Contractor Corner

Should My Small Business Go Paperless?

The days of cumbersome filing cabinets and endless stacks of paper are coming to a close. Cloud services and similar technology have made it possible for small and medium-sized businesses everywhere to go paperless. Going paperless offers an array of benefits to companies, especially when it comes to time and money. But it does require an initial investment to get started. So how do you know if you’re ready?

You Want to Help the Environment (and Save Money)

Obviously, the biggest benefit to going paperless is the effect it has on the environment. In fact, the paper industry is ranked as #3 on the greenhouse gas emissions list and #1 for water consumption. Even one company switching to paperless can help. So what does this mean for you? It saves a significant amount of money. With stamp costs at an all-time high, mailing out paper bills gets expensive fast. Add that to the cost of paper and toner needed to print those bills, and you can see just how much potential there is to save a lot of money.

You Want Better Organization and Accessibility

Electronic billing keeps everyone on the same virtual page. Because all of your documents are digital, you can upload them to the Cloud and access them anywhere, anytime. Never again do you have to sift through stacks of paperwork looking for an invoice. You can easily categorize your digital documents, making it much easier to search for them. You can finally ditch those unsightly filing cabinets.

You Want Your Customers to Pay on Time

Electronic billing doesn’t just help you save money; it can also help you make more money. According to Harris Interactive, about 23% of Americans pay their bills late because they misplaced their physical notices. This means you have to spend more money chasing down late-payers. With electronic billing and services like text reminders, your customers are much more likely to pay on time. That saves you money and a great deal of time.

Make the Switch Without Drowning in Old Paper Documents

Switching to paperless definitely has substantial benefits for business owners. But how do you prepare for the time-consuming task that lies ahead?

  • Start small by switching the easy stuff first. For example, start using electronic faxes instead of paper faxing. E-faxes go right to your inbox, where you can print out the hard copies you need.
  • Then switch internal documents, like spreadsheets, memos, and collaborative work. Platforms like Google Docs let you keep all those forms in the cloud, so your employees can access them from anywhere.
  • Consider implementing a service management platform to handle sales, scheduling, and billing. Most service management software integrates with QuickBooks accounting software or has the capability to integrate it. Many also come with mobile field applications. That means you can invoice and quote in a paperless environment, keep customer records in one place, email invoices to customers, and track inventory easily.
  • Make data storage paperless. This is one of the biggest time commitments – especially if you want to scan and upload old documents. But it’s worth it. Using an online data storage system will save you physical space and money and make organizing documents much easier. While it may take a large investment of your time up front, it saves you a lot of headaches in the long-run.

Go paperless by switching to an outsourced bookkeeping or payroll service like Contractor in Charge. Find out how to put your company “In Charge” – schedule a call with us to get a free quote!

Sources:

http://blogs.plantronics.com/small-medium-business/is-your-small-business-ready-to-go-paperless
http://www.automaticfinances.com/traditional-or-paperless-billing/

Make 2016 Your Best Tax Season Yet

As 2015 comes to a close, tax season is fast approaching. The April deadline is already looming and likely causing you stress, since there’s already so much on your plate. Doing taxes as an individual can be complicated. Doing taxes as a business owner is… very tricky, to say the least. When tax season rolls around, many entrepreneurs find themselves pulling their hair out with stress – but it doesn’t have to be as hard as it seems. Good record-keeping and a little perseverance goes a long way. Here are a few tips to help get you through the 2016 tax season.

Keeping Records the Right Way

Obviously, good record-keeping is a must as a business owner. Aside from just keeping a record of all your expenses, though, you also need to keep records in an organized fashion. Throughout the year, enter records into your accounting software as you create them. Don’t wait until the end of the year to tally your expenses. Make a habit of entering information at the end of each workday or work week. Also, keep your business and personal expenses separate. That means you should have different checking and credit card accounts for yourself and your business. It will make record keeping and tax season a whole lot easier.

Outsourcing your payroll and taxes is another fantastic way to keep proper care of your records and save yourself the headache of doing your own taxes. Many payroll companies offer tax services as part of their packages. Some of them are tax-focused, meaning their main service is accounting and taxes; payroll is a secondary benefit. These companies know the ins and outs of changing tax laws and how to get you the best tax breaks. Otherwise, you may run the risk of making costly mistakes on your taxes.

