6 Mistakes to Avoid for your Start-Up

6 Mistakes to Avoid for your Start-Up

As you begin your start-up company in 2018, it is highly important that you prepare well and not make commonly-made mistakes. Preparation is everything, and failure to plan will result in setbacks that could have been prevented had you spent a little time reviewing these common errors. Reading through these tips, provided by Alejandro Cremades, will provide you with a foundation for everything you want to avoid in order achieve success in 2018. 1. Too Many Members on the Founding Team Cremades noted that one of the biggest reasons behind failure in start-ups is that they start out with too much equity in the hands of too many early shareholders. Although giving equity is great in motivating and enrolling the help of individuals when your start-up is lean on cash, too many can create many unnecessary and avoidable problems. 2. Overhead is Too High If overhead is already too high, or the profit margins are going to be too small, the management team should rightly be concerned. One of Sam Walton’s core principles when building the Walmart empire was to always control costs better than the competition. That’s where he found his advantage, and sustainability. Not everyone wants to run a discount business, but there is no lack of scale or revenue at Walmart. 3. Weak Marketing Plans Scaling and generating real revenues is going to require a realistic and aggressive plan. If this isn’t your area of expertise, look for guidance.  Furthermore, start-ups can’t only rely on paid advertising, especially if they have only identified one or two channels to use. 4. No Technical Founders If you aren’t technical,...
How To Fill Out 1099-Misc Forms

How To Fill Out 1099-Misc Forms

In the last post, I discussed the exceptions to the 1099 rules.  If you missed the post, you can read it here. Today I’m going to explain how to properly fill out the forms required by the IRS.  There is a lot of information listed in the IRS instructions that don’t apply to most small businesses, so I’ll leave that out of this post.  If you’d like to see the full instructions, they can be found at http://www.irs.gov/pub/irs-pdf/i1099msc.pdf. In the Payer’s Name section, include the business name, address and telephone number.  In the Payer’s federal identification number box, include your tax ID number (EIN is format of XX-XXXXXXX, Social Security is format XXX-XX-XXXX). Enter the recipient’s identification number using hyphens in the proper format. Social Security numbers (SSNs) should be in the XXX-XX-XXXX format. Employment Identification Numbers (EINs) should be in the XX-XXXXXXX format. You should make every effort to insure that you have the correct type of number reported in the correct format.  When entering the recipients name, put the owner’s name first if it is not an entity (a sole proprietorship, etc).  You may list the business name below the owner’s name.  Include the recipient’s address. The account number is required if you have multiple accounts for a recipient for whom you are filing more than one Form 1099-MISC. Additionally, the IRS encourages you to designate an account number for all Forms 1099-MISC that you file. Enter the total subject amount paid in the calendar year under one of the following boxes (based on type of payments): Box 1: Rents Enter amounts of $600 or more for all types of rents,...
Exceptions to 1099 Filing Requirements

Exceptions to 1099 Filing Requirements

In the last post, I shared some basic information on who is subject to report, as well as who is subject to receive form 1099-MISC.  If you missed that post, you can find it here. There are exceptions to the rules listed in the prior post: Generally, payments to a corporation. But see Reportable payments to corporations, later. Payments for merchandise, telegrams, telephone, freight, storage, and similar items. Payments of rent to real estate agents. But the real estate agent must use Form 1099-MISC to report the rent paid over to the property owner. Wages paid to employees (These are reported on Form W-2, Wage and Tax Statement). Military differential wage payments made to employees while they are on active duty in the Armed Forces or other uniformed services (These are reported on Form W-2). Business travel allowances paid to employees (may be reportable on Form W-2). Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, and Coverdell ESAs), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government. Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. There are additional exemptions, but since most small businesses don’t have these types of payments, I have excluded from this post.  If you’d like to see the full list of exemptions, the IRS rules can be found at http://www.irs.gov/pub/irs-pdf/i1099msc.pdf. The following payments made to corporations generally must be reported on...
Who Should Receive a 1099-Misc Form?

Who Should Receive a 1099-Misc Form?

