After decades of rapid growth in which housing developments sprouted in swamps, farmland and deserts, the number of Americans moving to several states in the South and the West has slowed sharply because of the recession and housing bust, according to Census Bureau figures released Wednesday.

The longtime magnets of Florida and Nevada, which had benefited most as people fled the dreary cold of the Northeast and Midwest, saw more Americans move out than move in during the year that ended July 1. California also had a net loss of so-called domestic migrants, although in all three states the impact was blunted by immigration from other countries and by natural growth because of births.

The state population figures foreshadow a political realignment that will occur after the 2010 Census, which is used to determine the reapportionment of seats in the House of Representatives. Texas, which had the biggest population growth last year, 478,000 people, is among the states that stand to gain seats, and states in the Northeast and Midwest could lose.

The economic downturn and the upheaval it has spawned are creating an unusual set of challenges for next April’s national count. Foreclosures and job losses have caused many to give up their homes and move in with friends and family, and Census Bureau officials fear that those people could be undercounted. As the latest data suggest, hard times have led many people to abandon once-booming locales, and increasing numbers of others to stay put, when they cannot sell their houses or land new jobs.

The economy has also reshuffled the growth rates of states, transplanting some onto the losing side of the ledger for the first time in recent memory, according to William Frey, a demographer with the Brookings Institution.

Arizona, for example, was ranked in the top five states in population growth every year of this decade, until this past year. Just 15,000 Americans moved into the state, down from 55,000 the previous year. Georgia’s growth rate, usually about 2 percent, has been cut in half.

Conversely, the District’s growth rate of 1.6 percent almost tripled from the previous year. Virginia gained 87,000 people, more than half of them new residents. Maryland’s population grew by 41,000, but the state had a net loss of 11,000 domestic migrants. That was offset by about 20,000 people who moved to Maryland from other countries.

California and New York had repeatedly been in contention for losing the most American residents to other states; both states are now losing fewer residents than before.

But it is Florida and Nevada that had the most stark reversals of fortune. In the first half of the decade, they were usually among the top five in both population gain and growth rate. They now rank among 23 states that are losing more Americans than they gain.

These annual estimates are not an exact count. Although the census estimated that Florida gained 114,000 people last year because of immigration and births, researchers at the University of Florida said they thought the population had actually declined for the first time since the end of World War II, when many military personnel based in Florida left the state to go home, said Stan Smith, head of the school’s Bureau of Economic and Business Research. Even so, the increase is the smallest since 1949, he said.

“Florida was a state people moved to,” said Frey, adding, “It was a growth machine, and it just sort of stopped.”

Nevada’s population would have been virtually stagnant last year, if not for 11,000 newcomers from other countries who more than offset the net loss of 3,800 American residents.

“From Florida’s point of view, it’s cataclysmic,” said Isaac Eberstein, director of the Center for Demography and Population Health at Florida State University. Florida has no personal state income tax, only taxes on sales and property, Eberstein noted. “We’ve shifted all taxes onto the people coming in, whether new residents or tourists,” he said.

Smith said he expects that the state’s population growth will pick up when the economy improves, although probably at a lower level. Baby boomers will retire soon, and the state should continue to attract immigrants from Latin America, he said. But birth rates are expected to decline, and other states are aggressively competing to attract retirees.

“I think it’s more of a temporary blip than a permanent change,” Smith said. “But temporary doesn’t mean really short-lived.”

Nevada faces hurdles as it tries to return to the growth rates of 3 to 4 percent that it enjoyed throughout most of the decade. Last year, its population increased just 1 percent.

Nevada State Demographer Jeff Hardcastle said legalized gambling in other states and on Indian reservations has ended Nevada’s onetime monopoly on casino gambling, and rising fares for travel to the state are drags on any recovery.

“I used to joke a 3 percent growth rate in Nevada was considered a recession,” Hardcastle said, with no humor discernable in his voice. “I don’t think anybody was fully expecting this to happen. And I don’t think anybody has a good handle on what’s going to happen next.”

Small businesses locally and nationally have been hit with dwindling revenues and cash flow and are finding that traditional refinancing options are harder and harder to come by. Combining the lower level of revenues with business operating expenses, credit card debt, and small business loan debt can have a devastating impact on a business’s financial health. Many such owners have trimmed operating expenses, labor costs, and all other controllable costs, leaving changes to rent or building payments and their commercial banks loans as the only way to improve cash flow (assuming a landlord will even consider reducing rents).

