Setting Up a Tax-Advantaged
Commuter Benefits Program
The recent surge in gas prices has made getting to work considerably
more expensive for most Americans, especially those driving
long distances. For a relatively small investment, employers
can help employees reduce their commuting costs -- while providing
them with additional options for traveling to work -- by implementing
a tax-advantaged commuter benefits program. Offering commuter
assistance benefits can also be cost-effective for employers,
who save money not only on taxes, but also on parking facilities.
A company offering commuter benefits may subsidize the entire
cost of alternative forms of transportation or share the cost
with employees. The IRS permits employers to contribute up to
$105 per month, tax free, toward employee transit or vanpool
expenses; employees are allowed to have up to $105 per month
deducted from their paychecks on a pre-tax basis to pay for
transit or vanpools. Both employers and employees save on taxes,
as neither pays FICA taxes on these benefits. Some states also
provide tax credits to employers with commuter benefit programs.
For example, the annual cost to a Virginia employer of providing
a typical employee with $105 a month in transit benefits amounts
to $710.01 after state and federal tax savings are taken into
account, according to Arlington Transportation Partners. Meanwhile,
the after-tax value to the employee of these benefits was found
to be $1,772.19.
By installing bike racks, showers, and a locker room -- or
contracting with a nearby fitness club to use their facilities
-- employers can encourage employees to cycle, walk, or run
to work. Employees who struggle to find the time for a fitness
routine will appreciate the option of combining commuting with
exercising. Companies may also integrate these commuting options
into existing wellness programs, offering employees incentives
to burn their own fuel instead of spending money on gas.
Companies can encourage employees to stop driving alone to
work by implementing a parking cash out program, which offers
cash incentives for giving up parking spaces. This approach
can be especially useful for managing high parking demands.
However, while up to $205 a month in parking expenses may be
deducted from federal taxes, cash payments in lieu of parking
are considered taxable compensation.
Employees will also spend less time and money commuting if
they make fewer trips to the office. Compressed workweeks or
regular telecommuting help employees reduce their commuting,
and these schedules may also contribute to better work/life
balance.
Some employees who would otherwise be interested in taking
part in commuter programs may express reluctance about leaving
their cars at home out of fear of being stranded due to unforeseen
circumstances, such as unscheduled overtime, family emergencies,
or a change in the weather. Employers can reassure these employees
by setting up an "emergency rides home" program. If
vehicles and drivers are not readily available when needed,
companies can contract with a taxi operator to provide emergency
rides at a discount.
Business owners who are uncertain about whether demand exists
among their staff for commuter benefits can survey their employees
about their preferences. In addition to considerations related
to cost and convenience, employees may be drawn to the broader
benefits of driving less, including the opportunity to minimize
their personal contributions to air pollution, traffic congestion,
greenhouse gas emissions, and U.S. dependence on foreign oil.
Important Guidelines for
Employment Recordkeeping
Given the day-to-day demands of running a business, paperwork
and filing can quickly become last on a list of priorities.
But, good recordkeeping can help minimize your risk in the highly
regulated arena of employment. There are many federal and state
regulations regarding how long certain records must be kept
in order to protect an employee’s privacy, meet auditing
standards, and serve as documentation in the event of a lawsuit.
With an organized approach, you can minimize the time spent
on paperwork and more easily ensure you are complying with standard
employment practices.
EEO Guidelines
Many federal employment laws exist to
protect employees from discrimination in the workplace. Small
businesses with fewer than 15 or 20 employees may be exempt
from certain rules. Even companies not subject to Equal Employment
Opportunity (EEO) regulations because of their size should consider
following these federal guidelines. In the event an employee
or former employee takes legal action, failure to keep proper
records could hurt your defense during litigation. At some point,
the onus may be on you to prove that your employment practices
are lawful and comply with federal regulations. Without substantive
documentation, this may be difficult, if not impossible.
In short, EEO regulations stipulate that employers should preserve
all employment records for one year. Records for employees who
are involuntarily terminated should be preserved for at least
one year following the date of termination. If action is taken
against you, keep all relevant records until the charges are
resolved.
ADEA, FMLA, FLSA, and EPA Regulations
In order to comply with the Age Discrimination
in Employment Act (ADEA ) , payroll records, which include an
employee’s name, address, age, occupation, pay rate, and
weekly compensation, should be kept for three years. The employer
should also preserve records of an employee’s benefit
plan with information regarding seniority and merit systems
while the plan is in effect and for one year following its termination.
Information regarding employees and the Family and Medical
Leave Act (FMLA) should also be kept for three years, including
payroll records, dates and hours of FMLA leave, employer policies
and procedures, and any pertinent medical information.
For recordkeeping purposes regarding the Fair Labor Standards
Act (FLSA) and the Equal Pay Act (EPA), it is also important
to keep payroll records for three years. Information regarding
wages, rates, contracts, job descriptions, merit and seniority
systems, and collective bargaining agreements should be retained
for two years.
What Else and for How Long?
Hiring information, such as records and
any relevant procedures, should be kept for two years, and employee
applications should be retained for one year. If you use temps,
keep the contracts and their insurance information, plus all
employment-related tax information, for four years from the
tax due date.
Workers compensation regulations vary by state, so check with
the appropriate state agency for more information on full compliance.
