Social Media Advertising – Direct Tax Increases

Businesswoman typing.

Dear M & M:

Are there any studies that show advertising trends for 2013 for small businesses that include the use of social media and average time spent on it?

– Steve

Dear Steve:

Results from a recent survey from AWeber found that a majority of small businesses plan to increase their marketing spending in 2013 (68%), and 29% plan to spend the same amount. And, the results reveal that along with an increase in spending, small businesses will, naturally, increase their use of many marketing channels. The marketing channel that small businesses intend to increase their use of the most is e-mail, with 85% of those small businesses that responded indicating that they plan to increase their use of e-mail as a marketing channel. Other channels that small businesses plan to increase their use of include: their business website (74%), blogging (72%), Facebook (70%), online advertising (66%) and Twitter (58%). 22% of the respondents indicated that they will increase their use of print advertising in the coming year.

How Much Time Do Small Businesses Currently Spend on Social Media Marketing Activities? Currently, according to the AWeber survey results, nearly 25% of small businesses spend four or more hours per week on e-mail marketing, and more than 27% spend four or more hours marketing on Facebook (interestingly, 12.5% spend 7+ hours). For those small businesses that use their business website as a marketing channel, nearly 34% spend four or more hours per week working on their website. Marketing by blogging also takes four or more hours of time per week for nearly 30% of small business owners. However, Twitter is not such a time drain – of the small businesses that use Twitter for marketing purposes, more than half (52%) spend less than one hour on it per week, and less than 10% spend more than four hours using it per week. Who is spending this time? For 88% of the small businesses that responded to AWeber the Owner or CEO primarily fulfills the marketing function. -Docstock

-M&M

Dear M & M:

Are there any direct tax increases in 2013 that I should be concerned about from the Patient Protection and Affordable Care Act (PPACA)?

– Janice

Dear M & M:

The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that are in effect and more that will be implemented during the next several years. The health care reform law, the Patient Protection and Affordable Care Act (PPACA) included two tax increases that took effect on January 1, 2013.

NEW H.I. TAX:  The first of those two is also a “payroll tax” increase.  Effective January 1, 2013, the Hospital Insurance (HI) trust portion of the payroll tax increased to 2.35 percent from 1.45 percent (i.e. a 0.9 increase) on the wages or self-employment income over $200,000 for an individual return and $250,000 for a joint return.  There is no limit on the amount of wages or self-employment income that is subject to the tax (unlike the social security portion of the FICA tax, which has a wage cap). This is an increase in the employee’s share only.  The employer will continue to pay its 1.45 percent rate share on the employee’s wages.  In the case of the self-employed, they will pay “only” the additional 0.9 percent on the income above the $200,000/$250,000 threshold.

INVESTMENT TAX:   The second new tax effective January 1, 2013, is a bit more complicated. PPACA established a new “Unearned Income Medicare Contribution” (UIMC) tax.  The IRS is calling it the “Net Investment Income Tax” or the “NIIT.”  This tax applies to “net investment income” which is interest, dividends, royalties, rents, gross income from a trade or business involving passive activities, and net gain from disposition of property (other than property held in a trade or business).  The rate is 3.8 percent.  The NIIT on net investment income will not apply if modified adjusted gross income is less than $250,000 in the case of a joint return, or $200,000 in the case of a single return. The tax is paid when you file your tax return for the year.  Since the tax is effective on January 1, 2013, the first time most taxpayers will include the tax will be in 2014 when they file their returns for tax year 2013.  However, if you pay estimated taxes during the year the IRS observes, taxpayers “should adjust their income tax withholding or estimated payments to account for the tax increase in order to avoid underpayment penalties.” The IRS has a page with information on this new tax: http://www.irs.gov/uac/Newsroom/Net-Investment-Income-Tax-FAQs -IRS. There are additional changes that can affect you that have already taken place and that will take place in the future other than the two listed here such as employer reporting, medical device taxes, health coverage for children, adoption credit, health insurance premium  tax credits, etc.  As always consult your tax professional or the IRS for additional questions pertaining to the Patient Protection and Affordable Care Act .

 -M&M

To ask your questions: Call the Small Business Development Center(SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org

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