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If Your Employees Drive for Your Business, be Aware of Rules about Cell Phone Use

By Caron_Beesley, Contributor
Published: November 14, 2012 Updated: November 14, 2012

Do your employees drive commercial motor vehicles (CMVs) as part of your business operations? If they do, it’s important that you and they know about stringent regulations that went into effect nationwide in early 2012, restricting the use of handheld cellular phones while driving.

The U.S. Department of Transportation ruling restricts CMV drivers from the following:

  • Making a call while holding a cell phone
  • Dialing a cell phone using more than one button

It would have banned reaching for a cell phone in an unsafe manner, but after pushback from a variety of industry associations, the DOT amended the rule to permit drivers to reach for a compliant mobile telephone (i.e., a hands-free phone), provided the device is within the driver's reach while he or she is in the normal seated position, with the seat belt fastened. 

The rule also bans employers from requiring or allowing a CMV driver to use a handheld cell phone while operating a vehicle. CMV drivers must also be prepared and equipped with hands-free cell phone options before they drive a vehicle. The fine is steep – up to $2,750 for drivers and up to $11,000 for employers.

The ruling is based on research conducted by the DOT that put the odds of being involved in a safety-critical event are three times greater when the driver is reaching for an object than when the driver is not reaching for an object. If the driver is dialing a cell phone, the odds of being involved in a safety-critical event rise to six times greater than when the driver is not dialing a cell phone.

Other potential liabilities employers may face

Clearly, employers who have commercial motor vehicle drivers in their workforce need to be more aware than ever of potential liabilities they face for the actions of their employees behind the wheel. To boost awareness, the National Federation of Independent Business (NFIB) has put together a useful list of rules employers need to remember if they have employees who drive any vehicle for work:

  • Business owners are generally responsible for injuries to third parties that are caused by employees acting within the scope of their employment – whether the employee is driving a company-owned vehicle or a personal vehicle (i.e. if an employer authorized the employee to do it or it was deemed necessary in order for the employee to carry out the job).
  • Employers may be held liable for allowing unlicensed, incompetent or unqualified employees to drive a company car. Incompetency can include driving under the influence of alcohol or reckless driving.

The NFIB goes on to suggest that employers should be aware of federal laws that govern CMV safety and should encourage safe driving habits, including:

  • Ban all employees from texting or talking on the phone while driving for work.
  • Encourage employees to pull over before using a cell phone in a car.
  • Limit or altogether end any work-related driving by employees with poor driving records.
  • Update your company’s policy and any employee handbooks to reflect the most recent regulations in your area regarding distracted driving.

Related Resources

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

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SBA Unveils New Learning Portal for Small Businesses & Entrepreneurs

By ngoriel, SBA Official
Published: November 13, 2012 Updated: November 14, 2012

Global Entrepreneurship Week is an opportunity to celebrate innovative entrepreneurs and small business owners. In the U.S. alone there are 28 million small business owners and they create two out of every three new jobs in America. But, there are so many more people with the entrepreneurial spirit and I have the great fortune of meeting many of them through my travels. Global Entrepreneurship Week is a time to ensure America’s budding small business owners have more tools to help them turn their passion into business or turn that great idea into a new venture.

Often times, small business owners will share stories about how SBA’s resources have been vital or how they are in need of finding the right help. This is one of the reasons why SBA continually strives to ensure that small business entrepreneurs have access to the resources they need for their business, including information on startup how to’s, marketing, financing, contracting and more.

We’ve learned valuable feedback from entrepreneurs who rely on our website to educate themselves about small business ownership and listened to what they said. We acknowledged that the user experience to access online resources needed to be easy, efficient and engaging. Today I am pleased to share that SBA is launching a new online learning center.

The learning center is a redesigned, online learning portal for small business entrepreneurs. It has a streamlined, searchable catalog of small business educational resources including self-paced courses, videos and web sessions. The resources may be sorted by topic, making it easier to quickly locate helpful information. For instance, if you want to take a course on how to write your business plan, the learning center is a one-stop destination to find the course as well as other supporting content.

