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Can Same-Day Pay Help a Labor Shortage?

By James Pruitt, Senior Staff Writer

“Same-day pay” saw a redefinition in recent years. The past stigma associated with same-day pay has worn down in the face of current needs. In the past, observers have associated same-day pay schemes with agencies and employers that sometimes exploit those desperate for money. However, despite the stigma, economic developments and technological advances could make these relationships more workable.

  1. Same Day Pay in the Past Historically Has been Associated with Exploitation

Some temporary agencies have always used “same-day pay” to fill labor shortages. Often, these agencies use people who may need the money more than the companies need labor. Sometimes, the agencies and their clients “fudged” the labor factor to compensate. In other words, the workers have ended up doing harder work than they bargained for. 

Developments in technology and in the economy might sand out some of the inefficiencies that prevent more streamlined processes. Remember, the “same-day work economy” keeps many workers active. Such workers may include college students, caregivers, retired people, those in difficult straits, and any number of other people who just plain have labor to provide.

On the management front, managers often struggle to find the right labor at the right moment. Companies make do with what they have, and sometimes lack the flexibility to adapt to sudden changes in the market. 

“Same day pay” can provide an incentive to bring workers on board with short notice. Sometimes companies need labor now, and in exchange can tap into any supply of people who need money today. However, small companies may have trouble developing an equitable synergy between management and worker in these circumstances.

  1. Finding People and Keeping People

The “neglected labor pool” is diverse. Often, those outside the traditional labor market need short-term gigs. In addition, many competent people have idled for years, due to the prejudice against “gaps in employment.”  

Simultaneously, many smaller businesses need good help. As these companies and these people “find each other,” the businesses and the people can grow together. The employment role can grow as the relationship grows, and the business can grow as a result.

In other words, short-term labor and same-day pay can be a blessing for workers and managers. The right strategies and processes can separate the most exploitative practices from that synergy.

  1. Payroll Service Providers Have Advanced Technologically. Fees Are No Longer as Burdensome to Business Owners or Workers.

In the past, payroll service companies charged larger fees for the processing of quick paychecks. For example, cutting a check for a same-day worker may have cost a pretty penny. Smaller businesses sometimes paid in cash, which may have prevented the best possible record-keeping.

These days, technological advances have facilitated these short-term employment relationships. Expenses for cutting a same-day check, direct deposit, or even cold, hard, cash, have relaxed. Veteran Business Owners can thank technological advances for a decreased burden in the recordkeeping department, and increased efficiency in processing their workforce payroll issues.

  1. Bottom Line

The recent labor shortage has caused burdens throughout different sectors of the economy. However, advances in the “short-term economy” could facilitate a new synergy between small business owners and even some parts of the neglected workforce. Many companies have adopted a novel practice of providing half the pay on the same day, and the balance during the payroll period. 

In general, same-day pay has become more workable with technological advances, which can help both workers and employers with their record-keeping and avoid fees. Veteran Business Owners should always consider the exploitation factor, but also consider the benefits to all parties when determining employment relationships.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

 

How Small Businesses Can Minimize Tax Liability in 2022

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By James Pruitt, Senior Staff Writer

  1. Registering your corporation has Benefits. . . and Liabilities

One important consideration during tax season is your company’s organization, including any registration with government bodies.

Many small businesses outgrow their initial registration types. As a small organization grows, often the ownership needs to choose different organizational strategies.

Each business structure has its own “fit.” The simplest corporate structures retain the status of pass-through businesses. This category includes sole proprietorships, LLCs (limited liability corporations), and S corporations. Some of these business structures may not pay a corporate income tax.

On the other hand, these companies may lose out on other benefits. For example, companies that pay corporate taxes may receive asset protection against creditors, such as when a natural disaster forces bankruptcy and the ownership justifiably seek to keep their private assets separate from those of their enterprise.

Consider a balance of the different considerations at each stage of the development of your business. A sole proprietorship or home business almost never requires any kind of registration. Such a measure would only bring tax liabilities and nothing else. As a business grows in complexity, perhaps the benefits of registration may outweigh the tax liabilities.

  1. Charity Work Can Provide Low-Cost Marketing While Freeing You from the Taxman

As described in other posts, involvement in the community can market your ideas, services, and products. Never forget the importance of tax breaks as well. The advantages of community engagement can lift hearts and spread the message of your company far and wide, but never forget the tax advantages. Charitable contributions are deductible, as are expenses in the pursuit of community enterprises.

  1. Consider How you Treat your Employees: Tax Benefits can Arise

The IRS provides many incentives to treat employees well. For example, retirement benefits can not only improve employee retention but can also help pinch pennies when tax time comes.

