Independent contractor

Should You Hire? 3 Common Mistakes

Hiring employees or independent contractors is an on-going challenge to many small -mid-size businesses. When, who, what can I afford – all come into play. These are among the most common mistakes I see.

1. What skills and experience do you really need?

Classically, smaller employers want folks to wear multiple hats. There are some people who love doing a variety of types of work each day. But the work combinations must make sense and be right for your organization’s needs.

There may be a terrific sales person who is happy to be doing administrative work half of the time – but I have not met such a combination of attributes.

Two part-timers or outsourcing each area to experts or some combination makes far more sense in situations where the work needs are very different.

2. I hate to do sales… and other tasks you dislike

I often see founders who really dislike marketing and sales work. I am not too thrilled with it myself. But in most cases, the best business developer for the business is the founder or top executive. Potential clients want to know you before they will consider hiring your firm.

This can be true of other critical business aspects as well. If your business is highly technical, clients want to see the that founder or CEO knows the technology.

And are you really ready to give up these responsibilities? Many aren’t when it comes down to doing so – and they micromanage and wonder why they are not getting their own time back or the results desired. Giving up critical parts of your job is often more difficult than you expect.

In these cases of things that you dislike doing , you may need to hire support. But […]

Which Are Employees? Trouble Ahead or Not?

Many small and mid-size organizations use a range of people to meet their goals. Some are employees; others are vendors, independent contractors, freelancers, consultants, temporary, or casual labor.

States and federal government agencies are in significant enforcement efforts to ensure that anyone who is really an employee is actually treated as an employee. States complain that they are losing tax revenues. There are legal concerns about who is covered by various laws, like workers compensation. And there is concern about benefits and financial security. The increase in company efforts to reduce costs plus the use of freelancers and companies like TaskRabbit have aggravated these issues.

So how do you know who is really your employee?

Certainly there are monetary costs to making everyone who does anything for your organization an employee. And there are some people who do work for you who are easily outside the employee relationship. If you use a CPA or legal firm, for example, you know those are not your employees. When you hire someone through a temporary employment agency to do a short-term job, the agency is the employer.

If you hire temporary, seasonal, or casual labor directly, they are usually employees.

But what happens if you have a bookkeeper who comes in on a regular basis for a couple days each week? Does the bookkeeper have multiple clients for her own business? If so, she is not your employee. If not, she is likely to be your employee.

If you use a business which offers services to the public to provide you with services, contract work, or consulting then you are not likely to be the employer — unless your firm is the only client of that business.

When you consider bringing someone in to […]

Common Small Business Problems Hinder Success

One of the advantages of consulting is that you get to see others’ mistakes. And learn from them. I have made more than my fair share of mistakes. Yet, I still am surprised by how often the basics underlying how you run your operations are the most common small business problems.

Good administrative processes will support and enhance your ability to grow and succeed. Set them up early and properly to be effective. Boring work, probably. Critical, yes!

Financial literacy is quite low in the US.

Whether you are a financial whiz or barely understand cash flow, you need effective financial processes in your business. You need a system that is right for your size and work. But you also need to understand and use it. Get basic training. Or hire someone to help you set up your own chart of accounts and understand what your system can do for your business. Then add help to maintain it as needed.

Your ability to manage your cash flow is critical to your success. And your tax returns are far easier with a good system. So is your planning!

Yet… recently it was a long-time business owner whose bank account was overdrawn before he realized he had not seen his outside book-keeper in months and his employee was not entering everything correctly. Last fall it was a CEO who had not made payroll on time – again; but thought employees should understand good intentions!

And don’t even ask me what happens to firms which do not pay employee tax withholding on time – think locked doors, seized bank accounts, personal assets at risk.

How are you hiring and paying for services your business needs?

Do you have employees? Independent contractors? Contractors or consultants? Interns?

Tax and labor laws […]