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How To Take Advantage Of Government Funding For Your Business

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Funding is always a challenge for small and growing businesses. There are a number of government grants and other forms of support for small businesses that can help you expand. Most of these programs are specific to the type of business and the business’s goals for expansion. Some of them are also directed toward specific demographic groups. This is certainly not a comprehensive list of government funding opportunities for small businesses, but it will provide an overview of the type of funding that might be available.

Small Business Administration Programs

The U.S. Small Business Administration (SBA) is a go-to resource for many small business owners. The SBA offers several different ways to get funding, though most are loans rather than grants.

Small Business Innovation Research (SBIR)

This is a competitive program that gives small businesses grant funding to participate in federal research projects with commercial potential. If your business deals with research and innovation, this could be a good way to expand that function. To qualify, businesses need to be based in the U.S., for profit, run by a U.S. citizen or permanent resident, and have fewer than 500 employees.

Small Business Technology Transfer (STTR)

STTR is similar to SBIR, with the major difference being that businesses participating in STTR will need to partner with a nonprofit research organization. This can be a college or university, private research nonprofit, or a federally funded research center. The program’s goal is to strengthen the connection between basic scientific research and businesses that can take advantage of research products’ innovations.

State Trade Expansion Program (STEP)

If you want to expand your business by exporting your product, STEP can help provide access to foreign markets. Businesses can also receive support for developing international marketing campaigns and access to foreign trade shows. This is a federal program that uses state agencies to distribute funding, so you’ll work with the Economic Development Partnership of North Carolina to apply for STEP.

Small Business Investment Company (SBIC) Funding

SBICs are private investors licensed by the SBA. The SBA matches the private investment 2:1, and this money can be given as a loan, equity in the company or a combination of the two. SBIC funding can range from $250,000 to $10 million. To qualify, businesses need to be U.S.-based, meet the SBA’s size standards to qualify as a small business, and be part of certain approved industries.

SBA-Backed Loans

SBA-guaranteed loans usually come with lower interest rates and lower down payments than private business loans. They can range from $500 to $5.5 million depending on the size, nature and needs of your business.

Department of Commerce Programs

The federal Department of Commerce is another good source for business funding. These grants tend to be more specific, so you’ll want to be sure you qualify before applying.

Minority Business Development Agency (MBDA)

The Minority Business Development Agency offers specific grants and loans for minority-owned businesses. These will vary, so you’ll need to watch the agency’s website for opportunities that apply to you and your business. This is another federal program that operates through state agencies, so you’ll want to get in touch with the North Carolina MBDA Business Center.

Economic Development Administration (EDA)

This agency provides competitive grants to either specific demographic groups, regions of the country, or industries. These will vary based on the needs the agency sees throughout the year. Recent examples include indigenous communities and travel and tourism businesses. Businesses can apply for these grants through grants.gov.

U.S. Department of Agriculture Programs

The USDA offers several funding programs both for businesses directly involved in agriculture and those operating in rural areas.

Farmers Market Promotion Program (FMPP)

Farmers Market Promotion Program grants support farmers’ markets and similar arrangements that support direct producer to consumer sales, with the additional goal of improving consumer access to locally farmed products. Agricultural businesses, as well as related trade groups and nonprofits, can apply for these grants.

Rural Innovation Stronger Economy (RISE)

The RISE program is designed to create high-paying jobs and promote business growth in low-income rural areas. While for-profit businesses are not eligible to apply for these grants, they do support building and growing businesses in rural areas.

North Carolina State Programs

In addition to federal programs, North Carolina offers funding opportunities for small businesses as well, mostly run through the state Commerce Department. These include cash grants and tax exemptions that can improve your cash flow.

A factor you’ll see mentioned in many North Carolina state programs is the County Distress Rankings system. This system sorts the state’s counties into three tiers based on their economic well-being, with Tier 1 being the best off and Tier 3 being the most economically strained. This calculation is based on the counties’ average unemployment rate, median household income, property taxes and population growth. Businesses will receive the most credit for investing in Tier 3 counties.

