Yet Another Delay for Obamacare, Until January 2016

We’re at the point where we’ll soon need a spreadsheet to keep track of all the changes to Obamacare.

This afternoon the Obama Administration once again delayed a provision of the Affordable Care Act.

The latest decision delays the employer mandate for businesses that have 50 to 99 employees.  Businesses of that size now have until January 2016 before being required to provide health insurance coverage for employees.

The employer mandate originally was slated to go into effect in January 2014. Last year that was delayed until January 2015. Now we have this latest delay pushing it an additional year, until January 2016, for some businesses.

There’s also a partial delay for businesses with more than 100 employees. They now have to provide coverage for only 70% of their full-time workforce in 2015.

You might think small business owners would be relieved over the delay. After all, it means an extra year to comply with the ACA.  

But there’s also uncertainty and frustration.  It’s difficult to plan and forecast when you don’t know whether or when another change will be announced.  

Not only that, but small businesses have to spend time and effort just to stay on top of the complex law and its changes.  It’s what small business owners think of as “regulatory burden.”  They are required to divert resources to  activities that have nothing to do with whatever the business produces and sells.  Jeff Van Winkle, Chair of the National Small Business Association (NSBA) quantified that burden recently, noting, “Small businesses report spending on average 13 hours and $1,274 per month â€" and that’s just on the administrative side of understanding the law itself.”  Van Winkle’s comment came before the latest change.

Business groups reacted swiftly to the latest Obamacare delay.  The NFIB’s Director of Federal Public Policy, Amanda Austin, said,

“Every time small-business owners hear about another delay or random rewrite of the rules under this law, they are shaking their heads and thinking ‘we told you so.’ Today’s news is simply the latest indicator that this law is not ready for prime time and has systemic flaws that need to be corrected permanently. Temporary delays are not enough.”

The International Franchise Association President and CEO Steve Caldeira said, 

“This announcement is just another delay that while positive in the short term for some franchises, only postpones the inevitable and demonstrates the Affordable Care Act remains a significant problem for employers to implement.  By picking winners and losers based on the size of a business, the administration has effectively placed another complicated hurdle on the backs of the small business community in coming to terms with this law.”

Douglas Holtz-Eakin, President of the American Action Forum, added:

“Small business owners have been trying to understand and plan for the impact the ACA will ultimately have on their bottom line and benefit packages since the law passed in March of 2010. It has not been easy. With the administrative agencies putting out rules on delayed timelines only to reverse them, releasing new guidelines every year, making important policy changes via obscure FAQ documents, and blatantly ignoring the legislative text when making these decisions, what is left of the law is highly confusing and disruptive to companies trying to plan for the future.”

Delayed image via Shutterstock

More in: Obamacare

How the Affordable Care Act Will Reduce Small Business Employment

The Congressional Budget Office (CBO) reported last week that the Affordable Care Act (ACA) will mean that two million fewer people will be employed full-time in 2017 than would be working in the absence of the law.

Unmentioned in the report, or the firestorm of commentary that followed, was how the reduction in employment would be distributed between big and small companies. The employment decline will occur almost completely in the small business sector.

In fact, the new health care law will accelerate a two-decade long erosion in the share of Americans employed in small companies. My back-of-the-envelope calculations suggest that the ACA’s effect will combine with the current trend to result in only 46.4 percent of private sector workers being employed in small businesses in 2017.

That’s a major shift from the 54.5 percent who worked in small companies back in 1988.

The ACA will accelerate the decline in small business employment by reducing both the willingness of small business workers to supply labor - and the willingness of small business owners to demand it.

On the supply side, the income-based phase out of subsidies to buy insurance on the new health insurance exchanges will reduce the willingness of people to work. Starting this year, low-income Americans who buy insurance through the new exchanges are eligible for subsidies to offset the cost. Because those subsidies decline as income rises, they raise people’s marginal tax rates and reduce their willingness to work.

