04.16.07
Posted in Uncategorized at 7:20 pm by Diana Heeb Bivona
As hard as it may be to believe, employee theft and embezzlement adds up to billions of dollars in loss annually. For any business, particularly a small business, the financial loss can be devastating.
Security experts estimate that as many as 30% of all employees steal, and that another 60% will steal if given sufficient motive and opportunity. Just as hard to comprehend is the idea that honest employees often know theft is happening but fail to inform management of the problem. So what can you do to protect yourself?
Here are a three suggestions:
Pay closer attention. Keep an eye out for the tell-tale signs of internal theft. Has an employee’s standard of living suddenly increased without explanation? Do management or supervisor-level employees insist on handling routine clerical tasks themselves? Are your customers complaining about inflated or hidden charges on a more regular basis?
Make it harder to steal. Ensure that you have oversight and supervision procedures in place and remove the opportunities to steal. Perform regular audits of inventory and bookkeeping, regularly reconcile your invoices and payments, and/or consider installing physical obstacles such as alarm systems.
Work Together. It may sound like a common sense, no-brainer kind of thing, but it bears repeating. Employees are less likely to steal if they know there is a good chance they will be caught. Regular training sessions and “employee awareness” programs can inform employees about stealing problems and keep them on the lookout for theft of any kind.
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04.13.07
Posted in Uncategorized at 4:22 pm by Diana Heeb Bivona
Noncompete agreements are a common practice in business. It’s not an unusual request for a company to ask an employee, particularly a key employee, to sign one. However, many employers often find out after the fact that the agreement probably wouldn’t hold up in court if challenged. Most successful challenges of a non-compete agreement are those that claim the agreement with too broad, limiting neither time period nor geography. In the case of noncompetes, it is definitely one of those situations where the devil is in the details, and if you want yours to stand up in a court of law, if challenged, you need to take the time to draft a solid one.
The first thing you need to understand is how your particular state views noncompetes. States differ in their approaches. In California, they are practically unenforceable. In other states, such as Illinois, they can work just fine. In almost all situations though, the court will frown on an agreement they believe is too overly board. Be sure to include a reasonable specific timeframe that the non-compete will be in place and designate a specific geographic area. For example, the agreement is in effect for one year and covers the six neighboring counties.
Additionally, your noncompetes will be stronger if they apply to employees whose specific expertise—close ties to customers, knowledge of trade secrets—means their leaving could cause real damage to your company.Finally, always ask a potential new hire if they are subject to anyone else’s noncompetes. This could save you a trip to court and investing time and energy in someone who can’t work for you anyway.
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04.11.07
Posted in Uncategorized at 8:55 pm by Diana Heeb Bivona
As a small business owner, how dependent is your business on the internet? If faced with a loss of internet service, what type of impact would it have on your overall business? According to a recent Wells Fargo/Gallup Small Business Index 35% of small businesses believe it would have a major impact on their business, including 18% who said it would put them out of business.
Small business owners use the Internet for:
- regularly gather information as well as business and industry advice online - 75%
- online banking - 58%
- social networking to make professional contacts - 50%
- advertising and marketing - 45%
- payroll management - 22%
Forty-four percent of small businesses report having their own website, with the top three uses for company web sites being: advertising company products and services (81%), soliciting customer feedback or queries (69%), and communicating with customers, suppliers and employees (68%).
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04.10.07
Posted in Uncategorized at 4:46 pm by Diana Heeb Bivona
Workers’ compensation costs are skyrocketing. In some industries considered high-risk, businesses are seeing their costs become almost unmanageable. However, here are three easy cost saving strategies you could try to reduce your workes’ compensation premiums.
- Prevent workplace injuries and illnesses. You’re thinking, “well of course our goal is to prevent workplace injuries and illness”, but that often requires going beyond compliance with Occupational Safety and Health Administration (OSHA) regulations. It means taking the time to examine the nature of your past workers’ compensation claims to identify high-risk areas and then provide on-going training to your employees.
- Shop around. Businesses should research policies with larger deductibles, state-based assigned-risk pools, or group self-insurance, which is typically offered through state-based trade association to secure the best possible rates.
- Consider self-insurance.. Rather than purchase insurance, employers can choose to self insure their workers’ compensation liabilities on behalf of their employees for reasons of cost effectiveness, greater control over their claims program, and increased safety incentives with improved loss control results. Check your state guidelines to see if you are eligible to self-insure.
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04.09.07
Posted in Uncategorized at 1:18 pm by Diana Heeb Bivona
Ever found yourself frustrated by a customer who just doesn’t seem to pay on time? After all, you thought your terms of payment due in 30 days was pretty fair. Yet, as you check the mail, again, you wonder how can it be so difficult? You think, maybe you are overacting and should just give them a little more time….well think again. Studies have shown that after 90 days, the chances of you collecting an account drops to 72%, down from 94% after 30 days. After six months, its down to just 58%.
What can you do? You could:
Give your customer a friendly courtesy call reminding them their account is past due. Almost 80% of late payments can be resolved by simply picking up the phone and giving them a call. If you find out they are having cash flow problems, see if you can work out a payment plan that works for both of you. Once you’ve hashed out a plan, write it up and have the customer, as well as yourself, sign it.