This leaves us with the bank loans, and here lies the dilemma: Businesses that have seen their sales decline, thus causing a reduction in cash flow, have also found their assets are worth less on the market. The banker identifies these factors and realizes that this business is a greater risk than it was when the money was originally loaned. Requests for new monies and/or for refinancing of existing loans get declined.

Banks will actively look at, and in fact refinance existing debt for businesses with a stable ability to service debt (with good cash flow), sound collateral, and owners with good credit. Certain types of loans may have restrictions or qualifying events needed to allow the business to successfully cause refinancing, but it does occur. And, there are some bright spots when refinancing. Recent modifications to the U.S. Small Business Administration 504 Certified Development Company Loan Program-used for growing businesses with long-term financing for fixed assets such as land and building, will permanently allow small business owners to refinance their existing loans. Legislation allows 504 program projects to include a limited amount of debt refinancing if there is a business expansion and the debt refinanced does not exceed 50% of the projected cost of the expansion. The SBA, under provisions of the American Recovery and Reinvestment Act (ARRA) has another new program which is somewhat of a lifeline to small businesses struggling to manage business debt. One of these, the American Recovery Capital (ARC), is a loan program which provides interest free loans (through a limited number of local banks) of up to $35,000 to small businesses for purposes of making payments on existing, qualifying small business loan for up to 6 months. The loan is interest free and 100% guaranteed by the SBA. Loan proceeds are provided over a 6-month period and repayment of the ARC loan is deferred for 12 months after the last disbursement of the proceeds. The good thing is that qualifying loans can include credit cards used for business, capital leases, 504 loans, or other loans without an SBA guaranty, and loans made with or without an SBA guaranty since February 2009.

The key for businesses in surviving these times is to communicate with your bank and your banker. They will do whatever they can, within reason, to work with you to allow you to be able to remain in business and thus repay your debt.

article written by:
Rod Jorgensen
Director of Counseling
Nevada Small Business Development Center
College of Business
University of Nevada

With more than 100 people in the ballroom of the Joe Crowley Student Union and another 170 watching online, Johnson noted that the University of Nevada, Reno had entered a new phase following 18 months of campus discussions centered primarily on budget reductions.

“This year, we’re actually getting to live with a $33 million reduction,” Johnson said, “and we’re discovering that it’s much more difficult to live with a $33 million reduction than to plan for a $33 million reduction.”

And yet, during a far-ranging discussion led by University President Milt Glick and featuring Johnson’s presentation on the University’s strategic plan, there was reason to feel a cautious sense of optimism.

“We’re still doing business,” Glick said, noting how neighboring California’s higher education system has made headlines in recent weeks because of student, faculty and staff protests regarding budget cuts.

Glick credited the campus’ students, faculty and staff for weathering the budget-reduction process in a much more collegial manner.

“The culture of this campus and the willingness to understand that this is a tough time … people are doing their best and being extremely positive about it,” he said. “That’s something special.”

Glick’s remarks at the beginning of the town hall echoed a theme that both he and Johnson stressed throughout.

“There have been a lot of good things that we’ve done,” Glick said at one point. “And, on the other hand, a lot of tough things.”

Glick noted several positives from a mixed bag of University news for the fall semester, including:

 Significant growth in diversity and freshman class academic accomplishment, although overall enrollment was flat. “Our enrollment is flat for this semester,” Glick said, “but for our freshman class, this is our most diverse class ever, and the academic credentials of our freshman are higher than ever.” Glick further noted that the University had achieved an 80 percent retention rate for last year’s freshman class – a record retention rate for the institution.

 Competitive grants higher than ever before, although total research dollars were flat. “Our research, which is about $73 million, is flat from a year ago,” Glick said. “But competitive grants are higher than ever before, and we’re very pleased with that.”

Glick also noted that Faculty Senate Chair Elliott Parker, a professor of economics in the College of Business, had recently completed a study of the University’s budget reductions. Parker’s study found some interesting news, Glick said.

“Elliott found that instructional expenditures this year, compared to last year, were actually slightly up,” Glick said, adding that the institution, through the 15 percent budget reduction process, has increased class sizes but has made sure that student access to the courses they most need to make significant academic progress have not been curtailed.

