Congress at Work: Benefits for Veterans, More Money to Counteract Gun Violence and a Higher Loan Limit for Small Business Loans

VA MISSION Act of 2018 (S. 2372) – This bill was introduced by Sen. John Isakson (R-GA) on Feb. 5 and signed into law by the president on June 6. This legislation permits veterans to seek care from private doctors and hospitals. It eliminates the previous rule stating that they could seek care outside the VA only if they live more than 40 miles away from or are unable to get into a VA facility within 30 days. The legislation also :

  • Expands the VA Caregiver Program to include veterans (and families) who were active before 9/11
  • Creates a new system of community care, enabling veterans to have access to walk-in community clinics outside the VA system
  • Provides incentives to promote the use of telemedicine to help treat veterans
  • Authorizes resources to modernize VA facilities and hire new doctors, nurses and staff

Veterans Cemetery Benefit Correction Act (H.R. 4910) – Introduced by Rep. Austin Scott (R-GA), this bill assures that all veterans and their families receive the burial benefits they have earned regardless of where they are laid to rest. It instructs the U.S. Department of the Interior to provide burial vaults for veterans buried in national cemeteries managed by the National Park Service. Of the 14 national cemeteries controlled by the NPS, two are still active: Andersonville National Cemetery in Georgia and Andrew Johnson National Cemetery in Tennessee. The bill was introduced on Jan. 30 and signed into law by the president on June 15.           

Project Safe Neighborhoods Grant Program Authorization Act of 2018 (H.R. 3249) – This bill updates previous legislation to launch a nationwide law enforcement program focused on the reduction of violent crime. The new legislation allocates $50 million for fiscal years 2019-2021 and prioritizes the investigation and prosecution of targeted individuals who have an aggravating or leadership role in criminal organizations. In addition, the bill designates funds to be used for the Byrne Criminal Justice Innovation Program, which uses evidenced-based programs to reduce gun crime and gang violence. The bill was sponsored by Rep. Barbara Comstock (R-VA) in July 2017 and signed into law by the president on June 18.

Small Business Investment Opportunity Act of 2017 (H.R. 2333) – Sponsored by Rep. Steve Knight (R-CA), this bill amends the Small Business Investment Act of 1958 by increasing the Individual Leverage Limit from $150 million to $175 million. The Individual Leverage Limit stipulates how much capital can be deployed to a small business by a Small Business Investment Company (SBIC) program that has only one fund under management. It was last increased in 2009 from $137 million to $150 million. The bill was introduced on May 3, 2017. It has passed in both houses of Congress and is awaiting signature by the president.

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Old School and Hi-Tech Ways to Keep Track of Passwords

In 2017, nearly one-third of internet users reported being victim to online hacking or similar suspicious activity on their accounts. But as anyone who regularly uses a computer – especially for financial transactions – knows, keeping track of passwords can be a time-consuming task. Even so, it is necessary to ensure your personal and financial information is kept private and secure.

Unfortunately, one of the biggest inconveniences that has emerged is trying to keep track of different passwords for different websites. This issue is exacerbated by the fact that many websites require you to change your password every three to six months. Trying to keep up with which password is current at which website is mindboggling and aggravating.

Here’s one easy trick. If you ever want to find your passwords while online, look in the Settings for your browser. For example, with Chrome you log in, go to Settings, Advanced Settings, Passwords, Manage Passwords and click on the “eye” icon to see the username and password for each website. Similarly, with Safari you can log in and click on Preferences, Passwords, and the asteriks to the right of the username to show the password for each website. Most browsers have similar procedures.

However, what is convenient about the ease of finding your passwords is also reason for alarm. If you leave your computer unattended while logged into your browser, anyone can find them.

For this reason, it’s important to keep your computer password-protected and always within reach. Bear in mind, too, that there are other ways to keep track of passwords. For example, if you’re old school you might write them down in a notebook, crossing them out as you periodically update them. Some folks keep them updated in a spreadsheet software program. However, these tactics are susceptible to theft if, say, your home is burglarized and the thief takes both your computer and your password notebook. It can also be cumbersome if you are away from home and want to log in to websites from your smartphone.

Today’s smartphones typically provide a way to store password information in their settings or options menu. For example, on the iPhone go to Settings, Accounts & Passwords, App & Website Passwords, (input security protocol for access), then click on the individual websites and apps for each user name and password.

