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- 25 tax tips for entrepreneurs that you may not know about. [BusinessWeek]

- New Zogby poll finds 63% of Americans think entrepreneurs will lead the U.S. to a better future. That’s much more than they trust the news media, government or large corporations. [WeMedia.com]

- 75 “Outrageously Creative” tips for saving money and growing your business. [SmallBizTrends]

- SBA’s new stricter “goodwill” lending rule upsets some business owners. They want to know why SBA is making it harder for entrepreneurs to borrow money during the credit crunch. [Washington Post]

- Self-employed women spend more time with kids and on household chores than women working for someone else, according to a study released by the Small Business Administration’s Office of Advocacy. Self-employed women also spend more time taking care of the kids and work 10 hours less per week than self-employed men. [SBA Office of Advocacy]

- Some malls are battling the recession by attracting locally owned businesses instead of national chains. [WSJ]

- The U.S. government should be giving billions to venture capitalists to invest in start-up entrepreneurs right now, not bailing out big companies, NY Times columnist Thomas Friedman argues. [NYT]

Any other important or interesting small-business items we missed this week?

Small businesses are having a harder time meeting their obligations in offering retirement benefits for their employees, with two stark choices facing them: shut their doors or end their contributions, according to testimony at yesterday’s hearing before the House Committee on Small Business.

“Even before the economic downturn there was concern that small employers could not offer retirement plans at the same level as large corporations,” said Rep. Nydia Velazquez, D-N.Y., chairwoman of the House Small Business Committee, in a statement. “With consumer spending at an all-time low, and credit difficult to access, many small firms find it impossible to make up the difference for retirement plans hit hard by the stock market’s losses.”

Consider the facts: In the past 18 months, more than $2 trillion in retirement savings has been lost because of the stock market’s downturn. 401(k) plans have dropped more than 20% in value in the past year. In addition, 56% of workers are less confident in their ability to achieve a financially secure retirement than 12 months ago, with about a third expecting to work longer and retire at an older age, according to a recent survey by the Transamerica Center for Retirement Studies.

“In the current economic environment, it is more important than ever that Congress focus on encouraging the implementation and maintenance of retirement plans by small business,” says Jason Speer, vice president and general manager of Quality Float Works Inc. of Schaumburg, Ill., and a fourth-generation manufacturer.

Witnesses urged the Committee to look into these solutions:

- Consider measures to cap the amount of losses employers are responsible for covering during market downturns.

- Encourage unlimited pre-funding of defined benefit plans during “good” times so that there is less strain during the “bad” times.

- Make employee IRAs mandatory.

- Raise the age for required minimum distributions from 70.5 to 75, since many people are working longer.

- Create an annual tax credit to reward small employers that continue to maintain retirement plans and contribute to the plans.

Ranking Member Sam Graves, R-Mo., says that only 30% of small firms offer a pension plan, according to a National Federation of Independent Business survey, even though small companies represent 99% of all employers in the U.S. “We must work towards educating American workers on the necessity of retirement saving and helping, not by mandating small businesses to provide employees with retirement benefit plans,” Mr. Graves said in a statement.

Is your small business having a hard time fulfilling retirement benefit obligations? Are the solutions proposed above enough to keep retirement benefit packages?

Photo: Associated Press

President Obama mentioned “entrepreneurs” and “small-business owners” – “the hardest working people on earth”- several times last night in his first address to Congress. The U.S. economy, he says, relies on innovation and small businesses continuing to hire workers to stay strong.

Though the President didn’t offer new proposals geared directly at entrepreneurs, he spoke about several new budget plans that will surely affect them, including soon starting talks to reform the U.S. health-care system and investing government money in renewable energy projects. He also justified bailing out the struggling banks – a very contentious issue on this blog – as a way to ensure small businesses can borrow money so they can continue to hire new workers.

He said: “Because when credit is available again, that young family can finally buy a new home. And then some company will hire workers to build it. And then those workers will have money to spend, and if they can get a loan too, maybe they’ll finally buy that car, or open their own business.”

President Obama also said he intends to raise taxes on households earning more than $250,000 annually – an issue that has varying degrees of effects on entrepreneurs, depending on whom you ask. Some research has shown that less than 5% of small-business owners earn that much annually. Still, some experts worry that raising taxes will disproportionately hurt high-growth businesses – the ones that create the most jobs.

Republicans, in particular, said they fear his plans to raise taxes will hurt entrepreneurship and job creation.

“The worst thing we can do during a recession is take dollars out of the hands of the small-business owners who create jobs for Americans,” said Rep. Sam Graves, a Republican ranking member on the House Small Business committee, in a statement responding to President Obama’s speech. “This administration is trying to balance their massive spending increases on the backs of Main Street. Every dollar the government takes is a dollar that cannot be used to make that month’s payroll or reinvested to create new jobs.”