Know Your Deductions

Like individuals, businesses also have standard deductions they can claim. First-year business can deduct up to $5,000 in capital expenses for launching their company. If you’ve taken classes to improve your career as a business owner, you can deduct those, as well. Furthermore, the Small Business Jobs Act Tax law, enabled in 2010, has plenty of opportunities for small businesses to save money.

Have a Secret Arsenal of Tricks

There are plenty of little loopholes small business owners can use to their advantage. For example, if one of your children works (or helps out) around the company, you can pay him or her up to $6,000 that’s not taxed as your own income. If your spouse works for you, and you pay for healthcare, you can also deduct those payments. There are ways to save with non-related employees, as well. Offering extra benefits, like healthcare and childcare, instead of raises can offset the cost of paying taxes on additional income.

Donate!

We all know donations can help reduce individual tax payments, but did you know you can leverage this as a business? If you have unused inventory at the end of the year, donate it. You’ll save money since you don’t have to store it, and you’ll get significant tax breaks. Just remember to keep precise records for donations totaling more than $500, as donations more than that amount have more stringent reporting standards.

Contractor in Charge offers various tax and payroll services. Find out how to put your company “In Charge” – schedule a call with us to get a free quote!

Sources:

http://business.time.com/2013/03/13/10-tax-tips-for-small-businesses/
http://www.sbnonline.com/article/how-outsourcing-tax-functions-can-keep-you-compliant-and-focused-on-your-core-business-crowehorwath/
http://www.inc.com/guides/reduce-smb-tax.html

A service contractor business needs three key areas of their business to run efficiently and coordinated with their production and selling area.  Those areas are Operations, Accounting & Finance, and Marketing.  All three are essential but the hub lies in the Service department and Operations.  A Service department is very dynamic and implementing some key ground rules can change the game.  Here are five ground rules which will allow you to grow and mature as business with a peace of mind.

#1 The Golden Rule 

Do unto others as you have them do unto you!  Simply put, don’t sell or deliver a job that you would not have installed in your home.  We live in a “throw away” society today.  If a customer’s service problem can be fixed verses replacing something, then do it.  Don’t sell them something just because you need to drive more daily sales.  Do the right thing for the customer.  I know many air conditioning failures are related to a bad capacitor.  However AC Sales Representatives will sell a new condenser verses repairing the unit with a capacitor.  This is a hundreds verses thousands of dollars in repair for the customer.

#2 Build Confidence & Knowledge in your Team and Business

Our customers are empowered today.  They have research at their fingertips via the internet and their smart phones.  They expect service technicians to know the latest and greatest products and services in their field.  It your job to schedule regular training for yourself and technicians with manufacturers, supply houses, and partners to give your team the confidence and knowledge on the trends and solutions for your customers.  We suggest a monthly training on a new product, new technique, and new technologies in your field.  It is this training that gives your team confidence and knowledge to deliver the answers and discussion the empowered customer demands in today’s world.

#3 Don’t Work Below Your Pay Grade: 

Too many service companies do not have a knowledgeable and empowered customer service agent answering their phones, emails, and social media requests.  Most are using their personal cell phone as their business phone and most calls go to a voicemail… which by the way is generally is too full and will not accept new voicemails.  The other tactic is to answer a phone while on another customer’s job…what are you doing? This is not acceptable. 

The reason I labeled this as Below Your Pay Grade… is because this is not your job as the business owner and lead service technician of your company.   More than 30% of customers will not leave a message on a voicemail and 79% will not call back if their calls go unanswered.  As the business owner you are losing valuable customer’s sales …you are not productive in the most important role of your business.  A live customer service agent and organized scheduling is a competitive advantage and as part of your growth strategy, it is a must! Invest a your competitive advantage of a live customer agent and scheduling/dispatching software… this is a game changer.

#4 Establish Goals and Work Them

This is an old business cliché but it makes or breaks businesses.  So many service contractors are transaction driven.  They have not determined how many transactions or jobs they need to stay in business on a weekly, monthly, or annual basis.  What happens is they work and work and then one day they do not have any work.  This leads to poor cash flow and your technicians taking the skills you trained them and working for someone else. 

The breakdown starts with setting goals and communicating the goals to your technicians and employees.  The goals should be simple, achievable, and easy to understand.  A good example of a simple goal would be to communicate how many jobs at a certain price you need on daily and weekly basis to keep your business healthy.  Don’t keep it a secret, communicate it to your company and post the information publically.  A simple Monday morning meeting with everyone to let them know what the goals are and how you are doing… it can make a difference and will get everyone working toward success!