If you have an affirmative action plan, keep the plan summary
and any relevant records for at least two years from any affiliated
action, or for an indefinite length of time.
Apart from federal regulations, an employer will have to consider
whether to keep records for a longer period of time than required
in case of a lawsuit. An illustration of this lies in the case
of Anderson v. Mt. Clemens Pottery Co. , (1945) 328
U.S. 680, 90 L. Ed 1515. In this case, employees alleged that
they worked hours for which they were not compensated, but the
employer could not produce hourly work documentation. The court
ruled that although the burden of proof lies on the employees,
the procurement of such records may be beyond the employees’
capabilities; therefore, they only had to provide evidence giving
"just and reasonable inference." In today’s
litigious world anything can be alleged. Complying with state
and federal regulations can help protect your company’s
interests.
Recordkeeping
Guidelines |
1
Year |
3
Years |
5
Years or More |
Employment
records
Employee applications Résumés
Physical exam results Information regarding promotions,
demotions, and transfers
Layoff and termination documentation
Requests for accommodation |
Employee
information such as date of birth, gender, and occupation
Form I-9 (employment eligibility verification form)
Payroll records
FMLA-related information
Employer policies
Wage rates
Contracts
Job descriptions
Collective bargaining agreements
Merit and seniority system documentation |
OSHA
safety forms
Employment-at-will policies
Equal employment policies
Employee benefit plan summaries and related information
Affirmative action plan documentation |
Wellness Programs Contribute
to a Healthy Bottom Line
The health of a company’s employees inevitably affects
the productivity and profitability of the business. Illness,
both chronic and acute, can result in frequent absences and
underperformance on the job. A company’s bottom line takes
an additional hit when insurance premiums increase due to significant
health problems among its workers.
When faced with rapidly rising medical insurance premiums,
many business owners feel they have no choice but to ask their
employees to bear a greater proportion of the cost of their
health care coverage. It may be possible, however, for employers
to reduce their health care expenditures -- and boost employee
morale -- without resorting to unpopular cost shifting measures.
With the help of a comprehensive wellness program, companies
may be able to lower risk factors that can lead to expensive
insurance claims.
According to the nonprofit Partnership for Prevention, promoting
worksite health helps companies attract the best workers, minimize
employee turnover, reduce absenteeism, improve on-the-job decision-making
and time utilization, foster stronger organizational relationships,
and build goodwill toward management.
What risk factors can a workplace-based health promotion campaign
effectively address? Smoking, excess weight, poor diet, high
blood pressure and cholesterol, hypertension, and stress are
just a few of the health problems targeted by employer-sponsored
wellness programs.
Some of these risk factors are related to personal choice,
some to the nature of the workplace, and some to a combination
of the two. While obesity is caused in part by diet and genetics,
it is also clear that a worker is more likely to gain weight
if he or she has a sedentary job, little access to fresh food,
and little leisure time for exercise. Improving the health of
employees often involves encouraging them to make changes in
their habits at work, which can extend into other parts of their
lives.
According to a survey by the American Management Association,
the most popular wellness programs offered by employers in 2004
were exercise and fitness, smoking cessation, nutrition, and
assistance in the management of weight, blood pressure, cholesterol,
and stress.
If you are thinking of implementing a wellness program at your
company, start-up costs are likely to be a primary concern.
Smaller companies lack the economies of scale that might justify
building an on-premises fitness center or hiring a full-time
medical professional to provide care. Fortunately, there are
a number of measures businesses of all sizes can take that cost
relatively little to put in place, yet have the potential to
improve the health of your workforce significantly.
Here are some examples of wellness initiatives that may work
for your business:
Encourage regular check-ups. If you do not require
your employees to have yearly physicals, you may want to introduce
incentives that will encourage people to see their primary care
physicians on a regular basis. Supply your employees with a
list of tests that should be conducted at certain ages and at
certain intervals, such as cancer screenings. Sometimes relatively
small incentives, such as gift certificates coupled with frequent
reminders, can be enough to encourage workers to seek out regular
preventative care.
Arrange lunchtime clinics on health issues. While
information alone may not change people’s habits, a clinic
addressing blood pressure, addiction, weight control, or nutrition
can raise awareness and provide employees with ideas about how
they can reduce their risks.
Organize weight loss, exercise, sports, and other health-oriented
groups. Employees are more likely to take a walk around
the block during lunch breaks if they do not have to go out
alone. Some companies organize walking and running clubs, offering
employees incentives and recognition for reaching certain goals,
such as walking a certain number of steps each day or finishing
a race. If there is enough interest, it may also be possible
to set up a group of dieters who can support each other in making
the right food choices over the course of the workday. People
who prefer team sports may be persuaded to join a company softball,
soccer, or ultimate Frisbee team.
Offer additional support to employees with special concerns.
If particular workers suffer from chronic illnesses, such
as diabetes or hypertension, or are experiencing high-risk pregnancies,
you may want to encourage them to enroll in disease management
programs offered by local health care providers. While there
is a cost associated with these programs, participation can
often reduce the likelihood of more serious complications from
these illnesses developing further down the line.
Form a partnership with a local fitness center. It
is generally easy and inexpensive to obtain a corporate account
at a local fitness center. An account should enable your employees
to sign up for membership at a reduced rate, and it may give
them discounts on classes or individual sessions with personal
trainers. If enough people are interested, you may want to have
a trainer from the center visit your premises to conduct classes.