The ACA-induced decline in the labor supply will be concentrated in the small business sector because the subsidies apply only to workers who do not receive employer-sponsored health insurance.

The Kaiser Family Foundation reports that 99 percent of businesses with 200 or more workers provide employee health insurance, while only 57 percent of businesses with between 3 and 199 workers do. Therefore, the workers who will become unwilling to supply labor as they lose their health insurance subsidies will be those who work at businesses that don’t provide employee health coverage, almost all of which are small.

The penalty on employers with at least 50 full-time employees who fail to provide health insurance to their workers, scheduled to start in 2015, also will reduce the supply of labor to small businesses. The CBO, and many academic economists, believe that cost of this penalty ultimately will be passed on to workers through reduced compensation. Lower wages, in turn, will reduce workers supply of labor because people’s willingness to give up leisure time depends on what they earn.

Because only those businesses that do not offer employee health insurance will face the new penalty, and because almost all large businesses provide employee health coverage, the effect of the penalty on employee compensation and the subsequent willingness of workers to supply labor will be concentrated among those small businesses that do not provide employee health care coverage.

The penalty for not providing employee health insurance will also lower small business owners’ demand for labor, the CBO notes. Businesses can avoid triggering this penalty by keeping their labor force below 50 full-time workers. Therefore, the CBO expects some small businesses to restrain their hiring or to convert full-time positions into part time ones to remain below the threshold.

The CBO obliquely mentions that the negative employment effects of the ACA:

“. . .will be most evident in some segments of the workforce and will be small or negligible for most categories of workers.”

For those of us interested in small business, it’s unfortunate to see that the negative effects will be greatest for those people working in small companies.

ACA Photo via Shutterstock

More in: Obamacare

Yahoo Will Acquire Incredible Labs, Shut Down Donna

Incredible Labs is being purchased by Yahoo. Incredible Labs is the creator of Donna, a virtual personal assistant and productivity app. The iPhone app has become quite popular in less than a year on the market. It has earned 4 stars in reviews from nearly 600 users. But Donna’s days of being your iPhone assistant are over.

The deal with Yahoo means that several Incredible Labs employees are moving over to the Internet giant. With that, Donna’s services will no longer be available. In a post on the official Donna blog, Incredible Labs Co-Founder and CEO Kevin Cheng writes:

“We’re looking forward to the possibilities that will come from bringing the Donna visionâ€"letting technology take care of youâ€"to Yahoo. Upon closing, our team will be joining Yahoo and working with some incredibly talented people, or in the case of some of us, returning to a company we know and love. The transaction, which is subject to customary closing conditions, is expected to close shortly. Following closing, Donna will be removed from the app store and discontinued as a service.”

In a statement to TechCrunch, Yahoo praised the Donna app. The company mentioned nothing of shutting down Donna in that statement saying only:

“In case you haven’t heard of her, Donna’s pretty amazing - she has an immense amount of intellect, she keeps you on time and gives you the information you need, when you need it. For her clients, she’s the ultimate daily habit. When we met with the team from Incredible Labs, it was an immediate fit. As we look to the future, our visions are aligned in that we think technology should be smart enough to think for us.”

Yahoo did say that the five Incredible Labs employees joining its staff would work with Yahoo Mail. Time Magazine’s tech blogger Harry McCracken suggests we could soon be seeing Donna-like features in future Yahoo offerings.

The Donna app is synced with your personal calendar, sending reminders of future meetings and tasks. Donna sends these notifications on your iPhone. The app even checks traffic and weather data to give you a head’s up if you need to allow extra time to get to your next destination.

Image: Donna App

Yahoo Will Acquire Incredible Labs, Shut Down Donna

Incredible Labs is being purchased by Yahoo. Incredible Labs is the creator of Donna, a virtual personal assistant and productivity app. The iPhone app has become quite popular in less than a year on the market. It has earned 4 stars in reviews from nearly 600 users. But Donna’s days of being your iPhone assistant are over.