Job Development Investment Grant (JDIG)

The JDIG program provides cash grants to companies that invest and create jobs in North Carolina. The grants are awarded based on the number of jobs created, the wage those jobs pay, the county’s economic tier and the industry the business is in. They are paid annually for up to 12 years.

One North Carolina Fund (OneNC)

This is another cash grant program that is designed to allow the governor, through the North Carolina Department of Commerce, to support job creation quickly. To calculate grant amounts, the department considers the number of jobs a business creates, the location, the economic impact, the overall importance to the state and the level of investment in the state.

Business Tax Exemptions

North Carolina offers a few different ways for businesses to reduce their tax burdens. For example, manufacturing machinery and raw materials are exempt from sales tax. There are several other goods and services that are exempt from state sales and use taxes, detailed here.

Start Your Business Off Right With Our Business Startup Team

Applying for government grants can be complicated, but many agencies offer online resources like webinars and application guides to make it easier. Federal grants are usually processed through grants.gov.

Starting a business, applying for grants, and serving clients all at the same time can be a daunting task. Make sure you’re building your business the right way with the business law team at Wilson Ratledge by your side. Call us today at 919-787-7711 or fill out our online form to schedule a consultation!

When Do I Need A Tax Attorney?

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For many people with straightforward finances, taking care of their taxes and any tax hurdles they may encounter is often as simple as scheduling an appointment with their accountant or CPA. 

However, in certain circumstances, tax issues can become so complex that even your accountant may not be able to handle problems that arise. In this case, it is often necessary to consult with a tax attorney. Yet, you may find yourself wondering what a tax attorney is, how they differ from an accountant, and how you will know if you need a tax attorney.

What Does A Tax Attorney Do? 

While you likely work with an accountant at least annually to help you stay on top of your income/business taxes, you are not alone if you are unfamiliar with what a tax attorney does. While accountants typically review and examine financial records and provide tax advice, tax attorneys can handle more complex tax issues. 

A tax attorney is a lawyer who specializes in tax law and can help people arrange their finances to optimize their tax situation. They can also assist people who encounter legal problems with their taxes. 

However, it is essential to note that a tax attorney will not help you file your taxes. So, when would you need to hire a tax attorney? Keep reading for a look at a few situations where you could benefit from consulting a tax attorney in North Carolina.        

Situations When You May Need A North Carolina Tax Attorney

You Are Being Audited By The IRS

If you are being audited by the IRS, this does not necessarily mean that you’ve done something wrong. It simply means that the IRS is doing a formal examination of your tax records. Most tax audits are simple and can be handled by a certified public account. 

However, if you disagree with the audit results and wish to dispute them, or the IRS takes you to court during the audit, you must consult a tax attorney. You must work with a tax attorney in this situation, as an experienced lawyer can be instrumental in helping you navigate the complex world of IRS audits. 

Let’s face it unless you have a background in finance and tax law, trying to understand a tax audit, let alone appeal the IRS’s findings, can feel impossible. Fortunately, a tax attorney can communicate with the IRS on your behalf, removing much of the stress of appealing an IRS case from your shoulders. 

They can research your case to help you find a solution, they can represent you should your case go to court, and they can also help you negotiate a settlement with the IRS. Do not try to handle a complicated IRS audit on your own. If you are planning to appeal your case or your case is being taken to court, it is essential that you work with a tax attorney.

You Owe Back Taxes

If, after filing your taxes or completing an audit, you find that you owe a significant amount of money in back taxes to the federal, state, or local government, you may want to consider consulting a tax attorney. Tax attorneys know tax law in ways that accounts don’t, and they may be able to help you work with the IRS, or other government agencies, to help you find a solution to your current tax problem. 

A tax attorney may be able to negotiate on your behalf to work out a formal agreement to help you settle your tax debt. Tax attorneys know tax law inside and out, and they may even be able to help you settle your debt for less through an offer in compromise or a penalty abatement. They can also help you work out a deal to make installment payments on any remaining tax debt if you owe more than you can afford to pay upfront. 