#5 Don’t settle for Mediocracy- Rise Above the Rest

According to a recent Harris poll, 50% of customers who hire a contractor are not happy.  The top reasons for the dissatisfaction are:

#1 Contractors do not show on time

#2 Contractors do not call customers back when they leave a message

#3 Contractors do not provide details of what they are charging the customer to do the job

#4 Contractors do not communicate with customers well or if at all

These top four areas of customer dissatisfaction are a contractors “competitive advantage” if they implement systems and resources to stop the pain.  Rise above the rest and consider these recommendations for the dissatisfaction points:

#1 Field service management software which allows for scheduling and dispatching jobs and projects both on the web and on a mobile device is affordable and easy to use.  If you know what is scheduled and where scheduling opportunities exist, a service contractor can at least offer a window of time they can schedule to be a customer location. 

#2 A customer agent is priceless especially if they are empowered and knowledgeable about your products, services, and schedule.  They can answer most questions and save YOU time therefore money in your business. 

#3 Repair work and replacement work should be detailed for the customer on an invoice.  If you use flat rate pricing then list the materials and hours used and billed a job.  In the case of giving estimates, use a range of pricing with options for products and materials.  Just don’t leave the customer without information to make a decision. 

#4 Communication is the key to a business and customer satisfaction.  Customers have busy schedules and lives with their job, kids, and life.  They need to know about schedule changes, job changes on budget, etc.  Changes and revisions need to be communicated in a timely fashion so customers can accommodate and budget for these in their schedules.   Think about how you would like to be treated and treat your customers in the s same manner.

It was a hot summer day in Florida and our A/C broke. While I have my favourite A/C guy – let’s call him Kevin – and two of his cell phone numbers plugged in my phone, I did not expect him to pick up. At the same time as I was speed-dialing his number, I was already impatiently googling “broken A/C tampa, FL” on my computer. I was also already preparing excuses as to why it was OK for me to abandon this guy who always did great work for me – just because I was sweating and wanted this problem to go away.

Whoever will answer the phone first and get to my house wins… right? In todays world where patience is measured by the speed of the internet – I am entitled to get things right away; or at least know when my A/C will be fixed. When you ask for answers these days, what you will usually get from the A/C guy will be, “Well, I just have to clone myself.”

It today’s ever-changing technology, the keys to making automation work for your business are to select suitable devices and software for your industry; while also seeing the opportunities that already exist and using them in new ways. Technology must help you get the job done efficiently. The bottom line is that technology has to work for you – not the other way around.

You are used to performing office-related tasks in the field on your mobile devices without going to your office. You are able to schedule the supply deliveries, equipment and contractors without ever setting a foot on the job site. The challenge is quickly finding “what is next.” What else can you automate and make work faster? What will give you that edge as the market is flooded with super expensive equipment… that you don’t have the money in the budget or storage space for. The answer: look back to your customer to find out what really matters to your business, solving the problems of ordinary people with a broken A/C.

I just want somebody to pick up the phone and tell me it will be OK and my A/C will be fixed tomorrow, and it will not cost me my arm and leg.

Kevin picked up on the first ring, and to my surprise just as my google search results were loading. He asked me if the second A/C was working, and if we were ok to sleep downstairs for one night. He explained that he would be over first thing in the morning. It felt as if about a thousand pounds was lifted off my shoulders, I closed my browser and the house suddenly also felt “cooler” just because I knew Kevin will take care of it. I felt special that Kevin picked up on a first ring. He is my superstar! Until the next A/C problem, that is.

No, he did not clone himself.

Kevin is in high demand, usually with a three week wait for installation, and he has his hands full all the time. So you are probably wondering, “How did he respond so quickly?” So did I. When Kevin arrived the next day, the answer was obvious right away. Kevin had a smart watch. Unlike most people who just get smartwatch to check Facebook and to look cool, he was able to see the true potential of this wonderful technology. He is a clever guy, and he also knows that not picking up the phone will make a difference whether or not he will get the job, and hiring an additional “receptionist/organizer” is not in his budget. Now no matter where he is he can simply answer his phone through a voice command on his smart watch and talk to an irritable, sweaty, impatient, and entitled person like me. When the phone rang he was actually in a dark and hot crawlspace pulling ductwork under a house.

Kevin was able to solve a problem with existing technology solutions, and that is making a whole lot of difference to his customers.