The deal with Yahoo means that several Incredible Labs employees are moving over to the Internet giant. With that, Donna’s services will no longer be available. In a post on the official Donna blog, Incredible Labs Co-Founder and CEO Kevin Cheng writes:

“We’re looking forward to the possibilities that will come from bringing the Donna visionâ€"letting technology take care of youâ€"to Yahoo. Upon closing, our team will be joining Yahoo and working with some incredibly talented people, or in the case of some of us, returning to a company we know and love. The transaction, which is subject to customary closing conditions, is expected to close shortly. Following closing, Donna will be removed from the app store and discontinued as a service.”

In a statement to TechCrunch, Yahoo praised the Donna app. The company mentioned nothing of shutting down Donna in that statement saying only:

“In case you haven’t heard of her, Donna’s pretty amazing - she has an immense amount of intellect, she keeps you on time and gives you the information you need, when you need it. For her clients, she’s the ultimate daily habit. When we met with the team from Incredible Labs, it was an immediate fit. As we look to the future, our visions are aligned in that we think technology should be smart enough to think for us.”

Yahoo did say that the five Incredible Labs employees joining its staff would work with Yahoo Mail. Time Magazine’s tech blogger Harry McCracken suggests we could soon be seeing Donna-like features in future Yahoo offerings.

The Donna app is synced with your personal calendar, sending reminders of future meetings and tasks. Donna sends these notifications on your iPhone. The app even checks traffic and weather data to give you a head’s up if you need to allow extra time to get to your next destination.

Image: Donna App

9 Virtual Ways to Thank Loyal Customers

If you have ever been retweeted by someone you admired, you know how much a small, simple gesture can mean. If you are going to take the time to thank your customers for their loyalty, you might as well make it count.

Don’t have time for a three-course meal in the middle of the workday?

No worries. We asked nine entrepreneurs from the Young Entrepreneur Council (YEC) the following question:

“What’s a fun, entirely virtual way to reward loyal customers?”

Here’s what YEC community members had to say:

1. VIP Clubs

“We’ve helped clients set up VIP clubs for their best customers where the customers receive exclusive perks such as free shipping or special discounts. Model companies include Amazon (Prime) and Zappos (VIP members), which do a fantastic job of recognizing and incentivizing their best customers.” ~ Patrick Conley, Automation Heroes

2. Virtual Lunch

“If you can’t meet clients face to face, then video conferencing works. But it gets old â€" fast. A great way to reward your clients is to “do lunch” virtually. Call in a delivery order to their favorite restaurant and give them a special treat instead of a boring call.” ~ Steven Place, InvestingWithOptions.com

3. A Phone Call

“As simple as it sounds, customers are blown away when they receive a phone call from us thanking them for their loyalty. Even if each staff member just makes a few a day or a few a week, it goes a long way in making a human connection. “ ~ Shaun King, Upfront

4. Discounts

“If your customers have been loyally paying you, then rewarding them with even a small discount can sometimes produce huge amounts of goodwill. Receiving something of real tangible value that they weren’t expecting is the easiest way to delight customers, and depending on your business model, this could also make you more money over the long term.” ~ Liam Martin, Staff.com

5. Amazon Gift Cards

“I’ve rewarded loyalty by emailing Amazon gift cards, and people love it. You can buy anything on Amazon so it’s a very useful gift, and you can include a thank you note.” ~ Natalie MacNeil, She Takes on the World

6. Tweets

“If you run a B2B business, interview your customer and feature what they do. They’ll appreciate the extra marketing promotion.” ~ Wade Foster, Zapier

7. Final Four Brackets

“We’ve asked loyal customers to make final four picks and enter their picks into brackets where we give a cash prize to the winner. Our clients who are real sports enthusiasts enjoy the competition and appreciate the reward if they win.” ~ Enrico Palmerino, SmartBooks

8. Recognition on Your Website

“People love seeing their name or photo in print. Sometimes just bringing them to the forefront and letting the world see how great they are is more of a reward than anything of monetary value. For instance, highlight them in a blog post about how they’ve grown their business using your service.” ~ Sean Ogle, Location 180, LLC

9. Badges

“Customers are motivated by more than money. Introducing badges and recognizing customers for milestones they accomplish is a simple way to reward them virtually. Credit customers when they are doing a good job.” ~ Ben Rubenstein, Yodle

Thank You Photo via Shutterstock

Hackers can crash Apple\'s iPhone using Snapchat

February 10, 2014

Cyber security researchers claim that a vulnerability with popular mobile messaging app Snapchat enables hackers to launch a denial-of-service (DoS) attack against Apple's iPhone.