We know that your time is precious, and the Learning Center’s design significantly reduces the number of site pages that users have to visit to find a video or online course.

The learning center’s features include:

  • Information available everywhere at any time for small business entrepreneurs
  • Improved navigation that gives users one-click access to small business courses, videos or web chat sessions
  • A quick snapshot of each form of media, including a brief description and system requirements
  • Free online courses on topics such as How to Write a Business Plan, Essential Guide to Starting Your Own Business for Young Entrepreneurs, Government Contracting 101, Green Business Opportunities and Encore Entrepreneurs: An Introduction to Starting Your Own Business
  • Recommended courses, videos or web sessions based on selections that the user makes while navigating

I also encourage entrepreneurs to connect with SBA’s mentor network for further assistance. Local Assistance, a location-based map, allows you to connect to your nearest SBA District Office, Small Business Development Centers (SBDCs), SCORE Chapters, Veteran’s Business Outreach Centers and Women’s Business Centers (WBCs), where you can receive helpful counseling, training and mentoring from any of these resources for starting, growing and managing your small business. You may simply enter your zip code to get access to descriptive information about each SBA resource and narrow your search based where you would like to go for assistance. It’s that easy.

SBA’s Office of Entrepreneurial Development, in collaboration with our entire communications team, is continually exploring other ways to offer engaging materials to help keep your entrepreneurial enthusiasm going.

About the Author:

ngoriel
Natale Goriel

SBA Official

Hi, my name is Natale and I'm serving as a Moderator for the SBA Community. Our goal is to continually improve this site to meet your needs, so we appreciate your feedback and participation.

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6 Things You Need to Know About Your Tax Responsibilities as an LLC

By Caron_Beesley, Contributor
Published: November 13, 2012

Do you operate a single “owner” or member limited liability company (LLC)? Thinking of forming a multi-member LLC? Either way, you’re likely to have questions about how your business is, or will be, taxed.

Here’s what you need to know.

The Basics of Tax Law for LLCs

First, it’s important to understand how an LLC is structured according to tax law. Unlike a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses "pass through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership. The business does not pay federal income taxes, although some states do apply an annual tax to LLCs.

Depending on the number of members in your LLC, the IRS will treat your business like a sole proprietorship or partnership. However, certain LLCs are automatically classified and taxed as corporations by federal tax law. LLCs not automatically classified as corporations can choose their business entity classification. To do so, an LLC must file Form 8832. Refer to this guide from the IRS for guidelines about how to classify an LLC.

Income Taxes for Single Member LLCs

If you operate single member LLC, then the IRS will treat your business as a sole proprietorship (unless you elect to be a corporation) – meaning that the LLC itself does not pay taxes. Instead, you report all profits and losses of the LLC on your personal income tax return on (Schedule C) and file it with your 1040 tax return.

Get forms and read more from the IRS about single member LLC tax responsibilities. This page also explains when you should file using your social security number and when you should use your Employer Identification Number (EIN).

Income Taxes for Multi-Member LLCs

If your business has multiple owners, the IRS will treat your business as a partnership, unless you elect to be taxed as a corporation (read this blog from SBA guest blogger Barbara Weltman for more on this). Again, the business doesn’t pay taxes, but each owner is taxed on their share of the profits via their personal tax returns (attaching Schedule E). How a multi-member LLC shares profits is defined in the LLC Operating Agreement. Although not required by law in most states, this agreement structures your LLCs financial decisions, including how profits and losses are distributed.

You’ll also need to file Form 1065 (as all partnerships do) with the IRS. This form helps the IRS determine that each member is reporting income correctly. The LLC also must give each partner a Schedule K-1, showing each member’s share of partnership income, credits and deductions. Each member then reports this on their individual Form 1040 and Schedule E. If the LLC is a corporation, it should file Form 1120.

Read more from the IRS about an LLC filing as a corporation or partnership.

If your LLC splits profits and losses in a manner that doesn’t match each member’s percentage interests, you’ll need to request a “special allocation” from the IRS – something you ought to consult about with an accountant or tax lawyer.