Readers, what did you think of the President’s speech? Are his plans good for entrepreneurs?

Photo: Getty Images

Family-owned businesses in the U.S. number about 25 million, many of them mom-and-pop operations, and while there’s no federal or trade group tracking the closures of family businesses, experts say they are vulnerable in this current economy, according to a USA Today article this week.

‘What you’re seeing is more of the small ones biting the dust,” says Robin Klemm, director of a family-business program at Oregon State University. “They are most at risk in tough times because many lack solid business plans and deep reserves.”

For those that are still able to keep their family business afloat, making hard decisions, such as pruning the family tree by kicking out family members that don’t contribute to the business, may become more of a necessity, says Wayne Rivers, president of the Family Business Institute, in a video interview you can watch here. While those decisions can be hard, better morale and a stronger business will come out of it.

Still, the effect of family business closures may impact more than immediate relatives. The closure of family-owned businesses eliminates important role models, especially in poor and minority communities, says Bruce Corrie, dean of the College of Business at Concordia University in St. Paul. “They are the ways in which the American dream is realized,” he says.

Do you think family-owned businesses are more endangered than other types of small businesses?

For the cover story in today’s Journal Report on Small Business, I spoke with entrepreneurship experts, academics and psychologists to figure out what characteristics and lifestyle factors improve someone’s chances of being successful and happy as an entrepreneur. From these interviews, I came up with a list of 10 questions someone should ask before embarking on self-employment.

These include looking at whether your significant other supports the decision, your ability to swallow huge financial risk and how well you communicate and persuade others.

This is an important topic right now, as more laid-off workers are exploring entrepreneurship for the first time in their lives – sometimes after spending decades working for someone else. One common theme that arose in several interviews was that too many people jump into starting a business without carefully and realistically evaluating the effect it will have on their home life, their finances or their lifestyle. They like the idea of working for themselves and the prospect of making great wealth. But not doing careful enough self-analysis beforehand can lead to failed marriages, ravaged personal savings and years lost that might have been spent in a more personally fulfilling way.

You can listen to a podcast with one entrepreneur talking about her personal hurdles starting her company here.

Readers, were you prepared for the life of an entrepreneur? Would it have helped you to have done more self-analysis beforehand?

- Remember when we asked you awhile back which innovations of the past 30 years made the biggest impact? The winners are out. Top 3: Internet/broadband, personal computers and mobile phones. Other interesting picks include microfinance, GPS systems, DNA testing and MRI machines. Read the full list here. [Knowledge@Wharton]

- Small Business Administration-backed lending plummeted 57% year-over-year in the 1st quarter of fiscal year 2009, which ended Dec. 31. But SBA lenders are hopeful that the $730 million granted to SBA in the newly signed stimulus package will revive popular lending programs. [BizJournals.com]

- Treasury Department’s first monthly update on lending by top 20 recipients of federal bailout money shows lending decreased 1%. Lending would have dropped much more if bailout money hadn’t been provided, Treasury says. [Treasury]

- Kauffman Foundation launches new entrepreneurship training initiative for ex-Wall Streeters laid off in the financial crisis. [Portfolio]

- Figuring out how many small businesses will benefit from the stimulus package takes some digging. There just isn’t much relief there. [NYT]

Any other interesting or relevant small-business items we missed this week?

What’s happening with self-employment in the bad economy? Will all those laid-off workers become entrepreneurs?

Case Western Reserve University entrepreneurship professor Scott Shane examined data from the Bureau of Labor Statistics to figure out how the economic hardship is affecting entrepreneurial activity. There’s a false assumption, Prof. Shane wrote on USNews.com recently, that entrepreneurship has steadily risen in the U.S. in recent years. Mr. Shane’s research instead shows the U.S. self-employment rate actually dropped from a steady 6.9% in 2003 and 2004 to about 6.45% by mid-2008.

As the economy deteriorated in summer of 2008, self-employment rates dropped even more, landing around 6.2% by September. More recently, the self-employment rate has ticked up slightly, to about 6.3% in January. That’s not because more people are starting businesses, however.

“The catch is that the ‘improvement’ in the job situation among entrepreneurs appears to be a relative one,” Prof. Shane wrote on SmallBizTrends.com. “The better self-employment rates we have seen in recent months are largely the result of a cessation in declines in the number of self-employed people, coupled with continued declines in overall employment.”

His findings may break a common perception that today’s recession will lead to much higher rates of entrepreneurship. Bad economies and high unemployment certainly seem to spur more interest in entrepreneurship. We’re seeing more indications – such as more entrepreneurial training programs – that laid-off workers are indeed exploring starting a business as an option. But interest isn’t the same thing as actually doing it. Many people might consider becoming entrepreneurs – or even try briefly – but the inability to borrow money, get affordable health insurance and find consumers willing to buy their products might be a quick deterrent. Many of these people may ultimately decide they’re safer working for someone else.