You Are Starting a Business

Of course, consulting a tax attorney can also prove instrumental in helping you to avoid problems with the IRS, particularly if you are planning on starting a business. When you are in the process of starting a business, you will have to decide what type of business to establish, such as an LLC, an S-Corp, or a C-Corp. 

Working with a tax attorney when setting up your business is critical. You will want to make sure that you understand the type of business you are establishing and the tax responsibilities that come with it to avoid problems with the IRS. 

It is then imperative that your work with a tax attorney when starting a business, as an attorney can help you to structure your business in a way that reduces your tax burden and potential liabilities, preventing you from encountering problems with the IRS in the first place.  

You Are Considering Buying/Selling a Business

You should also consult a tax attorney if you are considering buying or selling a business in the near future, as a tax attorney can help you structure the sale in a way that minimizes your tax burden. 

For instance, someone selling a business will want to structure the sale in a way that minimizes capital gain, while someone buying a business might want an allocation that helps them recover the purchase price faster through depreciation. 

The fact is that buying or selling a business can result in a complicated tax situation, and working with a tax attorney can help minimize the amount of taxes you pay while also helping to ensure that the sale is being handled properly, reducing the likelihood of an audit down the road.

You Are Looking to Create an Estate Plan

Considering that you have worked hard to establish yourself and earn all of the assets in your estate, it is understandable that you would want to do everything to ensure that your assets pass to your heirs after your death with as little as possible being lost to estate taxes. 

Fortunately, only large estates valued at more than $12 million pay estate taxes. However, if you believe that your estate will be subject to taxation after your death, a tax attorney can help you devise estate planning strategies to minimize the tax burden placed on your estate. This can help ensure that as much of your estate as possible passes to your heirs. 

Contact Our North Carolina Tax Controversy Attorneys

There are many situations in which working with a tax attorney is necessary. These legal professionals have specialized knowledge and experience that can prove instrumental in helping you avoid encountering problems with the IRS. If you’re facing a situation with the IRS where you may need a tax attorney, contact Wilson Ratledge today at 919-787-7711 to schedule a consultation.

What Are the Workers’ Compensation Insurance Requirements for North Carolina Employers?

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Workers’ compensation claims have a twofold purpose: to compensate employees who suffer work-related injuries and to protect employers from being sued by their injured employees. For this reason, North Carolina requires most businesses with three or more employees to obtain workers’ compensation insurance. Here, we discuss the general worker’s compensation requirements for North Carolina employers and how COVID-19 might impact employee claims.

General Requirements for Employers

The North Carolina Workers’ Compensation Act (North Carolina General Statutes §97-94) generally requires all businesses in the state (whether they operate as corporations, sole proprietorships, LLCs, or partnerships) with three or more employees to obtain worker’s compensation insurance. Certain exemptions apply, including for businesses that employ:

  • “casual” employees (those whose work is casual and not part of the regular trade or business);
  • domestic servants working in a household;
  • farm laborers when there are fewer than ten full-time, non-seasonal workers;
  • employees of certain railroads; and
  • North Carolina federal government employees.

Who Does NOT Count as an “Employee” for Workers’ Compensation Purposes?

Whether a business employs three or more employees is not as straightforward as it might sound. The following groups of individuals generally do not need to be covered by workers’ compensation insurance:

  • Business owners, such as partners in a partnership, do not necessarily count as employees.
  • Corporate officers may elect to be excluded from coverage (however, they will still be counted as employees when determining whether a business has three or more employees, even if they opt-out of coverage).
  • Finally, with some exceptions, independent contractors generally do not qualify as employees.

How Much Does Workers’ Compensation Coverage Cost Employers?

The cost of workers’ compensation insurance coverage will vary depending on the number of employees a business employs and the type of jobs its employees perform. The North Carolina Rate Bureau is a non-profit organization that sets “class codes” and “base premium rates” for workers’ compensation, which will determine the total cost of workers’ compensation for a business.

These figures vary and reflect how dangerous a job is compared to another type of job (with high-risk jobs carrying higher base rates than lower-risk jobs). Depending on an employee’s class code and base premium rate, the North Carolina Rate Bureau will set a rate for its workers’ compensation premiums, which businesses must follow.