 Sustainability on the rise on campus. “The (Sustainable Endowments Institute) sustainability report card came out yesterday,” Glick said. “We received a C-minus last year, and a B-plus this year. Only 26 institutions received an A-minus, so we think that’s really good.”

 New Pennington building to help spur medical training consolidation, sense of entrepreneurship on campus. Glick said the new Pennington Health Sciences Building would probably begin construction in November. The project is made possible thanks to the Nevada State Legislature and private donors such as the William Pennington Foundation, which gave a $10 million donation to the University last month, the Nell J. Redfield Foundation which gave a $2.5 million gift and the Thelma B. and Thomas P. Hart Foundation which gave a $1 million gift. When completed, the building will help the University of Nevada School of Medicine and the Orvis School of Nursing produce more doctors nurses and, perhaps just as importantly, train them in the same facility.

Glick said that during last month’s Foundation Banquet, the Pennington Building and its vast potential had grabbed the attention of the banquet’s keynote speaker, Harvard medical professor Dr. Atul Gawande. Gawande, one of the nation’s foremost leaders in health care reform, said he came to Reno expecting to have some fun, gamble a little, and deliver a speech.

“Instead,” Glick quoted Gawande as saying, “I found the future of health science education. It was a ‘duh’ moment. Imagine, training doctors and nurses in the same building.”

“Going forward, our plans are now to move from buildings to people,” Glick said. “We are going to focus on students and faculty and funding for programs. Our priority will be to enhance faculty support and to enhance student support.”

To do this, Glick and Johnson both said the campus will increasingly look to become more entrepreneurial, seeking partnerships in the community and with state programs.

Johnson laid out a compelling vision for how this is to be accomplished, with a short recap of the presentation he will make to the Nevada System of Higher Education’s (NSHE) Board of Regents in December regarding the University’s strategic plan.

The six-year plan, Johnson said, has the potential to eventually grow the University in certain and strategic ways.

“We realize these are difficult economic times for the next two years, maybe the next four years,” Johnson said. “But we also think there is room for improvement and growth.”

As an example, Johnson said the University continues to climb national rankings for the number of National Merit Scholars on campus. This has been an area that Glick, Johnson and others have emphasized, even with declining state support. The results have been encouraging. Just a few years ago, the campus had four National Merit students. That number has grown to 26 this semester. Against 2006 data, the more recent available, this number would rank the University in the top 100 universities in the country.

Johnson said the University’s strategic plan has eight goals to build toward by the year 2015, with the overriding vision being the following:

“The University of Nevada, Reno is an internationally respected, high quality, accessible arts and science university fully engaged with Nevada’s citizens, communities and governments to improve economic and social progress.”

The goals were listed as follows:

Goal No. 1: Be a comprehensive university.

Johnson said this includes not only being a doctoral-granting, research type of institution, but also one that values and grows its student body. He said the institution needs to increase its undergraduate population to more than 15,000, and also needs to raise graduation rates and reduce students’ time to graduation. Graduate school enrollment, he said, must grow to more than 4,000 students.

“We also need to be the university of choice for the high achieving students,” Johnson said. “A growing proportion of our students are ACT 26-plusers, National Merit and Presidential Scholars.”

Again stressing the role of partnerships, both on and off campus, Johnson said the institution will increasingly “focus on sources of external entrepreneurship to grow in a time of budget reductions.”

Johnson also added that a newly established Outreach Council will help the campus coordinate efforts by the colleges and Cooperative Extension to reach out to the University’s various community, state and regional stakeholders.

Goal No. 2: Serve Nevada’s traditional and emerging renewable energy industries.

Goal No. 3: Prepare Nevada for the diversified knowledge economy.

“We want to have all of our graduates enter the workforce fully prepared for the digital age,” Johnson said.

Goal No. 4: Prepare Nevada youth to participate in the world economy.

To this end, Johnson said greater emphasis will be placed on partnering with local school districts and schools “to raise the aspirations of the students as well as the teachers.”

Goal No. 5: Improve the physical and mental health of Nevadans.

Goal No. 6: Enhance sustainable environmental quality in Nevada.

Goal No. 7: Participate in intercollegiate athletics.

“It’s interesting to note that the graduation rate of all of our student athletes exceeds the graduation rate of the average student on our campus,” Johnson said. He added that Nevada is the only school in the Western Athletic Conference to have met all of the academic eligibility standards of the NCAA for the past four years.

Goal No. 8: Build the University’s infrastructure.