One of the most important questions you face when changing job is what to do with the money in your 401(k). Making the wrong move could cost you thousands of dollars or more in taxes and lower returns.

Let’s say you put in five years at your current job. For most of those years, you’ve had the company take a set percentage of your pre-tax salary and put it into your 401(k) plan.

Now that you’re leaving, what should you do? The first rule of thumb is to leave it alone because you have 60 days to decide whether to roll it over or leave it in the account.

Resist the temptation to cash out. The worst thing an employee can do when leaving a job is to withdraw the money from their 401(k) plans and put it in his or her bank account. Here’s why:

If you decide to have your distribution paid to you, the plan administrator will withhold 20 percent of your total for federal income taxes, so if you had $100,000 in your account and you wanted to cash it out, you’re already down to $80,000.

Furthermore, if you’re younger than 59 1/2, you’ll face a 10 percent penalty for early withdrawal come tax time. Now you’re down another 10 percent from the original amount of $100,000 to $70,000.

Also, because distributions are taxed as ordinary income, at the end of the year, you’ll have to pay the difference between your tax bracket and the 20 percent already taken out. For example, if you’re in the 33 percent tax bracket, you’ll still owe 13 percent, or $13,000. This lowers the amount of your cash distribution to $57,000.

But that’s not all. You might also have to pay state and local taxes. Between taxes and penalties, you could end up with little over half of what you had saved up, short-changing your retirement savings significantly.

What are the Alternatives?

If your new job offers a retirement plan, then the easiest course of action is to roll your account into the new plan before the 60-day period ends. Referred to as a “rollover” it is relatively painless to do. The 401(k) plan administrator at your previous job should have all of the forms you need.

A word of caution: Many employers require that you work a minimum period of time (e.g. three months) before you can participate in a 401(k). If that is the case, one solution is to keep your money in your former employer’s 401(k) plan until the new one is available. Then you can roll it over into the new plan. Most plans let former employees leave their assets in the old plan for several months.

The best way to roll funds over from an old 401(k) plan to a new one is to use a direct transfer. With the direct transfer, you never receive a check, and you avoid all of the taxes and penalties mentioned above, and your savings will continue to grow tax-deferred until you retire.

60-Day Rollover Period

If you have your former employer make the distribution check out to you, the Internal Revenue Service considers this a cash distribution. The check you get will have 20 percent taken out automatically from your vested amount for federal income tax.

But don’t panic. You have 60 days to roll over the lump sum (including the 20 percent) to your new employer’s plan or into a rollover individual retirement account (IRA). Then you won’t owe the additional taxes or the 10 percent early withdrawal penalty.

Note: If you’re not happy with the fund choices your new employer offers, you might opt for a rollover IRA instead of your company’s plan. You can then choose from hundreds of funds and have more control over your money. But again, to avoid the withholding hassle, use direct rollovers.

Note: Prior to 2015, the IRS allowed a one-per-year limit on rollovers on an IRA-by-IRA basis; however, starting in 2015, the limit will apply to aggregating all of an individual’s IRAs, effectively treating them as if they were a single IRA for the purposes of applying the limit.

Leave It Alone

If your vested account balance in your 401(k) is more than $5,000, you can usually leave it with your former employer’s retirement plan. Your lump sum will keep growing tax-deferred until you retire.

However, if you can’t leave the money in your former employer’s 401(k) and your new job doesn’t have a 401(k), your best bet is a direct rollover into an IRA. The same applies if you’ve decided to go into business for yourself.

Once you turn 59 1/2, you can begin withdrawals from your 401(k) plan or IRA without penalty and your withdrawals are taxed as ordinary income.

You don’t have to start taking withdrawals from your 401(k) unless you retire after age 70 1/2. With an IRA you must begin a schedule of taxable withdrawals based on your life expectancy when you reach 70 1/2, whether you’re working or not.

Don’t hesitate to call if you have any questions about IRA rollovers.

I recently clicked on a great link to a blog post by Reid Hoffman, Ben Casnocha, and Chris Yen. The blog was titled “Your Company is Not Family.” The title was intriguing since you always hear from CEO’s, company owners and managers that their companies are “just like family.” The article makes some really good points about the difference between “family” and “team.”

  • In a real family, parents don’t fire their children for poor performance. Be careful, if you need to let someone go or institute layoffs. If you are telling your employees they are just like family, the emotional impact is hurt and betrayal.
  • In contrast to a family, teams have specific missions and goals. A sports team is a far better analogy to a company’s employees and management team.
  • Sport teams have a process of consistent identity to their teams and system of replacing poor performers with good performers.
  • Lastly, high performers of competitive teams are highly sought after by other teams.   As well, relationships are maintained with past team members to establish loyalty and trust for the long haul.

