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3.0 Staffing Your Needs

Employees and Staffing >> Each section contains key Action Items located within the downloadable Action Guide >> Click to Download Action Guide.

3.1   Recruit a Partner

Sometimes you may feel you need help either with money or with the workload.  This is a good time to ask your spouse, many businesses do well building a common goal within a family.  Other families haven’t defined the roles well so the business actually destroys the family.  There are venture capital organizations covered in these classes that may help you fund.  Whether it is a partner or just a confidante I encourage you to have a sounding board and not a yes-man.  You need someone who will give you feedback and test your thinking.  If you don’t have this type of support you will start to believe everything you say and think to yourself.  It is better to get the advice early in the process than have effort and money behind it and fail when just a little tweaking would make it effective.

ACTION ITEMS: Complete the Action Items in your Action Guide.

List a few people you might consider recruiting as a partner:

1)

2)

3)

3.2  Business Network and Mentors – Always build your network

You have built up a business network by now.  There are people who believe in you and understand your vision.  There are people who can connect you with others.  They will help you hire the type of person you want as long as you are specific in your requirements.

Let’s say you ask someone to go to the grocery store and get you groceries.  They continue to bring you food, but it isn’t what you want.  Well, you haven’t told them what you want.  The person helping you gets frustrated because they are trying to help and are starting to think you are not grateful for your help.  Meanwhile, you continue to long for fresh baby spinach without telling them.

This might seem like a strange example but it really works to show you that the more specific you are, the better qualified the referrals will be.  Don’t ask for help and put them through wasted effort.

See USCFE’s Networking and Referral Education Lessons via the site menu for help building a powerful business network.

Always set yourself apart from the crowds by sending handwritten thank you notes to thank anyone in your network that may have helped you in any way.  Write each note with sincerity.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Draft a quick letter that explains your needs. Not only can you use this in a written format, but it also gives you the words for when you are talking to others about your needs. Write a draft here:

Draft a short thank you note. This is one of the best ways to make people want to keep helping you, because you took the time to write them and thank them personally. Write a draft here:

3.3   Professional Advisors – Banker, CPA, Lawyer

It is important to have professional advisors know your business.  Walk into the bank and speak with the person in charge.  Introduce yourself and tell them you are interested in working with them and want to know how they work with businesses.  Introduce yourself to several of the banks in your area.  It could be that one is very good with business and you haven’t had the opportunity to work with them.  It is important to put a name and face in front of your banker.  Be a person they want to help succeed.  They will provide all sorts of advice and referrals for you to succeed.

An accountant is key.  Their expertise is important in building your business and they can recommend Quickbooks or other accounting software that can simplify your accounting.  You can get referrals from your banker, your other advisors and other business owners.  Be sure to interview them.  You want someone who matches your tolerance for risk.

A lawyer will help you from the start.  What sort of corporation do you need?  What papers need to be established?  A lawyer will help you understand any advantages to having family members named in the business.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Ask trusted people in your network for recommendations in developing your team of Professional Advisors. Who did they recommend?

Bankers:

1)                           Phone #:

2)                           Phone #:

3)                           Phone #:

CPAs:

1)                           Phone #:

2)                           Phone #:

3)                           Phone #:

Lawyers:

1)                           Phone #:

2)                           Phone #:

3)                           Phone #:

Now schedule a time to contact each lead and set up a time for an informational meeting. At this meeting, you want to ask questions about their experience in your type of business. Choose the Professional Advisors that meet your needs – just as you cannot settle when hiring – you should not settle here either.

3.4  Interns

Locate no-cost or low cost interns for research, surveys, administration, etc. Many colleges will offer students who can work on a project, set up process, or build a plan.  Having direct work experience is keen to the new grads.  And you get the chance to see work in action, get a project done and contribute to the community’s future!  You also get to practice your skills as a manager.

ACTION ITEMS: Complete the Action Items in your Action Guide.

List potential sources of interns in your area:

1)                                 Phone #:

2)                                 Phone #:

3)                                 Phone #:

Now contact a college near you and ask for the person in charge of internships for the school’s College of Business or other departments relevant to your business. Take the time to get to know this person. If he or she knows you, then he or she will be even happier to help you find interns.  You can also search for interns via specific student clubs like the accounting club, public relations club, entrepreneur club, etc.

3.5  Independent Contractors, Freelancers and Consultants

This is one of the most important areas today.  Many businesses will want to hire an independent contractor so they don’t have to handle taxes or other paperwork.  That is the wrong answer.  This is key – there are 20 questions used by the IRS to help you determine if the person is an employee or not.  The focus is on what control do you have over the person.  This short time project focus work can be a great help in your ability to grow your business.  These should be experts in a specific area and not doing work done in your business.

A person working for a business as an employee or independent contractor is an important distinction. The first question is who determines if a person performing work for a business is an employee or an independent contractor? Answer: the IRS.

The second question is how will a business that misclassifies an employee as an independent contractor get caught? Answer: IRS audit of the business, unemployment claim filed by a former worker, or a claim filed for worker’s compensation benefits filed by a worker, a former contractor filing a Form SS-8 (Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income tax Withholding) to mention a few.