“Not only physical infrastructure, but the infrastructure, the support we have for our faculty and students,” Johnson said.

Johnson said the strategic plan “will be accountable.” He then listed more than a dozen categories, from undergraduate enrollment, to graduation rates, where the University will constantly monitor its progress, with results compiled in an annual report.

Glick, who never hesitates to note that he prefers having strategic plans in digestible, smallish bites – small enough to fit on an index card, if possible – smiled broadly as he thanked Johnson and others for the work that had gone into the strategic plan.

“Marc Johnson has worked with a lot of people to flesh out my 2 by 4 card,” Glick said.

Friday, October 09, 2009

By John Trent

The economy has taken its toll on our community, and many organizations have had to cut back on full-time employment. If employees at your business are facing increased workloads and additional projects, it may be the opportune time to consider implementing an internship program.

Internship programs can be as small as one intern and as large as a cohort of many, but they typically result in a win-win situation. Students are exposed to the workplace, gain experience in their discipline, create contacts and are paid for their work. The organization gets help from students with some education in the field, meets a business need relatively inexpensively, and gets the chance to preview the interns as potential full-time future hires.

The first step in developing a strong intern program is assembling inter¬nal support and clearly identifying the need for interns. Internal support can be as simple as discussing the concept with your staff and agreeing to respect, assist and mentor an intern. In larg¬er organizations, internal support is best if it starts at the top. While CEOs may not be personally involved with employee development, they understand the value of good employees. At some larger firms, interns’ orientations include a meeting with a divisional vice president, CFO, or area manager. This shows support from the beginning of the interns, and helps interns understand that they are part of the team. Additionally, it shows the other employees that there is company support of the interns.

Next, it’s important to identify exactly what the intern is to accomplish by writing a job description. Include duties, responsibilities, knowledge, skills, abilities, reporting structure and work schedule. Don’t forget to also include what training and organizational/departmental exposure you will provide the intern. Contact the appropriate department at the university to determine if academic credit is available and if there are specific guidelines that must be met.

None of us like working on “busy-work” projects, and nei¬ther do interns. While they may not come to the workplace as seasoned professionals, they do come with knowledge, skills, and a level of enthusiasm and energy that is difficult to match. Nothing can sap that energy and enthusiasm faster than placing an intern in a project with no significance or connection to the company’s daily or long-term mission.

There are several ways you can promote and encourage applicants to apply for an internship. Both the University of Nevada, Reno (Career Navigator www.unr.edu/cn) and Truckee Meadows Community College (www.tmcc.edu/placement/studentjobs) have free online job boards that students frequently check. Follow up with the appropriate department to see if professors can help promote the opportunity to their students. Create a promotional flyer that can be posted around campus or attend one of the Career and Internship Fairs held each semester. If you would like to discuss creating an internship program and explore the ways you can reach out to this population this summer or fall, contact me at bessette@unr.edu or 775-682-9144.

Jane Bessette is director of career connections and alumni relations in the College of Business at the University of Nevada, Reno.

Want to jump into the social media waters, but worried about the time commitment? Think again. Reno’s Cabana Tans has nearly 10,000 “friends” on the social network, MySpace. This network receives automated bulletins offering price specials on tanning sessions that drive them to the business, according to owner Heidi Cortez. Why MySpace? “It is a free way to reach our 18- to 26-year-old market without paying $1,200 for a local ZIP code postal mailing—and only takes one hour a month,” according to Cortez.

Most businesses favor Facebook’s social network, partly due to its older member demographics. Colin Loretz, project manager at Reno’s Twelve Horses and graduating University of Nevada, Reno marketing major, attributes over half of the attendance to the recently held WordCamp event to social media networking efforts over a one-month period. Wordcamp is an annual workshop for users of the Word Press blogging platform. Loretz created a Facebook event page and sidebar ad to promote Wordcamp, targeting the ad only to Facebook members residing within 50 miles of Reno who blog, write and design Web pages. This narrowly targeted ad cost only 65 cents for each person clicking on it.

Loretz also promoted Wordcamp via Twitter, the fastest growing micro-blogging site that boasts over 7 million users, according to Nielsen Online ratings. Twitter is not just for kids and teens: 62 percent send their “tweets” from work. Tweets are 140-character messages sent to a member’s twitter stream, usually from a cell phone. Loretz was able to make announcements and answer questions about WordCamp in his tweets.