Look for ways to improve eating habits. If your company
has an on-site cafeteria, bring in a nutritionist to assess
the quality of the food from a health perspective. In addition
to offering more fruits and vegetables, you may want to consider
changing recipes to make them lower in fat and higher in fiber.
If you do not have a cafeteria, it may be possible to have healthy
meals or sandwiches delivered by a local deli or restaurant.
You can also replace candy bars and sodas in vending machines
with healthier alternatives, such as fruit juices and trail
mix.
Take action to reduce stress levels. Nearly all employees
experience some level of stress on the job, but the recent trend
toward greater efficiency among American businesses has added
to the burdens of many workers. Because each working environment
is different, there is no one-size-fits-all approach to reducing
stress in a particular workplace or for an individual employee.
The best way to find out if stress is a problem in your organization
is to conduct interviews with a range of employees across the
company, asking them what they consider to be the leading causes
of stress in their jobs. Once you have identified the sources
of stress, appoint a group of employees to come up with ways
to minimize pressures on individuals, while still maintaining
a productive and efficient working environment.
Building a Search Engine-Friendly
Website
Creating an online presence that stands out from the countless
websites jostling for space on search engine results can be
a daunting challenge for small business owners. Unlike their
big competitors, most smaller companies cannot afford a state-of-the-art
website with hundreds of pages, and they lack the advertising
budget to pay for sponsored links that would guarantee visibility
on the leading search engines.
But the best website from a marketing perspective need not
be the largest and most heavily promoted. One relatively cost-efficient
way to drive traffic to your website is to fine-tune its design
so that search engines place it near the top of search results
when surfers plug in words relevant to the products or services
your company offers. Known as search engine optimization, this
strategy will not only bring more visitors your website; it
can also improve the chances that those surfers most inclined
to buy from your company will actually find your website in
their searches.
While it is possible to hire online marketing firms to "optimize"
your company’s website, many of the services offered by
these professionals can be easily replicated by anyone with
a basic understanding of HTML code. As a business owner, your
in-depth knowledge of your company’s products and sales
objectives can be more valuable in achieving better search engine
positioning than the technical skills of a professional. Even
if you lack the requisite HTML skills to handle the task on
your own, you should give some thought to your online marketing
strategy before teaming up with an IT specialist to develop
a search engine optimization plan.
How Search Engines Work
To create a more visible website, it
is essential to understand how search engines go about providing
search results to users. Search engines use programs known as
"spiders," or "crawlers," to scour the internet
for web pages; these programs copy and save all or parts of
pages in the search engine’s database, or index. The crawlers
revisit these web pages at regular intervals, checking for updates
or alterations. When keywords or phrases are entered during
a search query, the search engine scans its index for web pages
that appear to have the desired content. The search engine then
uses algorithms to calculate the order of search results presented
to the user. Depending upon the search engine, these algorithms
may take into account the quality and popularity of the site,
as well as the location and prevalence of relevant keywords.
Some webmasters and designers have resorted to underhanded
tactics in an effort to achieve placement in a search engine
index that is not merited. Some tricks include misrepresenting
the content of a web page, overusing certain keywords, and adding
redundant links. These are commonly called "spamming"
or "spamdexing." Search engines use programs to catch
these practices, and they may remove from their indexes or otherwise
penalize sites suspected of engaging in them. To avoid being
kicked off a search engine or relegated to a low spot in the
rankings, it is best to avoid using deceitful techniques when
optimizing a website.
Why Keywords Are Key
Identifying the optimal keywords and
phrases for each page of a website is the first step toward
achieving a higher place in search engine results. These keywords
should feature prominently in the hidden HTML "meta tags,"
which aid in indexing, and in the text that appears on the screen.
Start by thinking about what words your customers would likely
enter if they were seeking to access information about your
products or services. To gain better insight into the different
ways that people search, ask your associates what terms they
would enter in a search query that would lead to your company’s
website.
If your business trades mainly in a limited geographical area,
is highly specialized, or has few direct competitors, coming
up with search terms that get your website noticed will be relatively
easy. It is much tougher, however, to come up with distinctive
keywords if your potential market is broad and the general terms
that describe your company and its products already appear on
thousands -- or even millions -- of websites. If this is the
case, try to formulate very specific key phrases that characterize
your business. For ideas, go to the websites of your closest
competitors and access the hidden HTML source code to view the
keywords contained in the sites’ meta tags. You may also
wish to make use of online keyword suggestion tools that provide
a range of related keywords, along with the numbers of web pages
that already contain those terms.
The most important keywords should appear in the title tag
of each page. Because it can be seen by visitors, the title
tag should take the form of a headline that entices people to
view the web page; it should also include the most pertinent
keywords. Using multiple title tags to squeeze in additional
keywords may be tempting, but this could be interpreted as spamming
by some search engines.
A greater number of keywords can be entered in meta tags invisible
to the user. While it is acceptable to include variations on
the same phrase in a hidden meta tag, avoid excessive repetition
of words and do not include words that are not relevant to the
contents of the page on which the meta tag appears. A description
meta tag, which some search engines display in search results,
should consist of a brief, clearly written description of the
contents of the site. Important keywords should appear toward
the beginning of the description.