Paying Estimated Taxes

LLC owners and members are self-employed and therefore aren’t subject to tax withholding, so each member must pay estimated taxes and self-employment taxes (Medicare and Social Security) quarterly to the IRS and their state tax office. Read more in How To Calculate and Make Estimated Tax Payments.

If you have a multi-member LLC with an owner not actively involved in the LLC (i.e. they invested in the business but don’t participate either through providing services or making management decisions), then that owner may be exempt from paying self-employment taxes. Your accountant or tax lawyer can tell you if your business meets the specific requirements of this exemption.

Sales Tax

Sales tax is a point-of-purchase tax imposed by state and local governments. The purchaser pays it and, as a small business owner, you assess it, collect it and pass it on to the appropriate authorities within the prescribed time. Rates and laws vary from state to state, which often leads to confusion, especially if you sell to customers in more than one state. To understand when sales tax applies and how to pay it, read Sales Tax 101 for Small Business Owners and Online Retailers.

State Taxes

If you operate an LLC, you’ll typically pay taxes to your state in the same way you do to the IRS – through your individual returns. Some states charge an LLC tax on income earned by that LLC, on top of the members’ income tax paid. Other states charge an annual LLC fee, unrelated to income, also known as a franchise tax, registration fee, or renewal fee. It’s a good idea to check the tax and business law in your state before you form an LLC.

Useful Resources

 

 

 

How to Change the Structure of your Small Business

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

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SBA Learning Center

Government Contracting 101 Part 2

This course is designed to help small businesses understand how the government buys goods and services.  There are three parts to the GC 101 training program. This part, part two, discusses the steps used by the government to purchase what it needs.   See the Government Contracting Classroom for more information.

Duration: 00:18:05

System Requirements:

Acrobat Reader, Adobe Flash Player

Due to Flash limitations, some courses will only play in iOS tablets or mobile devices with additional software installation
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SBA Learning Center

Pre-8(a) Business Development Program Module 1 - Setting Expectations

This course is an introduction to the 8(a) Business Development Program and eligibility requirements.   See the Government Contracting Classroom for more information.

Duration: 00:28:49

System Requirements:

Acrobat Reader, Adobe Flash Player

Due to Flash limitations, some courses will only play in iOS tablets or mobile devices with additional software installation
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SBA Learning Center

Government Contracting 101 Part 3

This course is designed to help small businesses understand how the government buys goods and services.  There are three parts to the GC 101 training series. This part, part three, specifically discusses how to sell goods and services to the government.   See the Government Contracting Classroom for more information.

Duration: 00:33:18

System Requirements:

Acrobat Reader, Adobe Flash Player

Due to Flash limitations, some courses will only play in iOS tablets or mobile devices with additional software installation
Course Preview Image

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Pre-8(a) Business Development Program Module 2 - Introduction to Federal Contracting

This course is an overview of federal contract markets and a description of how the government buys goods and services.   See the Government Contracting Classroom for more information.

Duration: 00:38:33

System Requirements:

Acrobat Reader, Adobe Flash Player

Due to Flash limitations, some courses will only play in iOS tablets or mobile devices with additional software installation
Course Preview Image

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Strategies for Growth: Exporting Opportunities

Does your product have potential in an overseas market? Small businesses can compete with larger companies in the global marketplace. Plan for the extra effort it takes to bring your product to foreign markets.
 
The SBA/Dell Strategies for Growth series presents interviews with successful entrepreneurs and experts who know how to grow a small business. Real stories and topic-specific advice will help you decide if your business is ready to grow. What does it take to be a successful entrepreneur?

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SBA Delivering Success: Entrepreneurial Spirit

Discover how passion and business coexist.  Learn what it takes to turn a passion into a business.

The U.S. Small Business Administration and the U.S. Postal Service bring you Delivering Success—video interviews with successful entrepreneurs who share the lessons they've learned about owning a small business.

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Schedule C Profit or Loss from Business

Learn from IRS experts about what is a Schedule C, Profit or Loss from Business, and who needs to file it.

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