Move over e-mail, the Internet’s social media are now the way to connect with prospects and customers. Small- and medium-sized businesses find value in social networks such as blogs, Twitter, Facebook and LinkedIn (the premier business network) for several reasons. First, companies find their e-mail blasts caught in spam filters, unseen by customers and prospects. Second, 67 percent of online users visit blogs and social networks, with the largest growth in the 35- to 49-year-old group, according to Nielsen Online ratings.

Next, company participation in many social media sites builds brands and Web site traffic by increasing “Google juice” (high ranking for key word search in Google results pages). This kind of activity also helps personal, company and brand reputation because having a lot of positive content will bury negative posts by others.

Finally, using social can help build a relationship and trust. Leading PR firm Edelman found trust in businesses at a 10-year low in its 2009 Global Trust Barometer study. Fifty-eight percent of the respondents said they trust “people like themselves,” while only 36 percent trust CEOs. Government officials fared worse – coming in at 32 percent. Fifty-five percent trusted doctors, and 56 percent trusted academics.

Business is about relationships, not one-way communication, and unlike most company Web sites, the social media host conversations between a company and its customers and among the customers themselves (“people like us”). Give it a shot, but watch the clock while sending those tweets!

Judy Strauss is associate professor of managerial sciences in the College of Business at the University of Nevada, Reno.

The G-20 recently convened in London. The Group of Twenty (G-20) was created in 1999, bringing together critical industrialized and developing economies to promote open and constructive discussion among industrial and emerging-market countries on key issues related to global economic stability. The G-20 consists of the finance ministers and central bank governors of 19 countries and the European Union.

With the current global economic crisis, this recent meeting was clearly the most important meeting the group has held. The economic crisis began in the United States and quickly spread to Europe and the rest of the world because of the economic interdependence among countries.

How did globalization occur?

With the fall of the Berlin Wall in 1989 and the opening of Eastern Europe thereafter, the Cold War ended and the new global system began. The world changed from a system that was dominated by two world powers that were fiercely competing with each other for political and economic dominance to a system with many competitors. In this new system, all could potentially benefit from participating in a worldwide economy.

What drives globalization?

Individuals, businesses and governments make decisions on a daily basis that interconnect them with other individuals, businesses and governments. During the Cold War, the connections that resulted from such decisions were limited to one’s own country or region – to those with the same economic and political philosophy.

In a global system, the decisions are driven by the need to be efficient and effective. Businesses buy resources where they can find the best quality and/or the best price; they sell their products to consumers worldwide. Resources and products are widely available.

The Globalization Index assesses countries’ levels of interconnectedness. Among the most globalized countries are generally Singapore, Ireland, Switzerland, the Scandinavian countries and the United States.

Effects of the Global Economic Crisis

Despite countries’ various levels of globalization and economic diversity, most are hurting and looking to the same solution: stimulating domestic demand. Does this mean we are entering an era of de-globalization? The global system only works and is sustainable if the countries that are part of it have democratic political systems and free-market, capitalistic economic systems. Because of the failures in the financial markets, discussions of more government involvement and oversight have ensued. How free must the markets be to make the global system work?

What about Nevada and globalization?

Although generally known for gaming, Nevada is actually highly globalized. Throughout the state, about 400 companies operate internationally.

Exports from Nevada currently support about 86,000 jobs. Nevada is the fourth largest producer of gold after South Africa, Australia and China. Nevada is ranked fifth in the nation based on the proportion of manufactured goods it exports. In 2008, agricultural exports, such as alfalfa to East Asia, contributed $71 million to the GDP of the state.

Nevada is attracting companies focused on renewable energy from Germany and Spain. Foreign companies that are already operating in Nevada contribute investments of over $7 billion and support about 30,000 jobs.

For better or for worse, Nevada is part of the “new” global economy. For more information on international business in Nevada, contact the Nevada World Trade Council, www.newtrac.net; the Export Assistance Center, www.buyusa.gov/nevada; or the State of Nevada Commission on Economic Development, www.expand2nevada.com.

Yvonne Stedham is professor of managerial sciences in the College of Business at the University of Nevada, Reno.

An old Chinese proverb says, “Anything that can lead you to success may also contain great risk.” Such is true for the stock market. Over long periods of time, stocks have been one of the best performing asset classes. Asset classes are simply things you can invest in, such as CDs, bonds, stocks, etc.