Telefonica cyber security consultant Jaime Sanchez and fellow researcher Pablo San Emeterio discovered a weakness in the Snapchat iOS app over the weekend, with the vulnerability allowing would-be hackers to send thousands of messages to users in a matter of seconds.

Detailing his findings in a blog post, Sanchez said that sending this many messages to each user can ultimately fill up their account to that extent where the iPhone freezes, crashes and then restarts.

Snapchat's vulnerability centres on its authentication measures. The app, which famously self-deletes messages and videos sent between friends, uses electronic tokens to prove the sender and receiver's identity.

A token is created each time the user makes a request to Snapchat, such as when they update their contact list or send a photo. This is called a ‘request token' and is based on the user's password and timestamp, among other things.

However, while this approach is designed to ease the flow of messages, Sanchez and Emeterio found that they were able to reuse a month-old token, meaning that spammers could potentially send hundreds of messages to numerous users, or even thousands to just one individual.

“That could let an attacker send spam to the 4.6 million leaked account list in less then one hour,” wrote Sanchez on the former, referring to Snapchat's data breach in January when 4.6 million mobile phone numbers were leaked.

“The other problem is that any attacker could just send all the snaps to one user only, as a Denial of Service attack. It will crash your phone and when it powers up, it still hangs until the attack is over.”

Sanchez demonstrated this by sending 1,000 messages in five seconds to the Snapchat account of LA Times writer Salvador Rodriguez. The attack saw the iPhone freeze “until it finally shut down and restarted itself.”

On a brighter note, the researchers said that the issue simply slowed down Android devices and didn't affect those who employed friends-only settings (providing, of course, the attacker wasn't on this list).

Snapchat has since banned Sanchez's two testing accounts, and blocked his IP, but has not fixed the issue. The firm, which has been subject to a bid from Facebook at the start of the year, was not available for comment.

IRS Now Enforcing Rule On How Restaurants Handle Automatic Gratuities

The Internal Revenue Service is cracking down to make sure restaurants comply with a 2012 rule change governing how servers’ gratuities are treated. The change may force restaurants to reconsider their policies on so-called “automatic gratuities.”   In an official IRS posting about the tax rules on reporting and withholding tips, the federal agency explains:

“Employees who receive cash tips of $20 or more in a calendar month while working for you, are required to report to you the total amount of tips they receive. The employees must give you written reports by the tenth of the following month. Employees who receive tips of less than $20 in a calendar month are not required to report their tips to you but must report these amounts as income on their tax returns and pay taxes, if any.”

But that’s not even the part that has restaurateurs perplexed and concerned.

The rule addresses how automatic gratuities are treated for tax purposes. Rather than simply divvying up these tips at the end of the night, all automatic gratuity tips will now be classified as service charges. So they will be taxed as regular wages and subject to payroll tax withholding.  According to the IRS, “These non-tip wages are subject to social security tax, Medicare tax, and federal income tax withholding. In addition, the employer cannot use these non-tip wages when computing the credit available to employers under section 45B of the Internal Revenue Code.”

What is the IRS Rule on Automatic Gratuities?

If you’ve ever dined with a large party, you’re familiar with how restaurants add a set amount on to the bill for the tip (typically 18% for parties of 6 or more).  It’s a common way to cut down on the work involved in calculating tips in a large party and helps ensure servers get gratuities in other situations.  Under the rule, restaurant owners and hospitality providers have two choices:

• Add automatic gratuities to your wait staff’s wages.
• Stop charging customers for automatic gratuities, if you want to avoid income tax complexities.

