Small Business Blog
Best Payroll Service - Intuit
I have used multiple payroll services and Intuit Payroll by far exceeds them all, both in ease of use and cost ($85 month for up to 10 employees, that's per month, not per pay check). The Intuit payroll web interface is so easy to navigate and is incredibly intuitive, and I recommend it for all my clients. And if you want to changeover from your current service, don't get scared by having to enter the "history". Entering your year-to-date data takes a small amount of time compared to the ease of running payroll throughout the year. When changing over, if you can, start at the beginning of a new quarter, then it is easy to enter the history for the previous quarter(s) so that the year-end W-2s are accurate.
Tax payments are automatically sent, and you can choose direct deposit or writing your own checks.
I can't say enough about Intuit payroll — and I am not even a rep for them!
Interns and Small Business Staffing
Many business owners ask about whether using an intern is cost effective. The answer is yes, if you plan well.
Interns can provide unique knowledge for specific projects, and in return they learn how their skills can be applied in the business world. For example, an intern with Final Cut Pro expertise can be the "tractor operator" as you sit with him to edit videos for display on flat screens at your business site or for your web site. You can't manage your business and also become an technical expert with video editing, so that need is met by having an intern experienced on the software work with you. Interns should not be put in back rooms stocking shelves, or doing mundane work all day. An intern is not "cheap labor," rather she is person who is looking to you for mentorship. Try to meet with the intern at least once a day to go over the project you have selected for her. Maybe you need to prepare an outline for an upcoming meeting. As you describe the presentation to the intern, you are formulating your outline, thereby accomplishing two things at the same time!
Interns can be paid or unpaid, but either way, my advice is to treat them the same as your regular employees. That is, include them in staff and project meetings, give them the same perks, such as lunches on Fridays, and acknowledge their work as if they were part of your team. Similarly, carefully interview and chose your interns just as you would if you were hiring a regular employee. Interns should also be subject to the same job performance standards and the same disciplinary actions. Just because you hired an intern does not mean you have to accept that they sit on Facebook all day, or conduct numerous personal phone calls. To be clear upfront, prepare an "internship agreement" describing the project(s) and your expectations (and theirs) and have interns sign it.
For me, it is personally rewarding to work with motivated interns who are passionate about their career choice, and that's why I feel strongly that the experience also will be rewarding for them.
By Louise Lee
Be A Role Model
Simply observing you in action can be valuable to interns, so bring them with you to trade shows and let them attend meetings with your staff, customers or outside partners. If interns are shadowing you for the day, you can help them learn even when you're doing desk work.
If, say, you're reviewing a contract, "describe everything you're thinking" out loud to give the intern a sense of what you're looking for, says Helen Thompson, chief executive of T2 Complete Business Services, a small-business consultancy in San Francisco.
Even if one of your staffers is supervising interns day to day, you as the top dog should carve out time to sit down with them regularly and discuss what they're learning, says David Lewis, CEO of OperationsInc, a human-resources consultancy in Stamford. The head of a big company probably doesn't have time to visit with interns, but in a small firm, the owner can and should be closer to them. "Your title means something to the intern," says Mr. Lewis. "That's valuable to him."
That type of one-on-one communication with you can help keep them engaged. "You don't want them to end up demotivated after two weeks and have them chuck it and go to work at Gap," says Mr. Lewis.
Fraternizing with the Enemy: Tips From an Employee-side Attorney
I am an employment lawyer. I represent employees who have been discriminated against, harassed, improperly compensated or wrongfully terminated. As a small business owner, you would undoubtedly prefer to keep me and my colleagues at bay. This will be the first of a series of posts outlining common – and expensive — mistakes I have seen small employers make in my 20 plus years of practice.
Mistake Number One: Misclassifying non-exempt employees as exempt. Picture this: business is picking up again, and your hourly bookkeeper has been working 10 hours a day to keep up with the workload (paying bills, sending out invoices, etc.). You already know that unless an employee is exempt from wage and hour laws, you have to pay overtime (time and a half) after 8 hours in one day and 40 hours in one week. Your hourly bookkeeper is getting rather expensive, and – truth be told – he's kind of slow and may just be milking it for the overtime. What if you put him on straight salary and gave him a lofty title like Supreme Executive Financial Control Officer (or "SEFCO") with a gold-embossed business card? Problem solved, right?
