The Economy vs. Small Business

It may seem like an unfair battle. Looming increases in interest rates and lack of credit are an especially fierce opponent for small business owners. But there are some tactics that will put you at an advantage. One of the best ways to protect your business is to take a close look at your cash flow which will be key in navigating the tumultuous economic climate.  Now is the time to go through your bills and take an honest look at what you may be able to cut or lower. Even if some things are necessary for your business to function, it’s worth your time to get new quotes from competitors or call your current provider to see what they can do for you. Be aware of vendors that might have lured you in with low introductory rates and plans and gradually increase the fees. Business credit cards are exempt from the credit card laws that keep your interest rate from rising without notice so be aware of your interest rate at all times. Also take advantage of useful sites like www.billshrink.com  where you can plug in your information find the best options on services such as credit cards, cable providers and wireless plans.  It may take a few minutes, but you can find major savings which just may be what your business needs to prevail against the economy.  

Contractor vs. Employee?

Most small businesses are better off with contractors instead of employees since the overhead cost is lower. But beware of misclassifying. The IRS has rules that stipulate when a contractor has crossed the line into employee territory. This can be a costly mistake and also land you into quite a bit of trouble with Department of Labor. There are certain general guidelines, such as how much the company controls scheduling and compensation, which weigh in on the decision. But even the IRS will admit every situation varies. If in doubt, you can file a form SS8 with the IRS to have an official ruling. But be advised that this can take up to six months. If nothing else, a good rule of thumb is to document your relationship through signed written agreements and make sure all compensation is documented. And of course, rely on a well-trained bookkeeper for guidance!