For example, a 401(k) account for your employees, or even for yourself, can allow deductions in the amount of any contributions you make. As an alternative, a SEP may provide some of the same benefits to employers

More importantly, especially considering the coronavirus pandemic, several plans allow credits for employers who work to minimize the impact on their employees during the pandemic. Consider the Families First Coronavirus Response Act (FFCRA), the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA), and the American Rescue Plan Act of 2021 (ARPA).

Without going into too much detail about each of these Pandemic-era legislation measures, this legislation applies to employers who paid their workers during periods of lockdown, who provided benefits to such employees, and who allowed paid time off for the purpose of getting vaccinations.

The Bottom Line

Some changes may provide increased opportunities for Veteran Small Business Owners during the 2022 tax season, not least due to the pandemic. Overall, the best strategies for minimizing tax liability may arise from investigating the right organizational strategies. Remember to apply a holistic approach to balance the right strategies not only to avoid the worst tax liabilities, but to maximize benefits to yourself, your employees, and your community as well.   This article addresses generalities, and we highly recommend that you consult a tax professional with your specific questions.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/

Handling Expense Records as Tax Season Looms

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By James Pruitt, Senior Staff Writer

Many small business owners brush off tax deductions that could save them and their small business large amounts of money. At the same time, all businesses need to understand their liabilities to avoid conflicts with the IRS or any other parties.

First, remember the importance of business records. Such records are convenient for your own internal purposes and play crucial roles in any drama that may come into play later. New entrepreneurs, especially, may underestimate the importance of their own private transactions. A clear and reliable records system can smooth out unforeseen problems in the future. 

Many independent businesspeople forget the need to track their own accounts in case prying eyes might zero in on any inconsistencies. Good internal records can resolve, for example, customer disputes before they escalate. Furthermore, these records can make all the difference in any future lawsuits or tax proceedings.

Second, remember that business expenses are deductible. Personal expenses, on the other hand, meld into your regular finances. However, even the best intentions can’t always prevent confusion between personal and business expenses, especially for small business owners who have chosen not to incorporate. The best solution lies with good planning. 

A list of possible business expenses may include advertising, rent, and/or mortgage expenses for office space, utilities, and employee salaries and benefits. Interest on loans may also provide a deduction. Finally, consider equipment, maintenance, and depreciation on any equipment as it wears out. 

Even relevant industry publications may provide just such a deduction. Imagine a doctor’s office without the New England Journal of Medicine. Most law offices couldn’t function without their legal digests, which are updated periodically. Any variety of other specialized professions may need these kinds of subscriptions to stay “in the know.” 

Business Expense v. Company Expense v. Personal Expenses

Your personal expenses may include your house, car, or cell phone assuming use only in a personal rather than business context. However, such assets may overlap with business expenses in some cases. Assuming some sort of overlap, generally, consider the percentage you use for business or personal reasons. In such cases, the percent of the value of maintenance of the asset becomes most relevant on Tax Day. Here, your accurate business records may come in handy.

Unfortunately, some other ongoing company expenses may not provide a tax break, even when separate from personal expenses. For example, if your company does any political lobbying, your company must shoulder the whole cost, taxation, and all. The same goes for fines and penalties. Ideally, a CPA can help sort out these technicalities.

Formal incorporation can help set these boundaries for you. However, some types of small businesses may see no need for this level of formality. 

Smaller businesses are more likely to utilize personal resources along with deductible business expenses. During tax season, itemizing these deductions may present greater challenges than the black-and-white restrictions facing more strictly incorporated companies, which must separate their affairs from their owners like oil and water.

Finally, don’t be afraid to seek professional help. Many business owners do handle their own expense records, but these records can become complicated very quickly.  A good accountant can prevent your worst headaches later. The IRS updates its regulations frequently, and a CPA may have more experience than others in more complex taxation matters.

In short, prepare, prepare, prepare. One of the best ways to prepare is to develop a good records system. Further down the road, an entrepreneur’s handling of expenses determines the path around many obstacles that fate may put in your path down the line.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

 

Considerations in Forming a Sole Proprietorship

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By James Pruitt, Senior Staff Writer

The most common types of small business are sole proprietorships. As discussed in previous blog posts, many small business owners ferret out their economic niche from a specific hobby, interest, or expertise which they can best accommodate from the privacy of their own home.

Independent business owners should consider their relationship with the organization when deciding whether to incorporate. Legally, a sole proprietor often can’t separate from their business. The obligations between the person and organization stay one and the same. 

As for the positives, some business owners benefit from the ability to take their organization in unique directions based on their own judgment. Often, the owner can’t effectively delegate their vision to a newcomer. Small businesses often start with specialized concepts. Sometimes, the only necessary staff within the company maybe you, the one business owner.