If that friendly call doesn’t jar them to action, send them a past due notice. How strong the language should be depends largely on your previous attempts to contact the customer and your relationship with them. Clearly state what will occur next if you do not receive payment.
If all else fails and you have tried everything in good faith to collect your money due, you can always head down to your local small claims court. However, if you travel this road be sure that you have a solid contract between you and your customer and a record of how and when you tried to contact them for payment.
Finally, consider whether or not your customer even has the money to pay you. If you have information that leads you to believe they don’t, you may want to reconsider the time and money you’ll have to shell out in order to collect via the court system. Ask yourself is it really worth it? This might prove to be the hardest question to answer, and you might say “its the principal of the matter”, but unless you have the extra money for filing and the time to prepare and go to court, it may not justify it.
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04.06.07
Posted in Uncategorized at 11:21 am by Diana Heeb Bivona
We all seem to collect mounds of paper no matter how paperless we try to go. Trying to decide which documents we should keep and for how long can also prove challenging, particularly when you are looking to unload some of that paper. So what should you keep and for how long?
According to the IRS, the American Institute of Certified Public Accountants and CCH Tax and Accounting, businesses should:
Keep the following records permanently:
- general ledgers and journals
- payroll records, including W-2s, 940s, 941s
- year-end financial statements
- tax returns and supporting documents
- articles of incorporation, bylaws, meeting minutes, etc.
- retirement plan records
- mortgages and deeds
Keep for 10 years:
- bank statements and cancelled checks
- AP & AR documents
- invoices and billing information (customers and ventors)
- leases
- contracts with clients and suppliers
Keep for 7 years:
- expense reports
- employee agreements/contracts/termination records
- documents related to litigation
- inventory documentation
Keep for 3 years:
- employment applications
- employee disability and illness benefit records
- expired insurance policies
- general correspondence
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04.05.07
Posted in Uncategorized at 4:56 pm by Diana Heeb Bivona
It’s becoming a more and more frequent practice for insurance companies to include a benefit-cutting clause in business insurance policies. What is this? In the past, business insurance policies generally instructed the insurance carrier to cover the entire cost of legal fees and related expenses, even when only part of the claim was covered by the policy. However, several insurance companies have begun putting “allocation” or “relative legal exposure” clauses into the fine print of their policies.
These clauses require the carrier and insured to use their best efforts to determine a fair allocation of payments between covered and uncovered claims. The insured then becomes responsible for covering the legal costs allocated to uncovered claims.
These allocation clauses reduce benefits and can potentially open the door to disputes over what is a fair allocation, which in turn may lead to costly litigation. So, be sure to check the fine print before signing those business insurance policies. You may end up paying more than you think in the long run for less coverage.
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04.04.07
Posted in Uncategorized at 9:15 pm by Diana Heeb Bivona
Last year, it came to light that the Small Business Administration had allowed hundreds of Fortune 1000 firms to receive billions in federal small business contracts. Companies such as AT&T, Lockheed, Boeing, Nike, Sprint and Hewlett Packard had erroneously received federal small business contracts through “miscoding” and “computer glitches,” according to SBA officials.
Obviously, many were upset and vowed action. The SBA’s Inspector General recommended an annual recertification policy in 2003 that would have stopped Fortune 1000 firms from receiving federal small business contracts. And, in 2006 the Senate Committee on Small Business and Entrepreneurship voted unanimously to adopt an annual recertification policy for all firms claiming small business status.
So, what’s happened? According to a press release from the American Small Business League (ASBL), the SBA Administrator Steven Preston has passed a policy set to go into effect in June 2007 that will allow these Fortune 1000 firms and hundreds of others to continue receiving billions in federal contracts earmarked for small businesses until the year 2012.
The ASBL estimates that if the new SBA policy is allowed to stand, U.S. small businesses will loose over $500 billion in federal small business contracts between 2002 and 2012.
Hopefully, Congress will step up to the plate and address this issue before more small businesses loose out on another potential source of financing for their business. Who needs it more? Nike? Sprint?
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04.03.07
Posted in Uncategorized at 6:29 pm by Diana Heeb Bivona
Business structures such as an LLC, LP, S Corporation or C Corporation are legitimate, legal structures. When you form one of these entities, you also reap certain benefits in terms of tax savings, limiting liability, etc. However, you need to fulfil the requirements that the federal government and states sets up in order to keep that structure. Too often, business owners form one of these entities, file their annual report and go on running their business. Unfortunately, many tend to forget to keep up with their minutes, stock issuance and corporation/LLC documents.
One of the potential results could end up costing you big money. The IRS likes to scruitinze business structures especially when it comes to qualifying deductions. If you find yourself being audited, do you know one of the first things they are going to ask for? Yep, copies of your minutes and corp./LLC documents.
If you respond, “I don’t have them,” or “They’re not quite up to date,” chances are pretty good that you are going to loose deductions. Why? Because without those records, you can’t say you have a legitimate business structure in place. You MUST operate your business like a business and follow the correct business formalities. If you don’t, the structure can’t benefit you.
So, don’t forget to properly issue stock and record it (if applicable), create annual filings for your state (if applicable), prepare notes for money you’ve put in and taken out of your business and record your mandatory annual minutes. Sure, it may take time out of your day, but better that than money out of your pocket.
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