaranteed by the SBA. You can use it to acquire, refinance or improve buildings, tools or equipment. Or as working capital like cash and inventory. You can also use this money to refinance existing debt or invest in business expansion.
• 504 loans are long-term, fixed rate financing for major fixed assets that promote business growth and job creation. You can borrow up to $5.5 million with a 504 loan. The 504 loan program is more designed for capital improvements, machine, equipment and property.
• With both programs, you have the ability to negotiate fixed or variable rates of interest on these loans. The terms for payback will vary depending on what you negotiate with your banker.

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Key Highlights

What Business Owners Need To Know About The New Overtime Rules

The Department of Labor has officially changed overtime rules for employers starting on July 1, 2024. Here’s what you need to know:

• Prior to July 1, 2024, you didn’t have to pay employees for overtime if they made more than $35,568 a year. After July 1, 2024, the new rule increases that salary threshold to $43,888. Now, any employees who make $43,888 or less a year will qualify for overtime pay. They must also meet other requirements like being a salaried employee and they’re not supervising anyone.
• This number will significantly increase again starting on January 1, 2025. On that day, the salary amount goes up to $58,656. This means that if you have any salary employees who aren't supervising anyone, their job duties fit the necessary description, and they make less than $58,656 a year, you are going to owe them overtime.
• In Texas, a federal court has challenged and suspended this ruling. If you’re a business owner in Texas, it’s recommended that you speak with a labor attorney to make sure your employees are classified the correct way.  
• Some companies are starting to enact strict overtime rules, while others are adjusting their employee’s status from a salaried worker to hourly worker.
• Be sure to comply to these new rules because if you’re not in compliance, your employees could sue your business for wage theft.

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