Original Blog Post by Reid Hoffman, Ben Casnocha and Chris Yeh 

When CEO’s describe their company as being “like family,” we think they mean well. They’re searching for a model that represents the kind of relationships they want to have with their employees—a lifetime relationship with a sense of belonging. But using the term family makes it easy for misunderstandings to arise.

In a real family, parents can’t fire their children. Try to imagine disowning your child for poor performance: “We’re sorry Susie, but your mom and I have decided you’re just not a good fit. Your table-setting effort has been deteriorating for the past 6 months, and your obsession with ponies just isn’t adding any value. We’re going to have to let you go. But don’t take it the wrong way; it’s just family.”

Unthinkable, right? But that’s essentially what happens when a CEO describes the company as a family, then institutes layoffs. Regardless of what the law says about at-will employment, those employees will feel hurt and betrayed—with real justification.

Consider another metaphor—one that Reed Hastings, the CEO of Netflix, introduced in a famous presentation on his company’s culture. Hastings stated, “We’re a team, not a family.” He went on to advise managers to ask themselves, “Which of my people, if they told me they were leaving for a similar job at a peer company, would I fight hard to keep at Netflix? The other people should get a generous severance now so we can open a slot to try to find a star for that role.

In contrast to a family, a professional sports team has a specific mission (to win games and championships), and its members come together to accomplish that mission. The composition of the team changes over time, either because a team member chooses to go to another team, or because the team’s management decides to cut or trade a team member. In this sense, a business is far more like a sports team than a family.

Consider what we can learn from the example of America’s winningest professional sports teams. In the National Football League, the New England Patriots have won three Superbowls since the turn of the century. Over the same time period, the San Antonio Spurs of the National Basketball Association have won three NBA championships (and a fourth in 1999), and the Boston Red Sox have won the World Series three times as well.

Each of these winning franchises has been able to build a consistent identity and a long-term relationship with its players—even though many of those players change from year to year.

An NFL team has 53 players on its roster. The only member of the current New England Patriots team that played on their first championship team is quarterback Tom Brady.

A Major League Baseball team has 25 players on its roster. The only member of the current Boston Red Sox team that played on the 2004 World Series champions is designated hitter David Ortiz.

The Spurs stand out for the stability and longevity of their player relationships, yet even their current 13-man roster only includes one player from their first championship in 1999: power forward Tim Duncan.

The reason these teams have been able to remain consistent winners despite high personnel turnover is that they have been able to combine a realistic view of the often-temporary nature of the employment relationship with a focus on shared goals and long-term personal relationships.

While a professional sports team doesn’t guarantee lifetime employment for its players—far from it–the employer-employee relationship still benefits when it follows the principles of trust, mutual investment, and mutual benefit. Teams win when their individual members trust each other enough to prioritize team success over individual glory. It is no coincidence that these teams are known for “The Patriot Way” or “The Spurs Way,” and that television broadcasters often praise them for “unselfish” play.

And paradoxically, winning as a team is the best way for individual team members to achieve success. The members of a winning team are highly sought after by other teams, both for the skills they demonstrate and for their ability to help a new team develop a winning culture. Both the Patriots and Spurs have supplied numerous other teams with veteran leaders and coaches. For example, five of the other 29 NBA teams have a former Spurs assistant as their head coach. Meanwhile, the New York Yankees’ habit of signing former Red Sox as free agents is so well known that it is now a common punchline among baseball writers.

Great sports teams also find ways to maintain their relationships with former players, even long after their departure or retirement. For example, Spurs alumni who are now working as television broadcasters still regularly have dinner with the team and its coaches, even though they might not have played with the team for over a decade. Do you think that current players, seeing that kind of loyalty, might want to play for the Spurs?

Of course, a professional sports team isn’t a perfect analogy to your business. It’s doubtful, for example, that you obtain the bulk of your employees by taking turns with your competitors as part of an organized talent draft. But a great sports franchise consistently brings together a disparate team to achieve a common goal despite the reality of staff turnover. That’s something all businesses should strive for.

http://blogs.hbr.org/2014/06/your-company-is-not-a-family/

In conclusion, the article made an owner or CEO of a company think about how they communicate and build relationships with their employees.