The visible text on the page can also influence search engine
results. Ideally, the first sentences of the copy appearing
on each page should be in HTML code, and they should contain
the keywords and key phrases most likely to attract visitors.
If a page features images as well as written content, appropriate
keywords can be entered in image alt tags.
Linking Your Website
To help the search engines’ crawlers
find the content of your site, add HTML hyperlinks to the home
page that take the visitor to each section of the website. Including
a site map page with text links to all the pages of your website
will guide search engines through your site; it is also useful
to visitors looking for specific content.
Certain search engines rank websites in part by the number
of links they have to quality websites with similar content.
To identify which links could improve your ranking, enter the
keywords relevant to your site in each of the search engines
and note which websites appear first. Unless competition would
prohibit cooperation, consider contacting the webmasters of
the most popular websites and asking them to provide a link
to your site in exchange for a reciprocal link from your company’s
site. Webmasters may be more likely to link to your site if
it features content that could be of interest to their visitors,
such as articles or tools, rather than just product information.
To Submit Or Not To Submit?
The necessity -- and even the advisability
-- of submitting a new website to search engines is a matter
of debate. Because the volume of submissions to the major search
engines is enormous, your website could be falsely identified
as spam and rejected by some of the engines. Instead of submitting
a website to each individual search engine, you can submit a
description of the website to a directory of sites selected
by people rather than algorithms. Since search engines draw
upon these directories for search results, these listings can
help your site find its way into the rankings. Links to other
sites already in the search engines’ databases will also
point the search engines’ spiders in the direction of
your website. If you do submit web pages directly to the search
engines, avoid resubmitting them frequently, as this could be
interpreted as spamming.
Search engine positioning can, at first glance, appear to be
a highly technical task. There are, however, many guides to
steer you through the process, including books and free or low-cost
online tools. Because achieving a prominent position in search
engine results can lead to significant increases in sales and
raise your company’s profile, you should be familiar with
how positioning works, and develop appropriate strategies for
achieving the best possible search engine results for your website.
Work-Life Benefits and Employee
Retention
Recruiting and retaining employees
who are both qualified and motivated is an ongoing challenge
for most businesses. One way to build staff loyalty and increase
productivity is to put policies in place to help employees balance
their commitments at work and at home.
Employees who have the time they need
to care for children or elderly parents, or pursue further education
or hobbies, will likely be less stressed and more focused when
they are at work. By offering flexibility to employees, businesses
will, in turn, have greater flexibility to employ people who
prefer part-time or non-traditional work arrangements that also
meet the needs of the company.
Adapting to a Changing Labor
Market
Demographic and societal changes inevitably
have an impact on the workplace. The 9-to-5 workweek was conceived
with the "traditional family" in mind. But the male
employee with a wife at home to take care of family matters
represents a minority group in today’s U.S. labor force.
Some 85% of American workers have immediate, day-to-day family
responsibilities, according to Senate Resolution 210, a proclamation
designating October as "National Work and Family Month,"
that was passed by the Senate in September 2003.
The resolution, which identified issues confronting workers
that can be addressed by the adoption of work-life programs
and services, noted that 46% of workers are parents with children
under the age of 18 and that nearly 20% of Americans have been
responsible for providing or arranging care for family members
or friends over the past year. Work-life programs are not just
beneficial for families, the resolution declared; they are also
key predictors of job productivity, job satisfaction, retention,
and commitment to employers.
"The workplace today is not our father’s workplace,"
Ellen Galinsky, president of the Families and Work Institute
observed in a testimony before the U.S. Senate Health, Education,
Labor & Pensions Committee. "No longer are whistles
that signal the start and end of the workday commonplace. No
longer are photos of our family members at work the sole symbol
of our lives outside of work."
Do Work-Life Programs Benefit
Employers?
Despite the clear demand for programs
that would support employees in juggling their personal and
professional responsibilities, many business owners remain uncomfortable
with the idea of "flexibility." Some fear the work
would not get done outside of traditional work arrangements
or the administrative burden of keeping track of staff with
unconventional schedules would be too onerous. Other employers
view flexible working as a perk to be scaled back or eliminated
in periods of budget cuts and downsizing.
While the work-life benefits offered to employees vary widely
from company to company, some of the most common programs include
the following:
- Employee assistance programs
- Child care referrals
- Elder care referrals
- Tuition assistance
- Flexible schedules
- Wellness programs
- Back-up child care
- Paid maternity leave
Some of these benefits, such as referral services and flexible
schedules, are inexpensive to provide; others, like paid family
leave or tuition assistance, are more costly. But given the
potential return in improved productivity and employee retention
levels, investing in a mix of programs tailored to the needs
of a particular workforce can give a company a competitive edge.
Part-Time Work: Flexibility for
Employees and Employers
Most employers are aware that hiring
part-time workers is usually more cost-efficient than taking
on full-time employees, especially since part-timers often do
not qualify for the full range of employee benefits, such as
participation in health and retirement plans, or paid leave.
But because part-time workers receive fewer benefits, they are
often less loyal to their employers. Some may be tempted to
leave a company if offered full-time employment elsewhere.
There are, however, some workers who prefer part-time schedules.
These include parents with children, older workers, and students.