Not so fast. In California, all employees are presumed to be nonexempt; that is to say, a sometimes confusing array of wage and hour laws apply, including overtime and meal break regulations. Therefore, the burden of establishing that an employee is exempt, such as your newly-exalted SEFCO, rests with you, the employer.
There are three exemptions under California law: Executive, Administrative and Professional. A salary and a really impressive title is not enough. Under both state law and the federal Fair Labor Standards Act, all employees, including the SEFCO, must meet both the "salary" and "duties" tests to be considered exempt. Under the "salary" test, to be exempt, the employee must earn a wage of at least double the minimum wage (currently $8.00 per hour in California). Under the "duties" test, your employees must spend at least 50% of their time engaged in "exempt" duties (for example, supervising employees, managing the business, performing work requiring advanced training and/or otherwise exercising "independent discretion and judgment"). So, title and salary notwithstanding, the SEFCO is still doing routine bookkeeping tasks and is entitled to overtime.
The consequences of misclassification can be serious, including back wages and penalties. Even the big dogs get this wrong. Wachovia recently settled a class action for $39,000,000 brought by a group of stockbroker trainees improperly classified as exempt. So be very careful before you decide that an employee is exempt from California's wage and hour laws.
For more information, contact the California Department of Industrial Relations' website at www.dir.ca.gov. Next time, we'll discuss whether you can hire that bookkeeper as an "independent contractor" and avoid paying him overtime and benefits.
Small Business Tax and Filing Deadlines
Deadlines for end of January are fast approaching...
- (January 15 – 4th quarter Federal and State estimated tax payment)
- January 31 – W-2 to Employees
- January 31: EDD (California) Payroll Form DE-6 due for 2009 4th Quarter
- January 31: Federal Payroll Form 941 due for 2009 4th Quarter
- January 31: Annual FUTA Form 940 (Federal Unemployment Tax Return)
- January 31: Annual EDD Form DE-7 (unemployment and training tax)
- February 28: Form 1099s due to vendors and independent contractors
- February 28: Employer W-3 (transmitting W-2s to IRS)
- February 28: Form 1096 (transmitting Form 1099s to IRS).
- February 28: San Francisco Business License renewal
- February 28: Oakland business license renewal
- April 15: Sole proprietorship tax return, file return or file extension
- April 15: Estimated tax payment for 1st quarter 2010
- April 15: Deadline to make 2009 ROTH/IRA contribution
- April 15: Pay corporation tax (Form FTB 3522)
- October 15: Extension for Sole Proprietorship tax return
- California Sales Tax: monthly quarterly, fiscal year or yearly, depending on sales.
- Quarterly returns due: April 30, July 31, October 31, January 31); Yearly return due January 31; Fiscal Yearly return due July 31.
T2 Participates in UCB Externship Program
Mina Park mentored with Helen Thompson for six hours through University of California, Berkeley, Career Center Externship Program for business majors. Mina said "90% of what you taught, I did not know." She added, "I now have a better understanding of how businesses are managed and run, how to file a business tax report, how to obtain a business license, and the costs involved in hiring and firing an employee. I plan on having my own business, and I thank Ms. Thompson for taking time away from her work to be my mentor. I also thank her for giving me the valuable information that I need to run and manage my business."
What is the Most Important Management Skill for Small Business Managers?
When asked what the most important management skill for a small business manager was, Executive Director Gina Maciula's answer was short and direct: communication. Not only do managers need to be aware of what they are saying, but how to listen as well.
Statistics reveal that a typical audience retains about 5% of what is said. That means that during a one-hour meeting, they might retain three minutes of what you said. Why is this?
- Staff feels like meetings are a waste of time to begin with
- Staff members dislike or have personal issues with the speaker
- The speaker uses emotional arguments instead of facts
- Audience has different political or cultural views
- The speaker has poor or dull presentation skills
- For example, a manager who begins a meeting with, "I think we should stop usability testing on the new website, what do you think?" has shut down communication with the team by providing their specific recommendations first.
One of our speakers, Gina Maciula, offers a few different communication seminars in San Francisco that covers how to give and receive feedback, called The Dynamic Management Team. This is a key management skill and a subset of listening.
