We cover a lot of topics on our blog, and have always tried to gear them towards providing information, awareness, and solutions to our locksmiths. Although we specialize in security products, we try to offer solutions out of our specialty – such as Small Business Help.
An interesting article from the Open Forum website on Small Business Mistakes. Take a read, and educate yourself so you don’t do these.
Big Mistakes that Small Businesses Make
Be warned: The following seven are the most common, and potentially most damaging, mistakes business owners can make.
- Payroll taxes. Companies are instructed by state and federal authorities to deduct payroll taxes from an employee’s check every payroll period. They are then required to send this money (with the company’s share) to various government agencies on a time period based on the total payroll size. When a small business processes its own payroll, these funds often get “comingled” with its general operating monies. Unfortunately, some owners with cash flow issues spend the money meant for the government and can’t remit payroll taxes on time. This not only gets the government angry, but it’s illegal. The owner is also personally responsible for payment of these taxes. (This tax obligation won’t even be discharged in case of business or personal bankruptcy!)
- Sales and use taxes. If a business collects sales tax from customers for their state, it also needs to remit this to the government on a predetermined basis (monthly, quarterly or annually). All the warnings of personal liability with payroll taxes apply to this type of tax as well. In addition, if a company gets a product and does not pay sales tax, many states charge a use tax for that item. In other words, the company needs to send the sales tax to the state themselves even if the selling company did not charge them initially.
- Sexual harassment or discrimination of employees. This happens frequently at small businesses that have few human resource policies as they rapidly grow. In addition, employees spend long hours together in unstructured environments. Accusations made against managers or between employees are common and can produce huge legal bills that sink a company.
- Classifying all employees as exempt. This means that the company is not paying them on an hourly basis, but a salary regardless of what their job function is. Employment guidelines are very strict in this area. This even becomes more complicated with companies that have flex time.
- Classifying workers as freelancers when they are employees. This is another area where many small-business owners make a mistake when they try to classify all their working relationships as freelancers so they don’t have to include payroll taxes. Guidelines in this area are, again, very strict.
- Deducting an employee loan from their paycheck. Many states do not allow any deductions from paychecks except for taxes and benefits.
- Not paying the employee his or her last check immediately. Most states are very strict in this area, where employees need to get their final paychecks within weeks even if they have not returned all company property. The required time period differs by state, but it could be as soon as the next business day.
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Kathleen Kempf is the Marketing Manager at IDN-H. Hoffman.