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3 Things for You to Consider When Hiring Workers

Accounting can be challenging for small business owners without financial backgrounds, especially as it pertains to labor. But these three tips can help.

1. Calculate labor costs before you hire.

If you decide to hire employees, you'll be on the hook for more than just their wages. You also must come up with money to pay benefits and payroll taxes. Those expenses can accumulate faster than you realize. Some small business owners even end up cutting compensation post-hire. That's a terrible position for you and your employees (who feel cheated), so avoid it at all costs. 

2. Classify workers properly.

When building a team, you have two choices: employees and contractors. And the penalties for misclassifying workers can be hefty. First, there's a $50 fee for the W-2 form for each misclassified contractor. Add to that 1.5% of wages and 40% of FICA taxes (in addition to 100% of the FICA taxes that you should have paid per employee). The IRS can also fine you up to $1,000 per worker or imprison you for a year if it believes the misclassification was intentional.

3. Don't try to do it yourself.

Many small business owners are used to controlling all aspects of their businesses. Eventually, however, you have to delegate to experts, especially when it comes to accounting and bookkeeping. By hiring a professional, you can reduce accounting mistakes and ensure that your accounting records are accurate and up to date. It will also save you a lot of time.

How to Win Big in Today's Economy

The altered economic landscape presents innovative and nimble businesses with opportunities to thrive. Find out how by requesting my free report "How to Win Big in Today’s Economy."

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3 Success Stories and What You Can Learn from Them

With the new year around the corner, you'll be reviewing how your business did this past year and reflecting on your goals and what you want to achieve in life and in business.

Here are three inspiring examples of those who managed to make it from humble beginnings and what we can all learn from them.

Jan Koum

Koum was born into poverty in a tiny village in Ukraine. After migrating to America with his family as a teenager, Koum became fascinated with computers and eventually began working for Yahoo!

In 2009, he had the foresight to predict the future success of the embryonic mobile app industry, so he founded WhatsApp. By 2014, he'd sold it to Facebook for $19 billion. Koum's story shows that intelligent forward planning can be the key to reaching your goals.

John Paul DeJoria

DeJoria began his working life moving from low-paid job to low-paid job, from shifts as a janitor to delivering newspapers. Befriending Paul Mitchell while working in hair care, the pair took out a small loan of $700 and founded John Paul Mitchell Systems, today a global conglomerate.

Since then, he has helped to found Patron Sports and is worth over $3.1 billion, proving that strong drive and good friendships can take you farther than you think.

Kevin Plank Plank was on the edge of going broke when he decided to put his life savings together with a $40,000 advance on a credit card to fund a company selling clothing under his brand, Under Armor.

After making a $17,000 sale to Georgia Tech University, sales to 24 NFL teams followed, and in a few short years, it turned into a multimillion dollar company. Today the company is worth billions. Plank's journey shows the power of investing in yourself!

Worth Reading
Introverts, Empaths, & Homebodies: How to Succeed in Business without Changing Who You Are
Marie Forleo
Want to start a business but feel like you're too shy to have what it takes? In this enlightening video interview with media strategist Angela Chee, Marie Forleo breaks down why it's okay to be an introvert and still have the brains for business. The entrepreneurial spirit isn't just a loud one!
Read More
How Remote Work Affects Our Communication and Collaboration
Laura Counts
Greater Good Magazine
We all know the feeling of sitting in a meeting that could have been an email, but sometimes meetings help get work done. In this article, Laura Counts examines how remote working might be pigeonholing staff. It's not that your team won't be working just as hard but more that they might not gel as well with each other. What works best for your team? Read the article to get the whole story.
Read More
The Importance of Feedback in Business

The colder months and shorter days signify one thing: it's nearing the end of the year. Just before you break out the holiday decorations, it's the perfect time to take a look back, think about what worked and what could have been better.

Feedback isn't just on the back of a customer service form. If used meaningfully, it can be the key to helping your business run smoothly. Here are a few tricks for how to implement it.

