The limited liability company is one of the most popular forms of business organizations for small businesses when they start up. Why? One reason is because you can establish your small business as a sole proprietorship while limiting your liability just like a corporation.

As you think about what type of small business you want to start up, consider the limited liability company and read about the advantages and disadvantages.

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The U.S. unemployment rate climbed to 10.2%, a 26-year high, in October 2009. The last time the unemployment rate was this high was in April, 1983. Economists expected a rise in the unemployment rate, but expected it to be to 10%, so this news came as an unpleasant surprise. A total of 7.3 million jobs have now been lost in the recession.

The major sectors losing jobs were retail, manufacturing and construction. Health care and education added jobs. Temporary employment agencies also added jobs, which is an excellent leading economic indicator. If firms are hiring temps, then their next step may be to hire permanent workers.

The underemployment rate, which includes discouraged workers and those working part-time and at jobs outside of their training, rose to almost 18%.

There is some good news. First, the unemployment rate is a lagging economic indicator. It was expected to go higher, even during the beginnings of economic recovery, during late 2009 and 2010.

Second, there is a bill on the President's desk extending unemployment benefits for those who have exhausted their benefits for three and one half more months. There is some confusion about who is eligible for extended benefits. A report today explains the bill saying that, in 26 states where the unemployment rate exceeds 8.5 percent, an additional six weeks of benefits will be tacked on to the three and a half months.

The extended benefits are aimed at those who have been out of work the longest and whose unemployment benefits will run out by the end of the year.

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I'm introducing a new feature into my blog and website for all of you interested in small business finance. Each Friday, I will feature a finance word or term in a Friday blog post that you need to know. It's a way for you to build up your finance vocabulary to impress your banker, your investors, and others in the business world around you, not to mention increase your own understanding.

This week, the term is accounting records. Accounting records are defined as records of a firm's financial position that reflect any changes in that position. An example would be the accounting journals. For more on this term, click on the link.

If you have a finance term you would like to see discussed in more detail than you can find in reference books or on the Internet, drop me a comment and I'll be glad to feature it in a Friday Finance Term of the Week segment. I hope you enjoy this new feature!

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The new unemployment bill that is on its way to the President's desk will help small business by giving you cold, hard cash. In the past, companies have been able to "carryback" their losses in a tax year for two past years. In other words, companies have been able to write off losses for the current year in two previously profitable years and get a refund.

The bill currently on the President's desk will allow businesses to write off losses in 2008 and 2009 for five years previous to 2008. That should be a boon to small businesses and put cash in their pockets when they file their business taxes at the end of 2009.

Talk to your tax accountant to see how much this new provision will help your business!

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The apparel industry depends on CIT Group, Inc. for 60% of its financing. It is an important and necessary lender to the retail industry providing credit to 2,000 vendors that supply 300,000 stores. CIT Group, Inc. filed for Chapter 11 bankruptcy protection on Sunday, November 1 even though it had received bailout funds from the U.S. government. In addition to the retail sector, CIT provides credit for thousands of small businesses in other industries.

A pre-packaged bankruptcy plan will allow CIT to keep lending to small and medium-sized businesses during bankruptcy proceedings. CIT expects to emerge from bankruptcy proceedings by the end of the year.

The retail industry is gearing up for the holiday season. Any glitch in financing at this time of year could cause a real problem in inventory management for retailers and those in the apparel industry. It is probably a good idea for firms that have relied on CIT to think about looking elsewhere for financing. Since credit is tight, firms may have to get creative about financing and use something like asset-based financing.

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After a two-day meeting, the Federal Reserve voted to keep interest rates low for "an extended period." They will remain between 0 - .25 percent for the time being and into the foreseeable future. This is good news for business since if small businesses are able to get a loan from a bank or another type of financial institution, the interest rate will be competitively low.

Unfortunately, for many small businesses, loans are few and far between. The new small business bailout bill, if passed by the Senate, may make loans easier to get.

The Fed also signaled, however, that it is gradually going to stop pumping money into the economy as it sees signs of an economic recovery. That means that interest rates may gradually start inching up in the long-term.

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Finally, a bailout for small business! The Small Business Financing and Investment Act was passed by the House of Representatives yesterday by a vote of 389-32. This bill increases the budget for the Small Business Administration (SBA) by $44 billion. It now has to be approved by the Senate. SBA loan maximums and guarantees have been increased by this bill. That, of course, will not matter if banks don't jump on the band wagon to make SBA loans.

This bill recognizes that less than 30 percent of the nation's 8,000 banks offer SBA-backed loans. According to a story released by Reuter's, the bill provides a measure that will allow the SBA to step in as a "lender of last resort" if a small business cannot get credit from banks. If this is true, it is a boon for small business!

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If the Gross Domestic Product (GDP) is the economic indicator it is supposed to be, the third quarter of 2009 may be the quarter when the U.S. exited the deepest recession since the Great Depression. The GDP increased by a healthy 3.5 percent between July and September after four quarters of decline.

To really make an educated guess about whether we are exiting the recession, we need to take a closer look at this increase in the GDP. Consumer spending, which is more than two-thirds of GDP, has been pumped up by various payments from the economic stimulus and the Cash from Clunkers program. It grew 3.4 percent in the third quarter and many economists think it may drop in the next quarter and into 2010 due to the high unemployment rate.

There was an increase in residential construction in the third quarter but commercial real estate continues to decline. If Congress extends the first-time home buyers credit of $8,000 beyond the end of November, home buying is expected to continue, but the immediate future is not bright for commercial real estate.

Government spending grew, but at a slower rate than in the second quarter. The growth is compliments of the economic stimulus and also contributed to the growth in the GDP. The recovery appears to be a fragile one at best and quite dependent on consumer spending. Only time will tell if, amidst growing unemployment, consumer spending will hold up and the recovery will last.

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Kroll, the world's leading risk consulting company, commissioned a survey by the Economist Intelligence Unit, composed of 700 business executives, which features detailed industry analysis across a range of fraud categories and regions. The survey found that companies suffering fraud loss in the financial services industry increased by 87%. Financial mismanagement and regulatory or compliance breach were the two most suspect areas.

Anyone who has paid attention to the financial news in the past couple of years is not surprised by this news! The survey found companies are investing various fraud prevention methods. Information technology tops the list at 63% of firms investing in fraud prevention techniques for IT. Next, 57 percent of companies are investing in fraud prevention methods for financial controls and 50% for management controls.

You can access the survey for more detailed information.

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I recently found a hot software bargain I want to share with you. If you are a very small company with three or fewer clients, you can use an online invoicing program called Freshbooks for free! This program not only allows unlimited invoicing for your clients but unlimited time-tracking and expense-monitoring as well. It's not only free, but it's easy to use.

If you have up to 25 clients, the service is only $19 per month. For all packages, including the free one, you have customer support and you can integrate the program with PayPal. You can upgrade to different pricing packages based on your needs.

You can manage client billing without an accountant or bookkeeper and send out professional invoices, even by snail mail. Take a look!

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