There also are apps designed to help you keep track of passwords. The following are highly recommended for their ease of use and security measures.

  • LastPass – Import saved login credentials from Firefox, Chrome, Safari, etc. If you opt for the Premium suite for $2 a month, you also get the ability to sync information between your desktop and mobile devices, enhanced authentication options and tech support.
  • Dashlane – This app is known for it simple, intuitive interface accessible with two-factor authentication. The app lets you change passwords across multiple sites with just a few clicks, and also keeps track of receipts of transactions so you can go back and review them.
  • Roboform – This old-school password manager that can generate strong passwords, store and encrypt them, and sync them across multiple devices. It’s an older app that’s recently been updated with a more intuitive interface and features an autofill function.

There are scads of apps designed to track passwords, so you can search for reviews and rankings to see which one offers features best suited to your needs. One of the perks of apps is that many are free to download and try out. If you don’t like it, delete and install another. When you find one you like, you might want to check out any premium features that are available for a fee.


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End of the Traditional Office: Fact or Fiction?

Brick and mortar versus the virtual office. It’s a dynamic that’s been ongoing for a couple of decades. But you might be wondering: how much has the traditional office really changed?

Some Facts to Consider

For perspective, consider data gathered by the International Workplace Group (IWG). IWG’s study, which included more than 18,000 professionals across 96 companies, found that 70 percent of employees worked at least one day a week somewhere other than the office. (While they didn’t specify, one could guess that this might be home or a “third destination” like Starbucks or a bookstore.) The study also revealed that more than half of the people surveyed worked remotely for half of the week or more, while 11 percent worked somewhere other than their company’s main office location five days a week, which could be a smaller, satellite office.

In addition to flexible work schedules, which presumably made employees more productive and happier, the study highlighted several tangible benefits:

  • Business growth (89 percent; up from 67 percent in 2016)
  • Competitiveness (87 percent; up from 59 percent in 2014)
  • Productivity (82 percent; up from 75 percent in 2013)
  • Attracting and retaining top talent (80 percent; up from 64 percent in 2016)
  • Profit maximization (83 percent)

As you can see, the effects of working outside a traditional office can be beneficial both physically (to the employee), as well as fiscally (to the company).

But in addition to the obvious technologies like conference calls and video conferencing, which have influenced work styles for some time now, what else is going on that’s causing this shift? In a word: millennials.

Millennials: What They Want

According to the U.S. Census, millennials (born between 1982 and 2000) make up one-third of the workforce and outnumber baby boomers. Millennials place a premium on happiness and a good work-life balance. They believe the more comfortable and satisfied they are, the higher their productivity will be. In fact, these employees who were born in the last decades of the 20th century were pivotal in contributing to the advent of a brand-new work configuration: shared office space.

The Rise of Shared Office Space

If you don’t know what this is, here’s another way to explain it: it’s an independent, satellite co-working space that allows for many different individuals and companies to carry on their daily job tasks. These spaces may include perks like a gym, for which they can pay a monthly fee, along with access to resources such as meeting rooms or special equipment. Not a bad setup.

This phenomenon is not just the flavor du jour. According to Forbes, it is projected that 26,000 new spaces will host 3.8 million workers by 2020. So, what’s the attraction? These shared, open venues allow for more businesses to collaborate, which is attractive to these young professionals, many of whom are entrepreneurs. Here are a few other reasons shared offices spaces are all the rage:

  • Lower costs. They don’t have to clean them and keep them maintained.
  • Less commitment. They don’t have to be shackled to a lease.
  • Start-up friendly. With the small budgets of start-ups and the low rent of shared places, it’s the perfect combination for this entrepreneurial demographic.
  • Urban-centric locales. According to Nielsen, 62 percent of millennials like cities. They want to be where the action is, such as trendy restaurants, grocery stores and theaters.
  • Reject traditional offices. Yes, they are rebels; they are very much into individual expression.

However, this is not to say traditional offices are becoming obsolete. The buildings that pierce the sky in most major cities aren’t going anywhere and chances are good we’ll still see plenty of new construction. It’s just that these work places might not be as fully occupied. In terms of long-term growth potential, that’s a positive.