North Carolina workers’ compensation insurers usually offer discounts to employers. These discounts will vary based on the insurer but can include discounts for a drug-free workplace; for businesses that are part of a professional, trade or industry group; and for businesses that implement certain safety or fall prevention programs. 

COVID-19 and Workers’ Compensation in North Carolina

For the foreseeable future, COVID-19 appears to be here to stay, and businesses across the State continue to be affected by it. While most businesses will undoubtedly be impacted by COVID-19 in one way or another, many business owners likely wonder how it will affect their workers’ compensation claims. Most notably: Will employees be able to file workers’ compensation claims for having contracted COVID-19?

Unfortunately, the short answer is that we simply do not know. It is unclear whether these claims will be compensable under North Carolina law. While it appears more likely that they will be denied, to understand why this issue is so complex, it helps to review the laws surrounding workers’ compensation claims.

Coverage for Workers’ Compensation Injuries

Coverage for workers’ compensation injuries is divided as follows:

  • Injuries that occurred because of an accident or specific trauma (e.g., a slip-and-fall at work); and
  • Injuries caused by an “occupational disease.”

Potential COVID-19 claims would likely have to be filed as “occupational disease” claims. The North Carolina statutes define an occupational disease as either one of the specific diseases enumerated in the Act (which does not include COVID-19), or any disease acquired while working at a job that placed the person more at risk for getting the disease than the general public.

Thus, if the general public is equally exposed to the disease outside of the place of employment, the disease is not considered an occupational disease and therefore would not be covered by workers’ compensation.

Establishing Eligibility for a COVID-19 Workers’ Compensation Claim

To be eligible for benefits, an employee must show that he or she contracted COVID-19 from exposure on the job and, because of the job, he or she was at a greater risk than the general public. It might be that some frontline workers, such as healthcare workers, would be able to show that they were at higher risk of exposure to the virus than the general public. Likewise, it is possible that others, such as grocery store clerks, could show the same.

What becomes more challenging to prove, however, is causation, that is, a link between the employee’s job and the resulting COVID-19 infection. Even if it were likely that the employee contracted the virus while on the job, (such as while working at a hospital or treating patients infected with COVID), it would be very hard to prove this, as the disease could have just as easily been contracted outside of work. In other words, proving causation is extremely difficult, if not virtually impossible.

Currently, unless legislation is passed that defines COVID-19 as an occupational disease, it appears likely that an employer will be in the position to deny such claims in North Carolina. However, this is an unfamiliar terrain, and the coming months are likely to bring more clarity.

Workers’ Compensation Claims During Uncertain Times

While the costs associated with a workers’ compensation policy will vary depending on the size and nature of your business, owners of small, medium-sized, or large businesses should be aware of their obligations. At this time, it remains unclear whether COVID-19 claims will be covered under workers’ compensation insurance, but business owners should make sure they are fully in compliance with the laws regardless of what changes may be on the horizon.

What is Innocent Spouse Relief and How Can It Help Me?

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The 2022 tax season is upon us, and with it comes the typical anxieties that generally go hand-in-hand with dealing with Uncle Sam. Believe it or not, though, the IRS is not always out to get us: In some cases, it creates systems that help consumers recover from financial errors or setbacks.

One such example is known as Innocent Spouse Relief. This is a form of tax relief that can relieve you of your tax liabilities, interest payments, and penalties you may face if you file a joint tax return with a spouse or ex-spouse.

The IRS created this relief mechanism with the underlying justification of fairness: Generally, both spouses are held equally responsible for what they fie on their joint tax returns. However, arguably, it would be unfair to hold both spouses liable for an error made by only one. This is particularly applicable in situations in which the spouses separate or divorce and later, it becomes known that one spouse made an error on a tax filing, resulting in a substantial tax burden for the other spouse.

What Innocent Spouse Relief Does for Taxpayers

In short, Innocent Spouse Relief does three things – or, in other words, has three key benefits for you as a taxpayer.

  1. It can relieve you from having to pay taxes, penalties, and interest stemming from a joint tax return that you filed with your spouse or ex-spouse.
  2. It can help you avoid tax liability resulting from errors or mistakes that someone else made on your joint tax return.
  3. Finally, it can relieve you of a financial burden if, by your spouse or ex-spouse’s fault, you’ve wound up with tax debt.