While companies may not consider it feasible to offer part-time
workers the same benefits package as full-time employees, they
can improve retention rates of part-timers by providing them
with flexible hours and the opportunity to take unpaid leave.
These employees, in particular, tend to have pressing commitments
outside the workplace, and they value having the flexibility
to alter their schedules to fit in teachers’ conferences,
doctors’ appointments, or study time for exams.
Meeting the Needs of Older Workers
A transformation in the
workplace is underway as the labor pool ages. While many baby
boomers will retire on schedule, some will want to continue
to work as they age.
Seniors do, however, tend to want to
put in fewer hours than younger workers. Some retirement age
workers might consider working longer if their employer offered
a phased retirement program. But many companies have yet to
establish formal or informal arrangements, such as shorter work
weeks or flexible hours, that would encourage older workers
to delay retirement.
Today, traditional work and retirement patterns are in flux.
A current trend is for people to leave and reenter the workforce
a number of times throughout their lives. Many seniors, like
younger adults, are likely to have family responsibilities,
such as caring for grandchildren or sick relatives.
If the latest trends complement business operations, companies
should discuss alternative working arrangements with employees
who wish to continue to work past retirement age, such as phased
retirement, flextime, compressed workweeks, part-time work,
job sharing, telecommuting, job reassignment, or even job redesign.
By adapting to the needs and desires of their older workers,
employers will be able to hold on to workers with valuable experience
and knowledge of the company.
Preparing for the Worst:
Disaster Planning
Given the daily pressures that come with running a business,
planning for an event that hasn’t yet happened may not
seem to be a priority. But by preparing for a major disaster,
your company will also be in a better position to cope with
more common disruptions, such as power outages or computer breakdowns.
While every organization’s needs will be different, here
are some general steps you can take to prepare for the unexpected:
Draw up a step-by-step disaster response and recovery plan
for your business. Consider which essential functions of
your organization would be most vulnerable in a crisis, and
investigate what steps can be taken to minimize exposure to
these threats. Appoint key people to take charge in an emergency,
and make sure these employees have the information and authority
they need to handle the crisis. Draw up a set of office or facilities
evacuation procedures, and establish a designated meeting place
outside the building. Ideally, senior management should be involved
in drawing up the plan and approving all measures.
Back up data on a daily basis using a tape backup or other
replication system. Critical data should be copied onto
tape or discs and stored offsite. Avoid keeping these backup
tapes in the office, as they could be rendered useless if the
building burns or is flooded. In addition to legal documents,
all administrative data vital to the functioning of the business
should be stored in this system, including billing and cash
flow records, customer and employee contact details, insurance
information, and appointment calendars. Test your backup system
periodically to ensure its effectiveness.
Invest in power protection systems. Uninterruptible
power supply (UPS) systems provide emergency battery power to
shut down a network in an orderly fashion when the electricity
fails, preventing damage to computers and the loss of valuable
data. Surge protectors and line conditioners protect computer
equipment against spikes in electrical current.
Plan to set up your operations in an alternate location.
Having your data safely stored and retrievable will be
of little immediate use to your business if equipment is destroyed
or the office becomes uninhabitable. Consider locations where
you could set up shop in the event of a major breakdown, such
as a branch office or the office of another business in your
community.
Burn copies of licensed software and store them offsite.
To protect your access to purchased software, create CD
or DVD copies of software programs and store them, along with
the licensing information, outside the office. This will allow
you to install the software quickly and easily on another computer.
Invest in up-to-date security software. Shield your
computer network with firewalls designed to create a protective
barrier between your organization’s network and the Internet.
Available as either software or hardware, firewalls can stop
potential hackers from gaining access to confidential information
stored in your system. Antivirus and anti-spyware software packages
should also be installed on all computers. These programs should
include automatic updates and should never be disabled. As an
extra precaution, remind staff not to open e-mail from unfamiliar
addresses.
Keep insurance policies current and make records of insured
items. Even a smaller business needs a package of insurance
policies, which may include property insurance, contents insurance,
key person insurance, disability coverage, and business interruption
insurance. To avoid unnecessary conflicts with insurance companies
when making claims, store detailed information about furniture
and equipment, including purchase prices and serial numbers.
Once preventive measures have been taken and a plan has been
drawn up, publicize evacuation and other emergency procedures
within the company. Depending on the length of the plan, you
may want to distribute information about the procedures in a
memo or as a manual. You may also want to post a summary of
the plan in a common area and arrange group sessions to explain
the details of the plan and answer questions.
Resuming normal operations as soon as possible following a
disaster is the goal of all continuity planning measures. By
taking the appropriate steps now, you can protect your business
from significant property losses and ensure that your company
will be able quickly resume service to customers, even in the
wake of a major disruption to operations.
Technology Solutions for
Teleworkers
Providing the right technology solutions for employees who
telecommute is getter easier as Internet and phone connections
become more sophisticated and affordable. Given the software
and hardware tools available, it should be possible to integrate
home computers and other remote devices into your company’s
IT network quickly, securely, and cost-effectively.
Employees who work at home on a regular basis should have a
personal or notebook computer that meets your network’s
specifications, and is not used by other family members. Dial-up
access is not recommended for work purposes; instead, telecommuting
employees should have a high-speed, always-on broadband Internet
connection at home. High-bandwidth connectivity -- available
through subscription services such as DSL, cable modem, satellite,
and Wi-Fi -- enables users to be as productive at home as they
are at their office workstations.