Global Banking & Finance Review: The End of the Traditional 9-5? IWG New Study Finds 70 Per Cent of Us Skip the Office to Work Elsewhere

The Odyssey – The End To Traditional Office Spaces

US Census Bureau – Millennials Outnumber Baby Boomers and Are Far More Diverse, Census Bureau Reports

Forges – Why More Millennials Are Flocking To Shared Office Spaces

Small Business Labs – Coworking Forecast – 26,000 Spaces and 3.8 Million Members by 2020

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Self-Employment Deductions Under the New Tax Law

The new Tax Cuts and Jobs Act, which went into effect on Jan. 1, has sent an unambiguous message that the current GOP-dominated Congress and Presidential Administration are decidedly pro-business. Fortunately, they included provisions in the new legislation that enhance tax advantages for many self-employed sole proprietors.

The following offers an overview of both new and old tax deductions that benefit self-employed workers.

Self-Employment Tax

When you work for yourself you must pay both the worker and employer portions of FICA taxes. In 2018, the Social Security tax is 12.4 percent (6.2 employer + 6.2 percent employee) of the first $128,400 of net income. The Medicare tax is 2.9 percent (1.45 percent employer + 1.45 percent employee) on every dollar of net income. This means a self-employed business owner must pay 15.3 percent in taxes in addition to his or her regular income tax rate. The good news is that the employer portion of the FICA employment tax is deductible.

Qualified Business Income Deduction

The new tax law reduced the corporate tax rate from 35 percent to 21 percent. However, this does not affect self-employed business owners because their income is taxed based on their personal income tax bracket. Legislators did throw in a last-minute provision to help level the playing field: a 20 percent deduction of personal income. Technically, this is called pass-through qualified business income (QBI), which basically refers to business revenue that the sole proprietor uses to pay everyday household expenses.

This new deduction is available to businesses structured as a sole proprietor, partnership (including an LLC) or S corporation. It basically allows certain self-employed workers to reduce their taxable income by an additional 20 percent. The new rule applies to taxpayers who earn less than $157,500; $315,000 for a married couple. The tax break phases out gradually and is not available for single filers who earn more than $207,500; $415,000 if married.

Home Office Deduction

The home office deduction remains in place for small business owners who use their home as their principal place of business. In most cases, there must be a designated space devoted exclusively for the business.

Retirement Plans

When the self-employed save for retirement with an individual 401(k) plan, simplified employee pension (SEP) or other type of qualified plan, contributions may be deductible and earnings have the opportunity to grow tax-deferred until withdrawn.


While the usual business expenses such as office supplies are deductible, supplies that have a lifespan of more than one year are deductible as a depreciated capital expense. The new depreciation rate was raised from 50 percent to 100 percent on equipment bought and placed into service after Sept. 27, 2017.

Educational Expenses

If you take classes, attend workshops or seminars, pay dues to join a professional organization or even purchase books and periodicals to help you learn about your business, these expenses may be deductible.

Travel Expenses

Studies show that more than one-third of small business owners work at least 60 hours a week, so it’s common for those who travel to catch a little rest and relaxation while on a business trip. Fortunately, IRS regulations provide for this type of situation.

The first rule is that the travel must actually qualify as a business trip. Once that criterion is met, the following guidelines apply:

  • Days spent traveling to and from the destination qualify as full work days
  • For travel inside the United States, the majority of time must be spent on business
  • For travel outside the United States, only 25 percent of time must be spent conducting business
  • If the business owner spends a smaller percentage of time on work, he or she might still be able to claim deductions based on a comparable percentage of that time (e.g., 20 percent of work-related expenses if 20 percent of the trip is spent working)

Deductible expenses must be considered “ordinary and necessary” – meaning no luxury sports car rentals or $500 bottles of wine. Business-related meal expenses qualify for a 50 percent deduction (keep receipts and record participants and topics discussed). The new tax law no longer allows entertainment expenses to be deducted. 

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Italian Economic Autonomy – What this means for the Eurozone and the Markets

Italy’s newly formed government is a coalition between two populist parties: Lega Nord (the Northern League) and Movimento 5 Stelle (the Five Star Movement). This coalition is floating the idea of issuing the “mini-BOT,” which would amount to a parallel currency to the Euro. In order to understand how this could work, let’s first look at the BOT.

The BOT: What It Is and What It Is Not

The BOT is Italy’s Treasury bill and is similar to the U.S. Treasury bill. The mini-BOT would also be a form of government debt, but it would pay no interest and never mature. The idea is the Italian government would issue the paper mini-BOTs to pay social benefits. While private businesses could accept them, they would not be compelled to do so.