The IRS rule on automatic gratuities covers the following:

• Large Party Charge (restaurant).
• Bottle Service Charge (restaurant and night-club).
• Room Service Charge (hotel and resort).
• Contracted Luggage Assistance Charge (hotel and resort).
• Mandated Delivery Charge (pizza or other retail deliveries).

Restaurant operators are concerned about the paperwork this rule will add to what they’re already juggling.

New IRS Tips Rule Finally Coming Into Play

The IRS automatic gratuities rule was originally announced in 2012. Restaurant owners and hospitality companies were given until this year to figure out how to comply.

Now, two years after it was first announced, the new rule is in force and concerns have intensified.  A representative of the National Restaurant Association, Christin Fernandez, told us here at Small Business Trends:

“While the IRS action regarding service charges does not change the law or initiate new policy, the ruling implies enhanced IRS enforcement. We expect some restaurateurs may, as a result, re-examine how they handle automatic gratuities in light of the rule going into effect January 1, 2014. For others, it may simply be business as usual (again, this is not a new policy and the ability for restaurateurs to determine auto-gratuity practices in their individual establishments has not changed in any way).”

Fernandez said that regardless of how individual restaurateurs respond to the IRS rule, it’s critical that operators maintain the flexibility to implement policies that make the most sense for their individual business, workforce and customers.

Gratuity Photo via Shutterstock

Barclays investigates reported theft of 27,000 customer records

February 10, 2014

Barclays Bank is investigating a reported data breach. Approximately 27,000 customer details may have been sold on the black market.

The Mail on Sunday newspaper reports that the bank has been subject to a massive data breach in which as many as 27,000 customer details may have been sold onto third-parties on the black market.

These details supposedly date back to 2008 and concern customers that had initially contacted the bank seeking financial advice from Barclays Financial Planning, a now-defunct business division that was closed in 2011. The details are said to include critical information including names, addresses, medical records, National Insurance and passport numbers.

The newspaper cites a former commodity broker for the tip, and says that the source passed on the details via a USB stick which contained files on 2,000 bank customers. The source said that the details had been sold onto City brokers and added that the files, which could be sold for as much as £50 each, could be used by unscrupulous brokers to persuade victims to buy “questionable investments”.

In response, the bank said that the data breach, which is in breach of the UK's Data Protection Law, looked like criminal activity and promised an investigation with the Financial Conduct Authority.

 “This appears to be criminal action and we will co-operate with the authorities on pursuing the perpetrator,” said Barclays in a statement.

“Protecting our customers' data is a top priority and we take this issue extremely seriously,” a spokesperson said in a statement. “We would like to reassure all of our customers that we have taken every practical measure to ensure that personal and financial details remain as safe and secure as possible.”

The Financial Conduct Authority added: “Barclays has contacted us and we will be working with them to understand exactly what has happened and what steps consumers may need to take.

“Consumers rightly presume their data is safe with their bank, and this should serve to remind all firms how important it is they have the correct procedures in place to ensure data is secure and used appropriately. We will continue to investigate the issue with Barclays over the coming days.”

Steve Smith, MD of data security specialist Pentura, told SCMagazineUK.com that this latest data breach illustrates the need not only for data policies but also for companies to ensure safe storage and data disposal.

"This shows that even older customer data from closed businesses or subsidiaries can have real value if it should fall into the wrong hands,” said Smith. “It's critical that firms holding this type of sensitive data have policies to protect that information, and to control who has access to it, from when it's originally created right through to its long-term storage and disposal.

“This is the only way to control these types of breach, so that their origins can be traced and any vulnerabilities quickly closed.”

David Robinson, chief security officer at Fujitsu UK & Ireland, added that while banks are the most trusted sector for data security that could change in light of attacks like these.