For teleworkers who travel frequently or shuttle between home
and the office, a laptop or notebook offers much greater flexibility
than a second desktop computer. Using a notebook, an employee
can connect to the Internet or the company network via a broadband
connection at home, the local area network (LAN) in the office,
and Wi-Fi hotspots when on the road. While more limited in their
functionality, personal digital assistants (PDAs) and some types
of cell phones allow employees to read and send e-mails, access
their electronic calendars, and even browse the web.
A virtual private network (VPN) provides telecommuters with
secure remote access to files and applications stored on the
company network. While VPNs operate over the Internet, "tunneling"
locks out extraneous Internet traffic, creating a direct, encrypted
line between the remote computer and the company network. Once
a VPN is in place, remote desktop software can provide users
with full and secure access to their workstations, allowing
them to view and use their documents, files, and applications
as they would on their desktops in the office.
Telecommuters are often involved in projects that require extensive
interaction and cooperation with co-workers. Collaborative software,
or groupware, permits several users to work on a single project
at the same time or at different times, and can schedule and
track a project as the work progresses. Other collaborative
management tools that may prove useful both inside and outside
the office include knowledge management, document sharing, and
workflow systems.
Security is, of course, a priority when implementing a telework
program. All computers and other devices connecting into your
company’s network should be equipped with appropriate
antivirus software, firewalls, and spam filters. Secure Sockets
Layer (SSL) encryption should be used when transmitting sensitive
data. It is important that employees who do remote work receive
training in how to manage passwords, update security patches,
backup data, and handle security emergencies.
Voice over Internet Protocol (VoIP)
is not only useful in helping telecommuters stay connected to
their office phones; it can also result in substantial savings
on long-distance and cell phone charges. The call notification
features of VoIP systems alert teleworkers to new voicemail
or faxes through messages to their e-mail inboxes, PDAs, or
cell phones.
VoIP systems may also offer a call following
feature, which causes multiple phones to ring simultaneously
when a call is received on a VoIP number. For example, when
a client calls the employee’s business number, phones
in both the employee’s office and home will ring at the
same time.
Notebook computers and voice-data handhelds known as "smartphones"
can also receive VoIP phone calls. Employees may be able to
reduce their cell phone usage while traveling by making VoIP
calls over their business phone number. In addition, VoIP technology
makes it possible for employees working from home or on the
road to participate in meetings via teleconferencing or video
conferencing. Miniature web cams, desktop microphones, and portable
headsets make remote videoconferencing easy.
While these technologies are becoming increasingly user-friendly,
employees who are traveling or telecommuting from home are just
as likely as employees in the office to require IT support.
If your teleworking employees typically work outside of office
hours, providing emergency helpdesk assistance late into the
evening is essential. IT staff should also remain in regular
contact with telecommuters to ensure there are no functionality
or security issues that should be addressed.
Thinking Out Of the Cube:
Moving Toward a Mobile Workforce
Until recently, encouraging significant numbers of employees
to telecommute did not make good business sense for many employers.
That was before the arrival of affordable communication technologies
such as broadband, wi-fi, web cams, cell phones, groupware,
and PDAs. Now, there are no longer any compelling reasons why
"knowledge workers" and sales professionals who do
most of their work using PCs and phones, cannot do at least
some of their work from just about any location in the wired
world.
Indeed, it is not far-fetched to imagine that the white-collar
office in the form we currently know it will someday be a thing
of the past. Some innovative companies have been able to reduce
their workspace through a combination of telecommuting and "hot
desking." For example, one company has created an office
with 90 cubicles to accommodate 140 employees, each of whom
telecommutes for part of the week and uses an available cubicle
when in the office. As more companies conduct their business
and store their files online, the paperless -- or even "virtual"
-- office is close to becoming a reality.
Even though many jobs currently performed in offices could
be easily done from a remote location, the culture of "face
time" often stops telecommuting in practice. But it is
worth remembering that time spent in an office does not necessarily
produce value for your business -- the work itself does. Increasingly,
employers are measuring performance on the basis of results
rather than hours worked. For most types of white-collar jobs,
it is possible to set measurable targets that apply regardless
of where the work is performed. Being able to work from anywhere
will also enable employees in customer-facing positions to spend
more time with clients and less time tied to a desk.
One reservation you may have about allowing your employees
to telecommute is the possibility that the distractions of children,
the laundry, or a latte at Starbucks will interfere with their
productivity. But offices also tend to be busy places, where
workers may be easily distracted or disturbed by other people’s
phone conversations or chats between co-workers. In many cases,
employees will get more work done when they can choose an environment
with less noise and activity -- and no temptation to gossip
over the water cooler.
For the employer, the money-saving opportunities associated
with having a remote workforce go beyond spending less on office
space, equipment, and air conditioning. It may be possible to
recruit qualified employees at lower salaries if teleworking
is an option. Working from home is cheaper for most employees,
who can save money on transportation, an office wardrobe, and
lunches out. People who want part-time or flexible work schedules
because of childcare or eldercare responsibilities may be willing
to work for less compensation than a full-time, office-based
employee would demand. If your office is located in an area
where housing is expensive, recruiting workers in less pricey
parts of the country will help you keep payroll costs down.