Why Would Anyone Want a Mini-BOT?

In order to issue mini-BOTs, there needs to be a buyer. So why would someone buy a financial instrument that doesn’t bear interest and isn’t widely accepted as legal tender? Well, the government plans to allow both businesses and individuals to use mini-BOTs to pay taxes – and the mini-BOTs would be sold at a discount to their face value.

Thanks for Nothing

In order for the mini-BOT to function as a parallel currency, there needs to be some other mechanism for it to circulate within the broader economy. Since mini-BOT holders could pay taxes at a discount, there’s an arbitrage opportunity. Traders would appear almost immediately and set up a system where social benefit payment recipients could trade their mini-BOTs for euros at a 3 percent to 12 percent discount from the face value of the mini-BOT itself.

How the Government Benefits

The Northern League sees the mini-BOT as a method to move away from the euro and back into an independent Italian currency, while the Five Star Movement sees the opportunity to spend more without taking on debt in euros, thereby detaching Italy from the Eurozone.

The coalition is looking to add about $180 billion euros to the deficit through tax cuts, increased spending or a combination of both. Italy already has the second highest debt of any government in the region (about 132 percent GDP), so the mini-BOT serves as a financing workaround to eurozone rules, making the proposal serious. As a result of the arbitrage trade, the mini-BOT could serve as a euro alternative for numerous transactions. Since it wouldn’t be a formal currency, there is little the eurozone could do to stop it.

Leverage Italian Style

If the mini-BOT gains traction, the Italian government can increasingly finance deficit spending without breaking any rules of the eurozone, ultimately debasing the Euro. This would force Germany to leave, fracturing the eurozone and everything that goes along with it.

How far the new coalition wants to push things is still uncertain. The real crux of the matter is whether Italy is considered too big to fail given that it’s the third largest economy in the eurozone. If the eurozone and European Central Bank believe Italy is indeed too big to fail, then it’s likely exceptions will be made to allow the increased deficit spending.

Certainly, there are populist politicians in both the Northern League and the Five Star Movement who would love to exit the eurozone, while others may simply see the mini-BOT as a way to garner concessions from the European Central Bank.

Fast and Furious

The recent Italian political upheaval has already impacted the broader European markets with the yields on Greek, Spanish and Portuguese bonds rising. Investors are seeking to get compensated for the risk of loans not being repaid by these specific governments even though they aren’t the ones looking to do more deficit spending.

Greece attempted to threaten something similar back in 2015, but it failed. Italy’s populist politicians have likely learned from Greece’s attempts. If Italy decides to move forward, it would probably do so without warning since implementing the plan could set off capital flight. Basically, we could all wake up one day to learn that a new Italian currency is being established; Germany is no longer part of the eurozone; and the markets are tanking.

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Key Performance Indicators and Your Business – Part 1 of 2

Key Performance Indicators, also known as KPIs, are core measurements that businesses use to monitor progress toward achieving goals and targets. KPIs, which vary widely by industry and entity structure, can be used to monitor and track all aspects of your business,. Management teams pay close attention to KPIs, looking for anything out of line that indicates action needs to be taken. In this two-part series on KPIs, we’ll look at the difference between KPIs and metrics, methods for choosing KPIs, how to define KPIs and the best ways to track and communicate findings.

Metrics versus KPIs: What’s what?

KPIs and metrics are often conflated because all KPIs are metrics, but not all metrics can (or should) be considered KPIs.

Metrics are data driven, quantifiable measures that track performance. Created from data compiled periodically (such as accounting-based metrics) or continually from a live data source, metrics allow businesses to monitor progress toward achieving goals and objectives.

How to determine which metrics qualify as KPIs?

Peter Drucker, one of the most widely influential thinkers on the subject of management theory and practice, wrote “What gets measured gets managed.” As such, not every metric is truly “key” for your business. If you treat all metrics as equal and don’t differentiate between what really matters, then nothing will stand out and you’ll manage everything equally. This is why it is critical to select the metrics most important to you and your business and designate those as your KPIs.

Metrics Still Matter

Your KPIs might be your most important metrics, but this doesn’t mean the other metrics don’t matter. When something goes awry with one of your KPIs, you’ll need to dig into other metrics to understand the problem, identify the root cause and correct course.