Business owners are required to file 1099 forms for vendors if the purchases and those who have been paid fall into certain categories.  These forms are due to the recipient and the Internal Revenue Service by January 31. Many entrepreneurs are confused about to whom to issue forms, so this post will give information which will help you determine which vendors need to have the 1099-MISC form issued to them. Forms are issued for expenses paid in the course of doing business only.  You are engaged in a trade or business if you operate for gain or profit.  Do not include any amounts that would be paid personally.  For instance, if your business pays someone to do landscaping outside your office, that is a business expense and should be reported (if the vendor is subject) but a landscaper paid personally for working in your yard at home is not subject to receiving a 1099. Please also note that nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements. Other organizations subject to these reporting requirements include trusts of qualified pension or profit-sharing plans of employers, certain organizations exempt from tax under section 501(c) or (d), farmers’ cooperatives that are exempt from tax under section 521, and widely held fixed investment trusts. Payments by federal, state, or local government agencies are also reportable. According to the IRS instructions, file Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year: At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments,...
Core Values: A Foundational Key To Success

Core Values: A Foundational Key To Success

  Are you aware that core values can impact your success? The heart of any business is its core values. It does not take long to see stories of companies that have been unethical. It seems in our day and age, not only are individuals not tied down to a conviction of core values, but businesses are not committed to them either. There has been a long-held myth that says holding to a basic set of core values can be detrimental to business success.  It goes on to declare that the only way to get ahead and succeed in life is to walk over people, fudge the truth in order to squeeze by, and act as heartlessly as one wants as long as one can keep a clean cover. However, there is a better way. Meg Witman writes, “But what I realized after ten years of running eBay was that if eBay had been the kind of company where we held no core values and followed no ethical compass, where we treated our community members and each other like pawn or assets to be exploited, we never would have succeeded at all.” As counter-intuitive as it may seem, establishing and abiding by a core set of values will actually prove invaluable for any business in the long run. Core values, according to Rob Dube, are defined as “the principles and beliefs that drive the behaviors of all members of an organization.” They are the backbone of any organization, and they are so important that Stephen Haines says they are the “social glue that holds an organization together.” The establishment...
Recent CA Fires and Property Tax Relief

Recent CA Fires and Property Tax Relief

Are you a resident of California affected by the recent fires? There have been emergency proclamations in the counties of Santa Barbara, San Diego, Los Angeles, and Ventura. The state of emergency has caused building owners to ask about whether property taxes need to be paid if a building is burned down. Thankfully, the answer to that question is no. Revenue and Taxation Code section 170 says that if a fire occurs (or an earthquake or flooding) and causes damage, you are eligible for property tax relief if your county has an ordinance that allows it. The good news is that every county in California, except Fresno, has adopted an ordinance for disaster relief. Property tax relief applies to owners of real property, business equipment and fixtures, orchards or other agricultural groves, and to owners of aircraft, boats, and certain mobile homes. The property taxes will be reduced for whatever portion of the property that is damaged or destroyed. In order to qualify for property tax relief, you must file a claim with your county assessor within the time specified in your county ordinance, or 12 months from the date of damage or destruction, whichever is later. The loss estimate must be at least $10,000 of current market value in order to qualify. You can find the form for reassessment for property damaged or destroyed on your county’s website. They will instruct you on the steps afterwards. Now you may wonder in the case that your house was destroyed in a Governor-labeled disaster, “Can I buy another house in the same county or a different county and transfer the...
OSHA First Aid Definitions

OSHA First Aid Definitions

If you are an employer with 10 or more employees, you could be potentially subject to OSHA reporting for any illness or injury occurring in your business. To read the details, see our last post. However, they do not require reporting of any injury that only requires first aid. What is their definition of this type of care? OSHA regulations state the following is considered first aid: Using a non-prescription medication at nonprescription strength (for medications available in both prescription and non-prescription form, a recommendation by a physician or other licensed health care professional to use a non-prescription medication at prescription strength is considered medical treatment for record-keeping purposes); Administering tetanus immunizations (other immunizations, such as Hepatitis B vaccine or rabies vaccine, are considered medical treatment); Cleaning, flushing or soaking wounds on the surface of the skin Using wound coverings such as bandages, Band-Aids™, gauze pads, etc.; or using butterfly bandages or Steri-Strips™ (other wound closing devices such as sutures, staples, etc., are considered medical treatment); Using hot or cold therapy; Using any non-rigid means of support, such as elastic bandages, wraps, non-rigid back belts, etc. (devices with rigid stays or other systems designed to immobilize parts of the body are considered medical treatment for recordkeeping purposes); Using temporary immobilization devices while transporting an accident victim (e.g., splints, slings, neck collars, back boards, etc.). Drilling of a fingernail or toenail to relieve pressure, or draining fluid from a blister; Using eye patches; Removing foreign bodies from the eye using only irrigation or a cotton swab; Removing splinters or foreign material from areas other than the eye by irrigation, tweezers,...
OSHA Injury Reporting Requirements