Should I Build my Own Website for my Small Business?
Unless you are a web developer by trade, you will inevitably waste your time building an ineffective, confusing web presence. Even worse — having a friend or relative do it for free or trade. (Good luck meeting your launch deadline and working out payment.) The truth is, your website will be the least expensive and most effective part of your marketing (if done correctly), so the answer is a no-brainer: hire a professional.
So spend your time making your product or service the best it can be. Determine price points. Study the competition. Find the most effective advertising stream. Meet industry experts. Find Facebook fan clubs and attend local events. Follow industry leaders on Twitter and attend their meet-ups, drink-ups, and other social gatherings. Small business is highly personal, it is about you, so spend your time building you, not a website.
If you would like to learn more about our strategy on how to tackle website redesigns, schedule our 'web meeting before your next web meeting' at 800-921-9007.
Choosing a Merchant Account – How and When to Use and Setup Credit Cards for your Business
Make it convenient for your clients to pay you. The more ways you accept money, the more money you will make. If you have a strict payment policy, (i.e., only accept cash, or only use PayPal), your clients may choose a competitor who accepts all credit cards, including American Express. Even though AMEX charges more than Visa and Mastercard (and, of course, you are paying those fees), you are making the sale by accepting it.
Studies have shown that most people do not carry cash, prefer awards programs of credit cards, and are sometimes forced to use credit cards by their companies.
There are many companies that offer this service, and typically there are two methods: purchasing a point-of-sale (POS) machine, or processing transactions through a web interface. For more specific types of situations, there are specialized machines that you can purchase to fit your needs — for example, they sell wireless card swipers for contractors who are on-location (wedding vendors, farmer's market vendors, Salvation Army workers).
The latest trend is to bypass all of these methods and just use a merchant account application on your iPhone. Intuit is a great solution, and is only $9.95/month (plus a per sale fee) and it is compatible with Quickbooks. Ask your bank for a merchant account (you will have to qualify credit-wise); they go through a third-party. For $85 I got a USB card reader for the laptop so I can swipe the cards, which saves time and increases accuracy as I do not have to enter client billing information. The online credit card services also keep records and store your sales so you can search for specific customers.
You need a credit card service for your business — even the guy I bought my furnace from swiped my credit card on his handheld in my garage!
Affordable Backup Strategy for Small Businesses on a Mac
"If it isn't in three places, it doesn't exist."
Securing client data is a top priority at T2, and this is why we have successfully avoided losing any data over the last 14 years of business. Because we are asked what we do and how we do it, I have outlined our general approach to backup and archiving. As we migrated to the Mac operating system years ago, this post is mainly targeted towards Mac users, but almost everything can be ported to Windows.
Our backup workflow is optimized for speedy backups, fast recovery, and has been streamlined to be very affordable. The following approach provides secure, redundant backups.
First, start using Backblaze. Backblaze is an encrypted online backup solution that preforms continuous, unlimited backups of all of all your data. They use military-grade encryption, it's automated, and very affordable ($5/month).
Second, purchase SuperDuper, an affordable backup application that allows you to create quick, easy-to-restore backups as disk images. Configured it to schedule automated backups to any drive, ideally to Network Attached Storage units. Create nightly clones of your system drives and nightly incremental backups of your data drives.
Note that we used Retrospect and Memeo extensively — both were problematic. While Retrospect worked intermittently, support is expensive, and Memeo did not work at all. (SuperDuper's Dave Nanian is known to reply to forums, threads, and even Tweets right away.)
Third, purchase a NAS unit. We use ReadyNAS NV+ units for twice-daily backups of everything. They hold four to six hard disks (depending on the model you get) and if any one of them fails, no data is lost, as they utilize RAID-5 technology. Simply pop in another drive and it figures the rest out. Highly configurable, these units are not cheap, but are much cheaper than hiring a data restoration consultant at $5,000 per drive.
Fourth, create DVDs or external hard drive copies of your data and store them off-site (safe deposit box, home office, etc). This is a requirement if you are not using a web solution like Backblaze.
Fifth, using TimeMachine to archive different versions of files that you are working on. This functionality can be done with Backblaze as well, but restoring files is faster with TimeMachine. Be sure to configure it to not backup large directories, as those will be covered with the NAS and Backblaze.