Types of Innocent Spouse Relief

Generally, both the IRS and some states offer a few different types of innocent spouse relief, namely:

Classic Relief

The most common type of innocent spouse relief, this applies to under-reported tax obligations that result in erroneously applied tax liability.

Relief by Separation

This applies in cases of separation and divorce, in other words, when an understatement of tax is allocated between you and your former spouse.

Equitable Relief

In some cases, relief is available for an understatement of tax as well as an underpayment. This type of relief may apply if someone doesn’t qualify for the first two types of relief but, nonetheless, should not be held liable for tax obligations.

How Do I Qualify for Relief?

Per the IRS, there are a few qualifications for innocent spouse relief:

First, you must have filed a joint tax return with your spouse or ex-spouse.

Second, there must have been some error on your return that resulted in an understatement of your tax liabilities. The IRS refers to these errors as “erroneous items” and in general, they include unreported income (any gross income you or your spouse received that you did NOT report), or incorrect deductions or credits claimed by you or your spouse.

Third, you must establish that at the time you signed the joint return you didn’t know (and had no reason to know) that the tax was understated. The law is unclear on what it means to “have no reason to know,” and different states hold claimants to different standards. For instance, some state laws say that the spouse is not entitled to relief unless he or she has carefully reviewed the tax returns and personally investigated any suspicious sections in it. Others, however, think this standard is too high and apply a looser standard to determining whether someone qualifies for relief. Regardless, while most tax disputes place the burden of proving noncompliance on the IRS, the “lack of knowledge” portion of the rule forces taxpayers to prove that they did not know of the errors – otherwise, they’ll likely be held liable for the tax obligations.

Fourth, considering all the circumstances, it would be unfair to hold you liable for the understatement of tax. The IRS will consider all facts and circumstances in determining whether it’s unfair to hold you liable for the tax obligations. Some factors the IRS will consider include, among others:

  • Whether you received a substantial benefit from the understatement of taxable income
  • Whether your spouse deserted you
  • Whether you and your spouse have been separated or divorced
  • Whether you received a benefit on the return from the understatement

Different courts and different states may apply different standards, however, so be sure to consult an experienced tax attorney if you think you may qualify from this type of relief or if the IRS is coming after you for alleged tax obligations.

And finally, you and your spouse (or former spouse) have NOT committed fraud in any way – for instance, by joining in a scheme to defraud the IRS. Fraud will cancel out any right to relief.

Contact The Experienced Tax Attorneys at Wilson Ratledge

If the IRS is after you for a tax debt that started when you filed a joint return with a spouse, and you don’t know what your spouse or ex-spouse did, we can help. The Wilson Ratledge team of experienced tax attorneys can help you gather the right facts, structure them into a valid case, and present evidence to the IRS to prove your statements.

At Wilson Ratledge, the tax controversy attorneys represent taxpayers in disputes with the IRS and the North Carolina Department of Revenue. They regularly handle disputes involving tax liens, audits, and collections, as well as other various aspects of tax controversy and litigation. For assistance, contact one of the experienced North Carolina tax attorneys today at 919-787-7711 or via the contact form below.

Protecting Your Company From Liability During Downsizing

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Your organization could resort to downsizing for many reasons, including cost-cutting, restructuring, mergers, and other factors. When you consider laying off employees, you must examine the risks of violating various state and federal laws. Furthermore, in the event of a layoff, several common law claims may be strengthened, and a mass layoff may expose you to multiple claims from several employees in a class-action lawsuit.

Successfully executing a layoff is one of the most challenging problems your company may face. However, a considerable body of best practices has been developed to aid management in carrying out the downsizing in a planned, legally compliant, and humane approach.

Legal Implications of Layoffs

An organization’s choice to downsize may violate several federal and state laws. Almost half of the states have their own notice laws. Some even go so far as to demand that corporations pay a modest severance package or continue to provide health insurance to employees for a limited time following the layoff. 

