Starting a business can be a handful. No matter how well you prepare, there is always the risk of the business going south. Running a business is not black and white. There is no single key that can lead a business to success, and no single problem that can shoot a business down. Starting and maintaining a business lies in the gray space in between. There are hundreds of factors that contribute to whether a business will succeed or fail. On top of the financial risk associated with running a business, business owners need to consider the following for their business.
Legal
It is crucial to understand the applicable labor laws before starting a business. Research the rules and regulations specific to your state. Be familiar with regulations and requirements pertaining to all areas of the business. Consider starting with the following.
- Health and safety regulations – physical conditions in the workplace (i.e. maintaining the building and equipment)
- Labeling requirements – inform consumers about the contents of the product
- Rules and regulations in the workplace – how to interact with staff members
- Minimum wage requirements – the minimum that employers are required to pay their employees
Laws and regulations are constantly changing – the research is never ending. Business owners should always stay up to date with new laws and changes made to existing laws.
Failing to stay compliant with all federal and state laws and regulations can lead to serious consequences for a business. Two laws have already changed just so far in 2019.
- Minimum Wage – There are 20 states that have updated the minimum wage laws. These changes went into effect on or by January 1, 2019.
- H-2B Visas – The H-2B Visa cap increased from 66,000 to 129,547 – via the Consolidated Appropriations Act of 2018.
Something to watch for: Overtime Rule – There has been anticipation over whether the overtime rule will be issued. The proposed rule would more than double the annual salary threshold for overtime from $23,660 to $47,476.
Manpower
There are some businesses that only require one person to keep the business afloat. However, for the most part, businesses need to be staffed with skilled employees. The business owner should include the cost of employee wages into their financial plan.
Ask yourself: “Can I meet my staffing needs without breaking the budget?” If the answer is no, the business owner may consider outsourcing some business services to a third-party vendor.
Hiring qualified employees is only half the battle. Retention is another risk.
Ask yourself: “What am I doing to retain my best employees?”
Avoid losing employees to a higher paying job elsewhere by providing them with a rich suite of benefits. Consider offering benefits such as:
- Group Insurance Plans
- Group Health Insurance (Medical/Dental/Vision)
- Life Insurance
- Short Term Disability
- Long Term Disability
- 401(k) Plan
- Employee Wellness Programs
Another important aspect is the management of staff members.
Will the business owner take all responsibility for managing the team? Will full-time employees be hired to fill the different responsibilities? Consider the following tasks that fall under this category.
- Onboarding and training – When a new employee is hired, someone in the organization must conduct an onboarding session with the employee. During an onboarding the employer will go over expectations, new hire paperwork, the employee handbook, and any additional forms and paperwork to get the new employee adjusted to the new position.
- Maintaining
employee work history and tax information records – There is documentation
that legally needs to be kept for all employees. To stay in compliance with
state and federal guidelines, the business owner must understand how to store
these documents properly and securely. Each document has specific record
keeping requirements which lets those tasked with maintaining the documents
know how long each should be kept.
- EEOC Regulations require employers to store employee records for one year. If the employee is involuntarily terminated, the documents must be kept by the employer for one year from the termination date.
- Employers must keep payroll records for three years according to the ADEA recordkeeping requirements.
- Employers
must maintain employee records even once the employee is terminated. Each
document has different length requirement for how long they must be kept by the
employer. Example: Termination + 5 years. Records Type include:
- Health & Benefit Records – Drug test results, Medical/Dental/Vision plan elections, job related injuries & illnesses records, etc.
- Pre-Employment/Employment Documents – Job description, employment application/resume, background check information, etc.
- Retirement – 401(k) allocation records, retirement beneficiary form, etc.
- Payroll/Tax – Paystubs, W-2s, W-4s, employee withholdings, expense reports, etc.
- Human Resource Policies & Reports – HR policies, Form 5500, etc.
- Administering employee benefits – This includes educating employees on the options offered by the employer, enrolling employees in the selected plans and terminating employees from the plan as necessary.
- Handling human resource issues – Human resources is a broad term. This could include addressing complaints and issues from employees.
- Addressing disciplinary actions – How will employees with poor performance be handled? Decide early on what the steps in the disciplinary process are and who will be responsible for addressing any issues. This may be the business owner or a hired staff member with the appropriate skills, training and background.
Some smaller businesses may find it more economical to outsource some of these services to a third party like a professional employer organization (PEO). This allows the business owner to task all the human resources, benefits administration and additional administrative tasks to one third-party vendor rather than paying multiple salaries to fulfill the business needs.
Time Commitment
Maintaining the day to day operations of a business is a full-time job in itself. To keep a business running and employees happy, a variety of tasks need to be taken care of daily.
Ask yourself: “Do I have the time and/or manpower to accomplish these tasks?”
Payroll Processing. Chances are most employees are not working for free, and the business owners wants to get paid also. The role of a payroll processor is to confirm the hours on timesheets for each employee, compute the wages and issue the checks on pay day. In addition to paying employees, there are additional human resource needs of a business.
A human resource administrator is tasked with planning, directing and coordinating the administrative functions of an organization. Consider the following necessary documents that a business should provide for its employees.
- Employee handbook
- Nondisclosure agreement
- Offer of employment letter
- Job descriptions
These documents help to set the stage for new employees. Setting expectations up front helps the team understand their role in the business. Some business owners will opt to require background checks and drug screens as part of the pre-employment screening process. Taking care of the human resources side of the business can turn into a full-time job on its own. Some may find that it makes more sense financially to use HR outsourcing for some of these needs.
One final role to keep in mind is the administrative coordinator. There are countless administrative tasks that require attention throughout a given workday. Two important tasks to prioritize on the list:
- Bookkeeping – Maintaining the financial records of the business. Watching the cashflow and double checking the numbers coming in and going out.
- Accounting – Analyzing the financial statements and preparing taxes.
Business owners have a lot on their plate. In addition to selling their products and services, there are the back-office tasks that are required to keep the business running. Small businesses don’t always have the financial ability to hire skilled staff members for each role that needs to be filled. Maintaining good business practices should always be a priority for business owners. This will help the business to avoid compliance related issues that could be detrimental to its success.
Choose FocusOne Source as Your Next Strategic Business Move
Focus OneSource is Iowa’s only locally based PEO. As Iowans, we know that Iowans like to do business with Iowans. Like other PEOs, Focus OneSource will give you access to a rich suite of benefits that are otherwise unavailable to small business owners. Our flexibility and personal interest set us above other PEO options for small business owners in Iowa.
There is never one right solutions for any problem and we get that! Unlike other PEOs, we offer the traditional PEO package or can break out our services into an a la carte option. Adding choice to our service offering allows our clients to pick and choose the services that will be the best solutions for their business goals.
Alaina Riley
Marketing & Wellness Coordinator