In most respects, managing teleworkers is not much different
from supervising people on-site. Managers and co-workers can
keep in touch with telecommuters through phone, e-mail, and
instant messaging. Managers themselves can also work remotely,
coordinating and supervising the activities of a group of employees
online, and holding meetings via teleconferencing or web conferencing.
Integrating telecommuting into your business strategy can also
help protect your company in case of disaster. If your office
were to be hit by a hurricane or fire, having employees already
working from other locations could save your business from serious
losses -- or even bankruptcy.
Not all jobs lend themselves to telecommuting, and not all
staff members have the self-discipline and focus required to
work remotely. But employees who have shown themselves to be
independent and reliable in an office setting may well have
the maturity to handle remote working. For employees seeking
work/life balance, the opportunity to telecommute for even part
of the workweek is a strong incentive to remain with an employer.
Can the Roth 401(k) Improve
Your Retirement Future?
For the first time, businesses have the option of offering
their employees a new type of tax-advantaged retirement plan
in 2006: the Roth 401(k). If you are a business owner interested
in tax-efficient retirement strategies, consider the ways in
which contributing after-tax dollars to a Roth 401(k) can help
you achieve greater financial security in retirement. It’s
a benefit you may enjoy as much as your employees.
As the name suggests, the Roth 401(k) incorporates elements
of both traditional 401(k) plans and the Roth IRA. Created by
a provision the Economic Growth and Tax Relief Reconciliation
Act of 2001 (EGTRRA), the Roth 401(k) allows employees to make
Roth IRA-type contributions to 401(k) plans, but without the
income restrictions and contribution limits that apply to Roth
IRAs. Contributions to a Roth 401(k) are nondeductible; however,
earnings within the account accumulate tax free, and qualifying
distributions are also tax free.
The Roth 401(k) is subject to the same contribution limits
as the traditional 401(k). In 2006, investors under the age
of 50 are permitted to contribute up to $15,000 to a 401(k),
but only $4,000 to an IRA. Like the 401(k), but unlike the Roth
IRA, the Roth 401(k) requires investors to begin taking distributions
after the age of 70½. On the other hand, the Roth 401(k)
resembles the Roth IRA in that investors will not be permitted
to withdraw their money tax free until they are at least 59½
years old and have held the account for at least five years.
Among those most likely to take advantage of the Roth 401(k)
are higher earners who expect to be in the same or a higher
tax bracket when they retire. These investors gain little in
the long run by taking a tax break today, and they are more
likely than moderate earners to be able to afford after-tax
contributions. For these savers, accepting the "pain"
of contributing to their 401(k) plan without the immediate tax
deduction means they can enjoy tax-free distributions and greater
flexibility during retirement.
But higher earners are not the only investors who could benefit
from contributing to a Roth 401(k). A recently published report
by the Vanguard Center for Retirement Research on the impact
of the Roth 401(k) on retirement plans observed that the "tax
diversification" offered by the Roth feature would help
a wide variety of 401(k) plan participants better prepare for
retirement.
Observing that plan participants
cannot anticipate how changes to the tax code might affect their
tax rate after retirement, the report’s authors recommend
diversifying the tax risk associated with pre-tax saving by
also contributing after-tax dollars to a Roth account.
The participants most likely to benefit
from this tax diversification strategy, according to Vanguard
researchers, are those who already have substantial retirement
savings, those saving at the maximum limit on deferrals, those
ineligible to contribute to the Roth IRA due to their high incomes,
and those in the lower tax brackets who wish to lock in a low
marginal rate of 10% or 15%. This last group includes younger
employees who are likely to see their earnings increase significantly
as their careers progress.
Before deciding to divert all, or a portion of, your retirement
plan contributions into a Roth 401(k) plan, you should take
into account the restrictions and potential disadvantages associated
with this option. The stipulation that the Roth 401(k) be held
for at least five years, and until the age of 59½, before
tax-free withdrawals are permitted could make this option less
attractive if you are currently approaching retirement. Unlike
Roth IRA investors, Roth 401(k) contributors are not permitted
to withdraw funds tax and penalty free to pay for a first home
or qualified educational expenses.
Matching contributions made by your business must be invested
in a traditional, not Roth-type, 401(k) account. This means
that even if you make all of your contributions exclusively
to a Roth 401(k) account, participants still owe tax in retirement
on withdrawals from funds contributed on a pre-tax basis by
the business.
The future of the Roth 401(k) remains uncertain. Like many
other tax breaks, the Roth 401(k) could be discontinued after
EGTRRA provisions expire in 2010.
Developing a Successful
Business Plan
A well-crafted business plan is a blueprint for success. This
multifaceted tool is as important to accomplished business owners
looking to grow their companies as it is to budding entrepreneurs.
A business plan defines your business, outlines your goals,
and lays a strong foundation for reaching them. A valuable resource
for investors and lenders, a strong business plan can help you
secure capital for expanding operations. And during these periods
of growth, your plan will help your business respond to changes
in the marketplace or industry. Let’s look at three essential
business plan elements: the executive summary, your business
description, and your financial data.
1. Executive Summary
First impressions are everything, and
this quick snapshot of your business has the potential to lure
in support or turn away investors. This is your opportunity
to efficiently summarize your company’s history and articulate
your mission:
- Describe your location and
facilities.
- Provide relevant financial information.