“Data trust is at a ten year low amongst consumers. Our recent research showed that only nine per cent believed that organisations were doing enough to protect their data. Barclays' data breach will serve only to enhance this feeling,” Robinson said.

“Currently, banks are the most trusted sector when it comes to personal data. But, they are also the sector which can suffer the most from the loss, of it. While only one in four would switch banks due to an IT failure; a security breach, which leads to the loss of personal information, could lead to a massive seven in ten choosing to switch.”

This attack comes just days after results were posted from the recent Waking Shark II exercise, where hackers targeted each bank's cyber defences. In the Bank of England's report, they certainly found some room for improvement - notably that the banks didn't collaborate with each other, didn't call the police when breached and also expressed confusion surrounding regulatory reporting.

Sony To Sell Its Vaio PC and Laptop Business

If you’ve bought a Vaio PC or laptop from Sony recently, you won’t be able to for much longer.

Another sluggish quarter selling VAIO computers forced Sony to agree to sell the brand to Japan Industrial Partners (JIP). The deal was announced in the company’s latest earnings report issued this week. Sony said it will also cut about 5,000 jobs by the end of the year.

The sale to JIP will be finalized in March. Sony will stop sales and manufacturing of VAIO after the Spring 2014 product lineup is announced, the company said.

If your business runs VAIO computers, rest assured. Sony said its customers will get “aftercare customer services” on their VAIO products. When it takes over manufacturing VAIO products, JIP will initially focus on selling them in Japan.

With its sluggish computer division out of the way, Sony said it is going to focus on its more profitable products. Chief among them are smartphones and tablets. The company currently markets the Xperia line of smartphones and tablets in the U.S. The latest, an unlocked high-end Xperia Z1 smartphone, will set you back $600, according to the Sony website.

Smartphones and tablets have done well for Sony recently. In the last earnings reports in late October, Sony said that smartphone sales were up 39.3 percent, according to an Engadget report. In the latest report, Sony said sales of all mobile devices were up 44.8 percent over this time last year. The company said that a higher volume of sales at higher price points has contributed to the success of its mobile products division.

Overall, Sony said it expects to lose $1.1 billion this year. It was expected to actually see a profit of about $300 million when it last forecast its yearly earnings ending in March. Sony said that it experienced a “significant decrease” in PC sales during the last quarter, especially. Last year, the company introduced the VAIO Duo 13, a tablet/laptop hybrid.

Image: Wikipedia

Join us for a Twitter Chat On Brand and Marketing on a Budget

We’re going to have a great discussion and some awesome networking at our upcoming Twitter Chat this Thursday, February 13, 2014.  We hope you’ll join us.  Everyone is welcome!

We will be discussing how to brand your business and create marketing materials â€" all on a budget.   Small Business Trends will be hosting the chat, and we’ve invited a representative from Brother to be on hand, too, to share expert pointers.  We also want to hear your tips and experiences when it comes to marketing on a budget, as well as your questions.  We will be covering such topics as how to create a consistent brand identity; creative ideas for “leave behind” materials; and how to develop a terrific presence for your business.

The occasion is to also celebrate the Brother CreativeCenter Back to Business Contest over on our sister site, BizSugar. This is the second year we’ve held this contest with Brother as the sponsor.   We’ll tell you what that’s all about, too.

We’ll have giveaways to make the chat even more fun.

To join in, all you do is log on to Twitter at the appointed time.

We’ll be using the hashtag #BrotherBackToBiz.  That means, to participate in the chat you simply include that hashtag somewhere in your tweets during the hour.  To follow what other participants are saying and to network with them, just use the search box on Twitter for that hashtag during the hour.

Then bring your best ideas and join in!  Oh, and be sure to follow the Twitter handles for @SmallBizTrends and @BrotherOffice.

When:  Thursday, February 13, 2014, from 2 pm to 3 pm ET (New York time zone)

Where:  On Twitter.com

Who:  All the cool entrepreneurs and business people - like you

Why:  Because it’s fun and educational. Giveaways, too!