Various negatives may also rear their heads. For example, some may perceive the company as less established as, for example, an LLC (limited liability company) or a company that has undergone formal incorporation. 

Business partners may view the company with greater suspicion. Remember, legal liabilities for a sole business owner and the organization itself are one and the same. The possibility of a “fly-by-night” operation may loom larger in the eyes of potential contractors.

Given the integration of a sole proprietorship with the business owner, the proprietor bears all the burden when problems arise. Furthermore, these organizations often hold less organizational backing, so funding and investment revenue present greater challenges. Finally, an ultimate sale of the business may bring further logistical issues. Outsiders may show little interest in a company tailored to the ambitions of one individual.

Positives are manifold for the right business owner. Sole proprietors may control their own schedules. Also, the simplicity of a sole proprietorship can make the process of tax preparation more agreeable. Businesses’ expenses are deductible, and the process is done much easier in general. Furthermore, sole proprietorships are much less expensive and easier to start up without the process of establishing an LLC or incorporating.  

Incorporation separates much of the owner’s legal responsibility from that of the business. The incorporation process also may loosen the grip of the owner on the business itself. After all, the process of registering a business implies the presence of other stakeholders. When others share an indispensable role in the organization, the process becomes worthwhile. 

In the end, the business structure must fulfill the needs of the owner. Sole proprietorships suit certain owners’ needs more than others. Some business ideas are unique enough that the owner should exercise the types of control that sole proprietors offer. Also, sometimes the founder simply doesn’t need a large, complex organization. 

Hence, when starting a new business, always consider the benefits of non-incorporation, as well as different types of incorporation. Many new owners may in fact benefit from incorporation as an LLC or, more formally, as an S or C corporation. However, other proprietors can satisfy their obligations independently. Assuming other stakeholders don’t complicate operations or legal matters, the simplicity of sole proprietorship should remain a viable option.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

Inventory Backlogs: Prevention Part One of Two

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By James Pruitt, Senior Staff Writer

Vast deposits of excess stock can leave small business owners bewildered or perplexed in the wake of a “failed” marketing attempt. Remember, excess inventory generally has some value to someone. However, prevention generally spares entrepreneurs storage expenses and manufacturing costs. 

Whatever happened to the Avon Lady? Multilevel marketing schemes are back with a vengeance. These companies can famously leave a garage full of excess merchandise. But what about the tribulations of small business owners who manufacture their own products?

As a general principle, unused products are a liability for small businesses. Such products gain the moniker of “deadstock” after collecting cobwebs in the back shelves of warehouses.

The Pandemic has brought fluxes in inventory to all sectors of the economy. Supply chain disruptions have plagued the worldwide economy since March of 2020. Skeleton crews on all fronts have left companies alternately oversupplied or undersupplied, even as demand has mushroomed since the early part of this year.

Inventory shortages are nothing new. First, demand fluctuates naturally due to a variety of market forces. Fashions move forward, circumstances change, and consumer needs oscillate accordingly. 

Second, businesses sometimes rush to meet demand. In the process, quality may suffer, leading consumers to search elsewhere. Over-eager business owners sometimes churn out subpar products to meet demand. The result leaves the owner in the lurch for storage and disposal. No one wants a trove of shoddy “skinny jeans” manufactured in 2008, especially in 2021.

Third, some businesses may lack effective inventory management systems. Internal operations may well disrupt a good balance between different types of products. Good online inventory management programs may include Fishbowl, Netsuite, and Quickbooks, although options for businesses are vast, and may include proprietary options as well. Also, consider the everyday operations of a company outside the computer system.

Fourth, the business may be marketing one product at the expense of another. Marketing resources may gravitate in one direction, based upon the expertise or biases of the company staff. Leadership on hand may know more about one product than another. Sometimes leadership and staff simply prefer one product over another. Such cases may simply present a human resources challenge.  Enthusiasts of one type of product on the marketing front may compensate for an oversupply of fans of another.

Finally, one person’s trash is another’s treasure. Remember that disastrous ET video game from the early eighties? Most ended up in a landfill. The landfill was excavated, and some collectors of vintage arcade games paid over $1000 for cartridges of a terrible but historically significant video game. Even in most cases of overstock, hope remains.

Best practice avoids excess supplies of unmarketable products from the outset. However, as with most of life’s problems, excess inventory is often unavoidable. With the resurgence of multilevel marketing, overstock has reached new levels in some quarters. However, certain business practices have long resulted in inventory imbalances, even before the Pandemic. 

In Part I of this two-part series, we examined strategies to prevent excess deadstock, to begin with. In Part 2, we will examine strategies to dispose of excess inventory, online and otherwise once such stock inevitably accumulates.

VAMBOA, the Veterans and Military Business Owners Association hope that this article of this two-part series has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

 

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