How do I Know if I can Afford an Employee?
Welcome back! Last week we talked about figuring out when you have an employee vs. an independent contractor. This week we’re talking about when you will know if you can afford to hire an employee.
But first, I need to be transparent and let you know that some links are affiliate links which means if you buy, I may receive a small commission from the sale. This does not cost you anything.
KNOWING WHEN IT’S TIME TO HIRE
“If you can’t fund a separate bank account, you can’t afford to hire anyone.”
You may have heard this before, but if you’re feeling like you need to hire someone to help out, you probably should have done it already. Hopefully you are finding this article before you get to that point, because there are some steps you will want to take beforehand to make sure you can afford that employee. When you start a business, you should have a vision of where you’d like to end up. And if your vision includes...
10 Steps to Setup Your Online Business
So you are here because you want to start an online business. Maybe you have an idea already and you just need to know what to do to make it happen. Or maybe you are looking for ideas on what types of business you can do online. Let’s jump right in!
But first, I need to be transparent and let you know that some links are affiliate links which means if you buy, I may receive a small commission from the sale. This does not cost you anything.
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WHAT BUSINESS ARE YOU GOING TO BE IN?
Decide on what you are passionate about and look for a way to either take it online or do it from home. Here are some examples:
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Bookkeeping - if you have a great attention to detail and enjoy things with a right or wrong answer. If you have experience in bookkeeping, check out The Bookkeeping Business Accelerator®. If you need to learn bookkeeping, check out Become a Bookkeeper
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Virtual Assistant - if you are highly organized and enjoy helping others manage their schedules,...
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Deciphering Employee vs. Independent Contractor
What an exciting time in your business, if you have gotten to the point where you need to add to your team!
Sometimes you can hire contractors (to outsource some work) but sometimes it makes better sense to hire an employee. We’ll go over the differences between ‘independent contractor’ and ‘employee’ from the IRS’s standpoint, so you have all the info you need to make the right choice for your business. Next week, we’ll talk about the money side of hiring one vs. the other.
The IRS has a 3-factor approach to determining who is an independent contractor vs. an employee. Those 3 factors are: Behavioral Control, Financial Control and Relationship of the Parties.
BEHAVIORAL CONTROL
A worker is considered an employee if the business has the right to direct and control the work performed, even if that right isn’t exercised.
These are examples of behavioral control that would indicate the worker should be an employee:
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The...
Profit First Basics
So you’ve read or maybe listened to Profit First, by Mike Michalowicz. Or you’ve heard about it, but you aren’t much of a reader and you’re looking for the cliff notes version.
The premise
The main idea is to take your profit first, instead of waiting until year end when you file taxes and your accountant tells you what your profit was. You basically budget your profit into your business and work backwards from there. Profit First is essentially the envelope method of budgeting, but for business, and using bank accounts instead of envelopes—because you can’t run a business with cash this day in age.
The 5 envelopes (bank accounts)
You will start by opening 5 bank accounts for your business:
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Profit - this is where you will transfer and keep your profit
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Owner’s Pay - this is where you will transfer the money you pay yourself
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Taxes - you guessed it, this is where you’ll transfer the money for the tax man.
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Operating Expenses (Opex)...