Sixth, make sure you are separating your data from your system drive. This way, if the system drive fails, you can use your clone and you will not lose any data.
Third-party services vs. full- or part-time employees
When applicable, I recommend expert third-party services versus hiring a full- or part-time employee to do the same job. There are many benefits with using services and business consultants: If you are unhappy with the consultant or service, you can cancel it and sign up for another. If you are unhappy with your employee, it's a lot more work to make a switch. Third-party services and independent consultants are always on time, and they only bill for time spent, never taking vacations. For many small business applications, this is the only way to go. There is no reason to reinvent the wheel when it comes to standard business operations.
In today's global world, you can outsource just about everything for your business (accounting, web design, database setup, inventory control, e-commerce, marketing). You only need to hire employees where day-to-day needs warrant it, otherwise use contractors. This is the best way to control costs as you can budget for the contractors and use them only when you need the help. Your payroll is usually the largest expense — keep it to a minimum.
With the crash of the economy in the fall of 2008, employers laid off staff and found that the productivity stayed the same as the remaining employees took over the work left by those who left. Even though the economy improved in 2009, employers are not hiring back since production is adequate even with a decrease in staff. Independent contractors fill the gaps left by this unemployment.
When do I need a contract?
Businesses should have a signed contract for all independent contractors. We recommend that you have an attorney draw one up for you. The chances of a boilerplate contract that you found online holding up in court are slim.
If you are offering a service over $1,000 per service, you need a contract and a deposit. Depending on the industry, you should ask for 25-50% upfront.
How Do I know if my Small Business will be Successful?
There are four major parts to running a successful business. Funding, and a great product (or service). You will also need drive, passion, enthusiasm, and determination. You want to run a business so badly that you think about it 24/7, and you love thinking about it. It is not a burden, it's a dream. So now you have the funding (bank loans, your own capital, loan from your mother), the great product or service, and you have the drive. What is the fourth part? Talent.
Some people just have a talent, a natural ability to run a business, some do not. That does not mean you cannot succeed. If you don't have innate talent, you can learn it, through training or mentoring with other business people to get a good handle on the backend.
The product or service is 50% (will people buy it, will people want the service), and the quality of the management of the business is 50% (can you sustain audits, have you developed a marketing plan that works, are you complying with employment laws, etc.)
When to Fire an Employee
Fire employees for serious misconduct — dishonesty, unethical behavior, gross insubordination or inebriation on the job — or where it is clear that the employee cannot meet the level of performance of the job. Employees who lie can't be trusted; it is impossible to 'train' an employee not to lie.
For example, when an employee changes the time on an email to cover up, fire him because you will not be able to trust him in other situations. Fire employees if they steal objects or cheat about their time (stealing from your payroll). Fire employees who consume an inordinate amount of administrative time (someone who needs constant remediation to get along with co-workers). Fire those who cannot adhere to a work schedule or are always late when arriving at work is important to your business. Fire employees whose productivity is low. Fire employees with bad attitudes. Fire employees where their continued employment will decrease your income.
Does a probationary period work?
July 1, 2009
Probationary periods do work. Be serious about using the probationary period to let employees know how they are doing. If you have taken the time to hire well, most employees will pass the probationary period with flying colors.
If deficiencies show up, by half way through the probationary period, sit down and tell the employee what they have to do to successfully complete the probationary period. Keep it simple and don't list more then six things (more than six things means the employee is not the right match).
Tell the employee that it is up to her whether she can keep the job — at the end of the probationary period she needs to have adequately performed the items on the list. This is the best part for a manager — taking an employee who is weak and coaching them to succeed. Unfortunately, from my experience, if an employee is having problems, less than half will still be working for you after the probationary period. But for those who are, it is the greatest reward for a manager to watch an employee benefit and grow from mentoring.
When should I borrow to offset costs?
Ideally, small businesses should have a Line of Credit (LOC) established with a bank to draw on when expenses and income do not match. Employers are required by law to meet payroll (that is, you have to pay employees on payday). Meeting payroll is a key reason to use the LOC. Managing expenses against income is very important and of course you do not want to spend more than you make, but spending more at startup is all right if your projections for income in the future (usually the next two to three years) will cover the startup costs. A budget, business plan, or even sketch made on a napkin in a restaurant is required before you start.