Stocks have averaged annual returns of between 9 percent and 13 percent, depending upon the time period examined. Those returns, however, are not without risk, as recent history has unkindly reminded us. In fact, over the last decade, stocks have underperformed nearly all other asset classes.

How do we reconcile the low returns of stocks with the obvious risks? Shouldn’t the returns be high if the risk is high? The correct answer is “Yes and No.” The crux of the argument is, just taking on greater risk does not guarantee you higher returns.

Taking on greater risk may result in higher returns, but it may also result in catastrophically lower, the same or much higher returns than investing in less risky assets. The correlation between greater risk and a higher rate of return that one so frequently hears about refers to the average of what is expected, not necessarily what one will attain.

Risk represents the range of possible returns, while the actual returns will fall somewhere within that range. Consider the example of two cities, Richmond, Virg. and San Francisco.

The average annual temperature in both cities is about the same, 57 degrees. However, the range of temperatures varies considerably between the two cities. During the coldest month, January, Richmond averages 36 degrees, while San Francisco averages 49 degrees. During the warmest month, July, Richmond averages 78 degrees, and San Francisco averages 63 degrees.

Richmond is obviously both colder in the winter and warmer in the summer, having a wide temperature range of 42 degrees. In stark contrast, San Francisco has a temperature range of only 14 degrees, one-third the temperature range of Richmond.

The range in this example is analogous to risk in the stock market. If you visited Richmond repeatedly, on certain days, it would be the average temperature; just as some years, you will get the expected return from the stock market. However, some days during your visits to Richmond, it would be much colder or much warmer than the average temperature; just like in some years, the stock market will return much more or much less than what is expected.

Unfortunately, stocks are probably less predictable than the weather. About the only thing we can say with certainty is that whenever you invest in stocks, there will be risk. So, caveat emptor, buyer beware!

Gregory R. Stone is assistant professor of finance in the College of Business at the University of Nevada, Reno.

An economic downturn motivates smart business managers to reevaluate operations and identify new ways to enhance their organizations. In times of tight budgets, more effective use of available computer technology and data can help managers learn of new opportunities and identify ways to better run their businesses.

Over the last 20 years, most businesses have invested in computer technology to automate daily processes such as point-of-sale, billing, inventory control, human resources and customer support. For many organizations, if the computer is down, everyone might as well go home because business processes stop working. This is the drawback of businesses being reliant on fully functional computer systems. However, the benefit is that we now have comprehensive automated systems collecting data that can be mined for better decision-making.

Managers have been using computer-generated data to aid decision-making for as long as they have had computer systems. The difference now is that organizations have captured vast amounts of data over the last 20 years and can couple that data with sophisticated computer technology to help compete with comprehensive analytical information. “Business intelligence” is a general term that encompasses the data, computer tools, processes and methods used to support decision-making. It enables managers to analyze historical trends, identify patterns, and experiment with solutions to gain greater insight into ways to improve their organizations.

Business intelligence has four major components:

• Data warehouse: A database designed to store current and historical data to facilitate queries. It usually contains data that is internally generated, such as customer data, as well as related data from external sources, such as demographic data about customers obtained from government census.

• Business management metrics: Key measurements identified by management as critical to understanding and monitoring business performance.

• Analytical tools: Computer software used to analyze data and provide meaningful information. These tools might be simple report generators able to provide basic information, such as which customers spent the most at a given business during the past year. They may also be more complex artificial intelligence programs, called data-mining programs, that can provide information that is more difficult to come by, such as which types of customers are likely to spend the most at a given business during the coming year.

• Information visualization: Computer software used to portray data in ways that make the results meaningful and easier to comprehend. For example, a manager may use an executive dashboard each morning to understand the immediate sales status of a region. A monthly scorecard may be used to present sales comparisons over time.

Organizations use business intelligence in diverse ways. For example, Toyota Motor Sales USA used business intelligence to discover inappropriate shipping costs and increase the volume of cars it handled by 40 percent within a four-year period. The state of Texas created a business intelligence system to better identify businesses operating in the state that were not complying with tax regulations. Business intelligence helps managers base decisions on actual data, rather than relying strictly on intuition during these tough economic times.

Dana Edberg is an associate professor of information systems in the College of Business at the University of Nevada, Reno.