OSHA Injury Reporting Requirements

Do you employ more than 10 workers? Are you aware you may be required by OSHA (Occupational Safety and Health Administration) to keep a record of serious work-related injuries and illnesses?  To find out if your industry is exempt, see this list. Minor injuries requiring first aid only do not need to be recorded. In our next blog, we’ll discuss what is considered first aid. How does OSHA define a recordable injury or illness? Any work-related fatality. Any work-related injury or illness that results in loss of consciousness, days away from work, restricted work, or transfer to another job. Any work-related injury or illness requiring medical treatment beyond first aid. Any work-related diagnosed case of cancer, chronic irreversible diseases, fractured or cracked bones or teeth, and punctured eardrums. There are also special recording criteria for work-related cases involving: needlesticks and sharps injuries; medical removal; hearing loss; and tuberculosis. By requiring this information, employers, workers and OSHA can evaluate the safety of a workplace, understand industry hazards, and implement worker protections to reduce and eliminate hazards to hopefully prevent future workplace injuries and illnesses. Maintaining and Posting Records The records must be maintained at the worksite for at least five years. Each February through April, employers must post a summary of the injuries and illnesses recorded the previous year. Also, if requested, copies of the records must be provided to current and former employees, or their representatives. You can find instructions and  forms  here. The full regulation can be found at Recordkeeping regulation. To register for online reporting, apply at the ITA launch page (Injury Tracking Application). To learn about OSHA’s rule on submitting records electronically,...
CA Parental Leave for Smaller Employers

CA Parental Leave for Smaller Employers

The New Parent Leave Act has been passed into law and took effect on January 1, 2018.  Under this new law, certain California employers are required to provide eligible employees with 12 weeks of unpaid, job-protected parental bonding leave. California business owners who employ 20 to 49 employees within 75 miles of each other are required to provide this benefit. This law does not apply to employees who are covered under the FMLA/CFRA, as these laws already provide 12-weeks of baby bonding leave. What employees are eligible for California Parental Leave? The eligibility requirements are extremely similar to those under the FMLA/CFRA.  In other words, an employee is eligible for Parental Leave if he/she meets the following requirements: The employee has worked for the employer for at least 12 months, The employee has worked at least 1,250 hours in the 12-month period preceding the use of leave, and The employee works at a worksite with 20 or more employees in a 75-mile radius. How much leave is available to eligible employees? Eligible employees may take up to 12 weeks of unpaid, job-protected leave during a 12-month period to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Do employers have to maintain an employee’s health benefits under this leave? Yes, if an employee is covered through a group plan prior to their leave, employers are required to maintain and pay for the employee’s continued coverage under the same conditions that coverage would have been provided had the employee continued to work. If the employee does not return to work after their leave,...
CA Passes Salary History Ban

CA Passes Salary History Ban

AB 168 passed into law on October 12, 2017, amending the California Fair Pay Law by prohibiting all California employers from inquiring into an applicant’s salary history starting January 1, 2018. Specifically, under the new law, all California employers are required to follow these rules during the hiring process: Employers cannot use (rely on) the salary history information of an applicant when determining whether to offer employment to an applicant or Employers cannot use (rely on) the salary history information of an applicant when determining what salary to offer an applicant. Employers cannot seek salary history information, including compensation and benefits, about an applicant. Upon reasonable request, employers must provide the pay scale for a position to an applicant applying for employment. It is important to note that the law does not prohibit an applicant from voluntarily disclosing salary history information to a prospective employer. If an applicant voluntarily and, without prompting, discloses salary history information to a prospective employer, the law does not prohibit that employer from considering the voluntarily disclosed salary history information. Next step for employers California employers should review this new law and provide training to those people involved in the hiring process about the new requirements, as these new requirements impact the interview process.  In addition, all California employers should review their job applications and verify that any inquiries regarding prior salary history or wage rates are removed from the application before January 1st. This information was written by Laurian Rutterbush and shared on https://blog.eplaceinc.com....

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