Mirror, Mirror on the Wall: Who’s Performing Best of All?

Not everything your business gauges will be an accurate measure of performance. Metrics that feel good to track but don’t have much impact on progress are often called “vanity metrics.” Vanity metrics are fun to get excited about, but they don’t actually provide much value or insight.

The entire point of carefully selecting KPIs is so that you focus on what really matters to your bottom line.

How to choose KPIs that matter

Delivering the right metrics to the right people at the right time allows you and your team to collaborate, make decisions and take actions based on data. KPIs can go beyond just providing focus to create a cohesive unity among your team in working toward a common objective, but only if they are well defined and easy to comprehend. Next month we’ll look at how to transform a bunch of numbers into something actionable and meaningful.

Before we get into the specifics, the simple way to drill down and select a handful of metrics is by asking two central questions. First, what are you trying to achieve and, second, how will you know if you’ve achieved it?

Stay tuned next month for a continuation of this discussion and more answers to your questions.

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Social Security Ground Zero: 16 Years to Impact

Every year, the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (OASDI) issues its annual report on the Social Security system. The report details the current financial status of both Social Security and Medicare as well future projections. The 2018 report has one key takeaway – both programs are facing long-term financial pressures and potential shortfalls.

How Social Security and Medicare are Funded

To better understand the report’s conclusion, you need to understand how the programs are currently funded. Both self-employment income and wages are subject to Social Security and Medicare taxes, known together as FICA (Federal Insurance Contributions Act) taxes.

Employees pay a Social Security tax of 6.2 percent and the employer also pays the same 6.2 percent again for a total 12.4 percent of every employee’s wages (under the wage cap of $128,400 for 2018) funding the system. Self-employed persons pay both halves themselves (although the “employer” side is tax deductible against total self-employment income).

Unlike Social Security, all wages are subject to Medicare taxes at a rate of 1.45 percent, paid by both the employee and employer for a total of 2.9 percent contributed to the system. Again, the self-employed pay both sides of the Medicare tax, just like the Social Security tax. In addition, anyone who earns more than $200,000 ($250,000 if married filing jointly) pays a Medicare surtax of 0.9 percent on all wages above those amounts.

Earning Your Benefits

Taxpayers need to earn a certain amount of credits in order to be eligible for Social Security benefits, with the amount depending on when they are born. Everyone born on or after 1929 must accrue 40 credits – which equals roughly 10 years of full-time work – to be eligible to collect retirement benefits.

How much you receive in benefits depends on how much you earned during your career. As of the April 2018 tables, individual retirees currently receive an average of $1,411 per month, or just under $17,000 per year.

Taxing Your Taxes

Taxes on Social Security benefits themselves also help fund the system. Depending on your filing status, age, how much you earn, etc., you might have to pay income tax on your Social Security benefits. These taxes are added back to fund the system for other taxpayers.

Historical Perspective

The Social Security and Medicare system are more than 83 years old. During this time, the programs have taken in approximately $20.9 trillion in revenue and paid out about $18 trillion; leaving $2.9 trillion in trust fund reserves at the close of 2017.

Source of the Problem

Here’s the issue: the initial recipients didn’t pay into the system themselves – their benefits were funded by those currently working. The problem is that those entering retirement today represent a large segment of the population, while the working population is increasingly smaller due to declining birth rates. Together, this means the system is paying out more than it’s taking in.

For the first time since 1982, Social Security’s total costs will exceed its total income, according to the trustees’ report. As of now, the trustees expect to continue funding Social Security and Medicare using non-interest income (aka taxes), interest income on reserves and trust fund asset reserves. This leaves the system solvent through 2034, when the trust fund reserves will run out.

How Bad Is It?

Without structural changes or increased taxes, Social Security will be able to pay only about 75 percent of scheduled benefits after 2034 through 2092. Medicare is facing a similar, if not worse scenario.

What’s Next?

The trustees suggest addressing the shortfalls as soon as possible. This is easier said than done, as any solution is going to be untenable to some group of constituents.

Potential solutions include reducing benefits now, raising the retirement age or increasing the wage cap for Social Security taxes. Even more draconian measures being considered include means testing to receive benefits or an outright increase in FICA tax rates.

The trustees’ report places a great emphasis on taking action now rather than later. The longer Congress waits, the worse the problem will become. But since all solutions are politically unpopular, they are unlikely to take any action now.

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