The third question is what are the consequences of being caught and having an independent contractor reclassified as an employee? Answer: the employer becomes responsible for the employers and employees FICA (15.3% of gross wages), FUTA (currently $56 per year per employee), as well as the federal income tax (20% of gross wages). The IRS may also bring in the state and as a result, the employer may also become liable for the state income tax, as well as state unemployment and worker’s compensation. Employers may also face a penalty equal to the amount of the back taxes owed. Likewise, the employer will owe interest on all back taxes from the due dates. And, the business may be required to support the injured person for the rest of their life.

Common Law Rules

The following is a list of 20 questions the IRS uses to determine if a worker is an independent contractor or employee. The answer of “Yes” to any one of the questions (except #16) may mean the worker is an employee.

1. Is the worker required to comply with instructions about when, where and how the work

is done?

2. Is the worker provided training that would enable him/her to perform a job in a particular

method or manner?

3. Are the services provided by the worker an integral part of the business’ operations?

4. Must the services be rendered personally?

5. Does the business hire, supervise, or pay assistants to help the worker on the job?

6. Is there a continuing relationship between the worker and the person for whom the

services are performed?

7. Does the recipient of the services set the work schedule?

8. Is the worker required to devote his/her full time to the person he/she performs services

for?

9. Is the work performed at the place of business of the company or at specific places set

by the company?

10. Does the recipient of the services direct the sequence in which the work must be done?

11. Are regular oral or written reports required to be submitted by the worker?

12. Is the method of payment hourly, weekly, monthly (as opposed to commission or by the

job?)

13. Are business and/or traveling expenses reimbursed?

14. Does the company furnish tools and materials used by the worker?

15. Has the worker failed to invest in equipment or facilities used to provide the services?

16. Does the arrangement put the person in a position of realizing either a profit or loss on

the work?

17. Does the worker perform services exclusively for the company rather than working for a

number of companies at the same time?

18. Does the worker in fact make his/her services regularly available to the general public?

19. Is the worker subject to dismissal for reasons other than non-performance of the

contract specifications?

20. Can the worker terminate his/her relationship without incurring a liability for failure to

complete the job?

The IRS uses the 20 factors to determine if a worker is an employee or an independent contractor. However, it is their interpretation (although it could be challenged). Not all factors apply in each case or carry the same weight.

According to the IRS, workers are employees if they must comply with the employer’s instructions about their work, receive training or direction from the employer, provide services that integrate into the employer’s business, render their services personally (can’t subcontract), have a continuing working relationship with the employer, must follow set hours of work, work full-time for the employer, perform the work at the employer’s site, regularly report to the employer, are paid regularly (e.g. weekly), are paid for business expenses, use the employer’s tools, materials, etc. lack a major investment in facilities used to perform services, cannot make a profit or suffer a loss from their services, work for one employer at a time, do not offer services to the public, can be fired, may quit work at any time and not incur a liability. Thus, to qualify as an independent contractor, the opposite of all of these would be true. But remember, the IRS selects the questions and grades the answers.

Statutory Employees and Statutory Non-Employees

The Federal code lists some exceptions:

Agent Drivers or Commission Drivers; Full-time Life Insurance Salesperson; Homemakers: Traveling or City Salesperson: Qualified Real Estate Agent:  and Direct Seller.

The ultimate safeguard is to complete a Form SS-8, which asks the IRS for a determination if the person is an employee.  For more information, see IRS Publication 937.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Review this section carefully and consult your Professional Advisors if you are still unsure about how to classify the people helping you.

3.6   Employees

There is nothing wrong starting a position off part time if you aren’t sure of the future.  Be straightforward with the person.  Generally fulltime is 40 hours a week, part time is less than that–usually around 20 hours and temporary is 90 days or less.

3.7   Advisory board

Your advisory board can be people who hold you accountable to your business plan.

Certainly your accountant and your lawyer are key.  But include people outside the regular

business arena, such as a creative designer who brings a different kind of thinking.  These

are folks who want your business to grow.  Initially, a nice networking dinner will be fine.

These are people who can refer people to each other.  You are the connection.  And a focus

on your business helps them as a break from their everyday work.   Spend their time wisely. As you grow, a Board with compensation for participation should be considered.  You may be surprised who will help.  Just ask?  If you don’t ask, the answer is always no.

ACTION ITEMS: Complete the Action Items in your Action Guide.

Identify five people you would like to ask to be on your Board:

1)                                 Why?

2)                                 Why?

3)                                 Why?

4)                                 Why?

5)                                 Why?

Does each person bring something unique?

Now schedule a day to draft a letter to each person asking them to consider being a part of your Advisory Board. Explain why you feel they would be a valuable member of your board. Keep it honest and concise. Tell them, in the letter, you will contact their assistant this Thursday (?? Month, Day – Specify date), to set up a time to discuss further. Draft a brief letter here to someone from your list above:

Once you mail the letter, follow up within a day or two after you think the letter arrived.

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