Helps avoid mistakes. Sharing little points of feedback often can be the key to stopping a team from derailing. When a group is working on a project together, there can be a lot of misunderstanding and communication. Not only does it keep the team on track, but it also saves you the time of correcting a larger mistake.

Form better relationships. Communication is the key to a good relationship, and that's the same in business. Being honest can be quite a hard pill to swallow, but the more comfortable your teams become with it, the better they will be both inside and outside the office.

Helps to motivate. Receiving feedback motivates people! Keep it friendly. The key to constructive feedback is to offer advice, not judgment. Your team members may be unsure how to ask for help or may feel a little lost. Plus, end with encouragement! Hope will always be better than fear.

Offer good feedback. It's not all doom and gloom! You should be applauding your staff as well as pointing out any mistakes or places to improve. This in turn creates a better, more well-rounded team.

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Links You Can Use - Feedback
All companies value feedback, whether it's external, internal, top-down or passed up. Here are some links to help.
How to Ask for & Actually Get Customer Feedback

We can ask all our customers to leave us feedback, but getting them to do it can be tough. This HubSpot article has some helpful tips to change your luck with that.

Read More
Giving Feedback When You’re Conflict Averse

Value harmony in the workplace? Feel uncomfortable with confrontation? Being conflict averse can be difficult when it's your job to give feedback. This article might help you combat it.

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4 Killer Methods to Collect Employee Feedback

Time to collect your teams' thoughts after a long year. Unsure where to start? It can be quite difficult to get results. Try these killer methods from inside 6Q.

Read More
Criticism Vs Feedback

Constructive criticism vs. feedback: What's the difference? Find out in this blog by Sonia Layne-Gartside on LinkedIn.

Read More
5 Things Small Businesses Need to Know about Accounting

Most small business owners are not accountants, but they must learn the nuts and bolts of accounting. Fortunately, the basics of small business accounting is fairly simple for a company that operates in a single state. You need to ensure your revenues exceed your expenses, keep your books clean and pay your taxes. Here are five tips that will help you do that. 

1. Keep business and personal accounts separate.

One of the biggest accounting blunders is mixing business and personal finances. Sure, as an entrepreneur, you may have chipped in to get your business going; that's not unusual. But you must keep business revenues and expenses separate from personal funds (money coming in and going out).

First, you may want to create a separate business structure with a distinct legal entity, such as an S corporation or LLC. Next, open a business checking account and get a business credit card in the name of that entity. Then pay all of your business expenses from those accounts (including your salary). Be sure to track any business usage of your personal items.

2. Always get a receipt.

You can claim a good portion of your company's expenses as tax deductions: meals with clients, marketing campaigns, office rent, office supplies, accounting, freelancers, etc. In order to claim these deductions, though, you need receipts. Software is available to help you track receipts. A simple program called Shoeboxed, for example, allows you to photograph, upload and categorize receipts on a desktop computer or smartphone app. A simple Google search will help you find many other options.

3. Watch accounts receivable.

It's important to keep an eye on accounts payable, but outgoing money doesn't dictate your survival like accounts receivable does. If there isn't money coming in the door, you can't continue to operate. Each month, then, you should review outstanding revenue. Generally speaking, no more than 10% to 15% of your accounts receivable should be past due, so reach out weekly to those clients. Also consider instituting penalties for late payment (such as a monthly finance charge of 1% or 2% of the principal). But if you do this, be sure to tell clients in advance. It's legally important, and the threat of penalties may be enough to dissuade those clients who tend to be late.

4. Invoice correctly (and regularly).

Invoicing is a critical part of owning a business because any mistake or delay can hurt your ability to get paid. But it can be time-consuming. That's why it's important to ensure you send out accurate invoices. The invoices should be detailed, providing specific information about all line items. Send invoices in a timely manner and regularly, and follow up with an email reminder to increase your likelihood of getting paid.

5. Stay on top of tax deadlines.

Most small businesses file estimated quarterly tax payments. These payments are made on two types of taxes: self-employment tax (which includes Social Security and Medicare taxes) and income tax (on the profits your company makes). If you do need to make estimated tax payments, they are generally due on April 15, June 15, September 15 and January 15.

This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.

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