North Carolina, however, does not fit into either of these categories. Because North Carolina lacks its own layoff or plant closure statute, workers are solely covered by the Federal WARN Act.

Worker Adjustment and Retraining Notification Act (WARN)

The purpose of this statute (and its state law equivalents) is to reduce the harm caused by layoffs to workers and communities. WARN requires you to offer at least 60 days’ notice of a downsizing to the affected employees.

A “mass layoff” happens when at least 500 full-time workers lose their jobs within 30 days, or when at least 33% of workers at a single site of employment are laid off in 30 days, unless the percentage amounts to fewer than 50 people. A site of employment is a physical area where you run your business operations and could include a building, an industrial complex, or a campus. Physically separate worksites that are utilized for the same function, are in reasonable proximity, and share the same personnel and equipment may also be considered a single employment site.

The Federal WARN act is limited to larger firms. A large business has:

  • At least 100 full-time workers (those who work at least 20 hours a week and have been on the job for at least six of the previous 12 months prior to the notice) or,
  • 100 employees who work a cumulative of 4,000 hours or more each week.

Determining whether WARN applies to a given layoff can be challenging. It is advisable to seek legal advice in all instances, even in what may seem to be the most straightforward cases.

Notice Required by WARN

Employees who will lose their jobs during downsizing are entitled to 60 days’ notice. Individual notice is not available to unionized workers. Instead, the employer must inform its union representatives, who in turn notify the impacted employees.

The notice must include specific details regarding the impending layoffs, including whether they will be temporary or permanent or whether the employee will be given bumping benefits. It should also state when the layoffs are slated to begin and when the employee will receive a termination letter.

In some cases, you are not required to give any notice at all or can give less than 60 days’ notice.

No Notice Required

An employer is not legally compelled to give early notice of a mass layoff in some instances. They include:

  1. Temporary Projects: No notice is necessary if an employer releases personnel employed solely for a temporary project that has been completed or shuts down a facility that was only meant to be open for a limited time. This exception is only applicable if the employees were aware of the temporary situation during hiring.
  2. Strikes and lockouts: WARN does not apply if a closure or downsizing results from a workers’ strike or an employee lockout.

Shorter Notice Allowed

In select circumstances, you may offer less than 60 days’ notice. You must clearly explain in a written notice why you were unable to provide the mandated 60 days’ notice.

  1. Unforeseeable business conditions. A shorter notice period is permitted if the grounds for the downsizing or layoff were not reasonably foreseeable at the time, the employer should have given 60 days’ notice.
  2. Natural calamities. If a natural disaster causes a layoff, you may give less than 60 days’ notice.
  3. Faltering Enterprise: If your company is facing financial difficulties, it may give a shorter notice. You must, however, demonstrate that your business was actively seeking business or funding that would have enabled it to defer or avert the downsizing and that it reasonably believed that giving a 60-day notice would have gotten in the way of obtaining the necessary money or business. However, this provision is only applicable for plant closures, not mass layoffs.

What Happens With A WARN Violation?

An employer who breaches WARN may be held liable for all wages and benefits lost due to the violation, up to the full 60 days mandated by WARN. Any salaries or severance fees paid voluntarily by the employer are deducted from the sum. You may also be required to pay the legal fees and court costs of affected employees who win their lawsuits. 

Additionally, you may have to pay $500.00 in civil penalties for every day you fail to notify local authorities. However, if you deliver back pay to every affected worker within three weeks of parting, you can avoid the $500.00 civil penalty.

Because WARN stipulates that an employer’s maximum liability is limited to 60 days, providing your employees with full benefits eliminates any potential liability. However, no provision in WARN allows for payment in lieu of notice, and the laws do not recognize the concept.

Our North Carolina Business Attorneys Can Help

As seen from the above discussion, federal WARN and its state equivalents can be highly complex and technical legislation that should be considered whenever your business is having to downsize. 

If your company is considering layoffs or downsizing, the Wilson Ratledge North Carolina business attorneys can help you ensure compliance with all applicable state and federal labor regulations. Call them today at 919-787-7711 or fill out the form online to schedule a consultation!