As Nevadans know well, Nevada is one of only seven states with no personal state income taxes. In addition, Nevada does not levy an income tax on corporations, nor does it tax business profits. However, if you are a business owner in Nevada, you still may be liable for state income taxes – to the state of California.

What businesses are subject to California tax?

Generally, the state of California levies taxes on all types of businesses that are either incorporated, are qualified to do business, or are “doing business” in California. According to California statutes, a foreign entity – an entity not organized in California – must be qualified to do business in California if it is engaged in intrastate business, meaning it is doing more than just selling goods into the state of California.

A corporation “doing business” in California is subject to the California Franchise Tax. Furthermore, corporations that are not officially “doing business” in California may still be subject to a California tax if they derive income from California sources. According to California law, the term “corporation” is very general and includes regular incorporated entities, as well as certain unincorporated associations, trusts, professional corporations and limited-liability companies. Currently, “doing business” is broadly defined as “actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.” Beginning in 2011, the definition will be sharpened, encompassing only companies either organized or commercially domiciled in California, or companies with more than 25 percent of their sales, assets or salaries in California.

Holding companies that do not trade the securities, but only collect and disburse investment earnings, such as dividends and interest, are not considered to be “doing business” in California.

How can Nevada business owners limit California taxes?

Business owners who want to minimize their California tax liability should try to segregate their other activities from income-producing activities, for example, through creating separate entities for different activities. Although the California entities will still be subject to the minimum tax ($800), keeping taxable income separate will limit the amount due to California.

Companies can also petition the California Franchise Tax Board for a determination that the California activities are limited. A determination generally is good for five years, as long as the company continues to meet the criteria. For example, the following activities could be considered limited and therefore not subject to California Franchise Tax:

- Purchase of personal property or services by an affiliated entity outside the state if the corporation has 100 or fewer employees in California whose duties are limited and related to the personal property or services.

- The entity’s employees live in California for the sole purpose of education.

For more information:
http://www.ftb.ca.gov/ (CA franchise tax board)
http://www.taxes.ca.gov/Small_Business_Assistance_Center/index.shtml (CA tax service center)
http://www.sos.ca.gov/business/resources.htm (CA business portal)

Sonja Pippin is an assistant professor of accounting and information systems in the College of Business at the University of Nevada, Reno.

One misinterpretation of the small business stimulus is that the SBA and U.S. government are going to send out checks (free money) to all current and start-up small businesses. That is not the case; the SBA is issuing funds through various programs to help small businesses get funding, refinance, etc. In addition, the SBA is changing programs to make them more beneficial to small business owners, such as increasing the loan guarantee percentage and reducing loan fees.

Most of the funds, $375 million, are for reimbursements, loan support, financial backing, grants and loan modifications. These funds will mostly help small business owners having trouble with their current loans or needing equity for investments. Much of this funding will be used to help small business owners refinance their current loans to obtain better interest rates or longer repayment periods.

Another large chunk of the funds, $255 million, is allocated to a new small business stabilization program. This program guarantees loans of $35,000 or less to allow small businesses to make up to six months of payments on existing loans. Additionally, the loan can be used to start a business. The new loans must be paid off over five years or less, beginning one year after they are made. They carry no interest, have no fees, and may accept a secondary lien as collateral. This gives small business owners some relief and helps entrepreneurs develop their businesses.

The remaining $90 million provided by the act includes a wide range of services, such as bond programs, direct loans and technical assistance. The main point of the small business stimulus package is to provide economic relief to small businesses. There is money out there for small business owners who are running good operations.
The stimulus plan is intended to prevent small businesses offering valued products or services from failing due to the economy or lack of financial support.

For more information on the American Recovery and Reinvestment Act of 2009, see http://assets.opencrs.com/rpts/R40241_20090225.pdf or http://tax.cchgroup.com/Legislation/QTF-AmericanRecovery_Act_09.pdf.

In addition, if your business is struggling, you can register for a free “Business Survival Workshop” being offered by the University in partnership with SCORE of Northern Nevada and other local organizations, 8:30 a.m. to 4 p.m., May 30 in the University’s Continuing Education Building. Preregistration is required; log on to http://www.extendedstudies.unr.edu/ or call 784-4046.

The Nevada Small Business Development Center at the University’s College of Business offers assistance, information and counseling to small businesses throughout the year. Call 784-1717.

Rod Jorgensen is director of counseling and management consultant at the Nevada Small Business Development Center in the College of Business at the University of Nevada, Reno.