Readers, what do you think? Will we see more entrepreneurs in coming years? Or is the economic climate just too rough to support them?

For years, California has been the center of the technology-driven start-up community. Is that phenomenon going to end?

It wasn’t long ago that anyone with a fresh tech-related idea would pick up and move to the West Coast in search of like-minded entrepreneurs – and funding. Just a few months ago, I wrote this blog post about East Coast universities that were struggling to keep their bright students from taking their start-up ventures and heading west. New York City’s push for a “Silicon Alley” bustling with tech companies never did take off, precisely because the vast majority of tech businesses continued to look west.

Well, it’s no secret that tech companies are harder to start – and harder to keep growing – these days. Silicon Valley is struggling. Meanwhile, this WSJ editorial blasts California for its onerous tax structure. The state has some of the highest income and sales tax rates in the country. Complicating the business-generation picture, many areas in the Golden State are struggling with high foreclosure rates and dramatically reduced home values – essentially eliminating home equity as a source of start-up capital.

Unlike entrenched big businesses, start-ups have the luxury of being able to move without too much upheaval – though it’s certainly not easy. With state governments all over the country hurting for tax revenue, some of them are launching programs designed to woo new businesses. It seems unlikely, but Michigan has already made some inroads with tax breaks designed to lure movie studios to film in its gritty urban neighborhoods and leafy suburbs. Other states are reaching out, too, offering not just tax breaks but grants for small businesses that set up shop within their borders. When it comes to new business generation, maybe California’s golden years are behind it.

So what’s the next hot spot for business generation? For start-ups, is California over?

Photo: AP

If the bad economy isn’t enough, there’s another financial danger to watch out for these days: Employees who steal.

My colleague Simona Covel writes today that employee fraud is rising at small businesses now that so many workers are feeling financial pressures in their personal lives. It could be an employee skimming $20 bills from the cash register, or a bookkeeper doctoring financial records. Sometimes fraud is so undetectable that the owner attributes the lost income to falling sales.

The article offers some helpful tips for how business owners can prevent fraud. One important step: After fraud is detected, the owner should stay quiet for a while as they build their case against the employee and enlist a lawyer and accountants’ help.

You can read more tips for preventing employee fraud here and here. Here are some possible ways:

Keep your own eye on finances. Just because you have a designated bookkeeper doesn’t mean you don’t have to check bank statements. You should be poring over statements, deposited checks with signatures and other financial documents carefully, making sure nothing looks fishy.

Install a security camera. Employees are less likely to steal if they feel someone is watching them. Focus the camera on the areas where cash is most likely to be dealt.

Check prospective employees’ backgrounds. Somebody with the gall to steal from you likely had the gall to steal from someone else. Make sure you thoroughly check references of employees to ensure there isn’t any criminal activity or suspicious behavior you should be aware of.

Conduct surprise audits. Even if you don’t have an auditor on staff, you can hire an accountant to come and do an independent audit of your books. If you do them sporadically, employees won’t have time to cover up any rogue activity.

Enlist employees’ help. Make it clear that you have a no-tolerance policy for fraud and make it easy and risk-free for employees to report it. You might set up a system where employees can report suspected fraud anonymously.

Make sure employees take vacations. Employees defrauding their employer often don’t want to take vacations because that’s when their scam gets discovered.

Has your business ever been a victim of fraud? Any other tips for preventing it?

The rise in layoffs and downsizings may lead to a jump in employment-discrimination lawsuits against companies, according to a recent article in Human Resource Executive.

Last year, employment-discrimination charges rose 15%, the story says. And more may be on the way.

Big businesses often have teams of lawyers to advise them on how to lay off legally and how to avoid gray areas that could lead to lawsuits. But small companies may not have those resources, and that could leave them vulnerable. The dismal job outlook may lead to even more claims than in past recessions, when unemployment rates were lower. This time around. unemployed workers may feel desperate and thus more likely to look for compensation.

In the past, many employers tried to protect themselves by offering severance packages in exchange for a former employee’s signature on a release saying they wouldn’t sue. For big companies with rich packages, that helps. But companies that don’t offer severance don’t have that leverage. And some small severance packages - like two weeks pay - just might not be enough to deter a former employee from rejecting the package and filing a suit that could net them much more.

According to the article, employers would be wise to check into current employment laws to make sure they’re up to speed on things like the Older Worker Benefit Protection Act, which protects older workers from age discrimination. And when in doubt, just try to be fair to your employees.

Readers, are you worried about employee lawsuits?

Photo: AP