- Reveal strategic corporate relationships.
- Highlight key accomplishments.
By the end, every reader should know your services and/or products,
understand the marketplace’s demand for your business,
and believe in your success.
2. Business Description
After a compelling introduction, it’s
time to provide details. Here it is important to accomplish
the following:
- Describe your business.
- Identify the marketplace.
- Demonstrate your industry knowledge.
As you know, there must be a market for your products/services,
and your business plan should outline how you are going to gain
and maintain a share of it. Ask yourself some foundational questions:
- What are you selling?
- Who are your clients?
- Who is your competition?
- What makes your firm unique?
In answering these questions, show how various components of
your business work in harmony to accomplish your objectives.
For example: How does your location support your business? What
experience do you and your management team bring to your operation?
What are the specialized skills of your workforce? Remember,
your intent is to construct a winning approach by building confidence
in your readers.
3. Financial Data
Here, startups will need to project future
performance, while established businesses need to detail the
historic performance of their companies, as well as project
future earnings. Your business plan should include three key
financial documents:
- Income Statement
- Cash Flow Statement
- Balance Sheet
Lenders, in particular, will focus on your cash flow statement,
because poor cash flow management can sink even profitable businesses.
From their perspective, accurately projecting when money comes
in and goes out is key to meeting your financial obligations.
Lending aside, effective cash flow management can do a world
of good for your business by helping you maintain liquidity,
minimize your credit obligations, and keep your interest expenses
down.
Sky’s the Limit
Think of your business plan as a building
with many floors, each performing a function. A foundational
function is, of course, the presentation of information as a
tool for raising capital. But limiting your approach to this
will barely get you off the ground. Additional functions for
a well-engineered business plan include helping you manage daily
operations, make decisions in line with your ultimate objectives,
and stay on track with your plans for growth.
To keep pace with change, review your plan every year, and
revise it, as needed. If you build into your plan an ability
to adapt to market fluctuations, industry developments, and
business advances, the sky’s the limit.
Is It Time to Incorporate?
In the minds of many people, a corporation is a big company
whose shares are traded on Wall Street. But a business does
not have to be large or public to become a “C” corporation.
While you may have started your business as a sole proprietorship
or partnership, your firm could benefit from adopting a more
complex business structure as it seeks to expand or take on
more employees. The most regulated of the business forms, the
corporation nonetheless offers certain tax and legal advantages
that could make it a suitable structure for many growing businesses.
The C corporation is a for-profit, state incorporated business,
which is considered by law to be a unique entity separate from
the individuals who own and run it. A corporation is created
when shareholders file articles of incorporation with a secretary
of state’s office. If a corporation conducts business
outside the state in which it was organized, the company may
be required by other states to register as a “foreign”
corporation.
The organizational structure of a corporation involves three
main groups: shareholders, directors, and officers. A corporation
is owned by the shareholders, who are usually not directly involved
in running the company unless they also serve as officers or
directors. Instead, most shareholders influence corporate decisions
by electing and removing directors, voting on amendments to
the articles of incorporation, and approving or disapproving
other major changes. The corporation’s officers, who manage
the company’s day-to-day operations, are appointed by
the board of directors. In most corporations, the board has
a supervisory role, intervening only in major business decisions.
Corporations, like individuals, are
entitled by law to enter into contracts, loan and borrow money,
own assets, sue and be sued, hire employees, and pay taxes—all
without having to directly involve the shareholders. Corporations
offer shareholders liability protection: while shareholders
participate in profits in the form of stock appreciation and
dividends, their personal assets are shielded from debt liability
and lawsuits against the company.
C corporations pay corporate taxes, and
the shareholders pay tax on the income they receive as dividends.
This double taxation can be a disadvantage, particularly for
owners who are not in a position to reinvest a significant portion
of profits back into their business.
On the other hand, corporate federal income tax rates, which
start at 15%, may be lower than the shareholders’ personal
income tax rates. Owners who can afford to do so may leave a
portion of earnings in the company for future investment or
to reduce their own income tax liability. The amount of corporate
tax owed may, in any case, be relatively low after the cost
of paying salaries and benefits is deducted.
Of all the business forms, C corporations have the greatest
flexibility in raising money through equity financing. There
are no restrictions on C corporation shareholder numbers, and
owners are not required to be U.S. residents. C corporations
may even be owned by other business entities.
Unlike sole proprietorships and partnerships, which often end
upon the death or retirement of the owners, C corporations can
last in perpetuity. Ownership in a corporation is easily transferable:
when shareholders die or sell their interests, the corporation
can continue to exist and do business.
The C corporation is not the appropriate structure for every
business. While the independent status of the corporation offers
many advantages, there are also some potential drawbacks to
choosing this structure. C corporation shareholders cannot,
for tax purposes, offset the company’s losses against
their personal income. As profits grow, the company will be
faced with corporate tax rates as high as 39%. Because of the
organizational complexity and regulatory burdens associated
with this structure, the corporation is more expensive to establish
and maintain than other business forms.
Each business structure has its advantages and disadvantages.
Your choice will affect the taxes you pay and your personal
liability risk, so it is important to choose the right entity
for your business.
An Important Difference:
Independent Contractor vs. Employees
The idea of hiring individuals to perform certain jobs without
having to put them on the payroll is appealing to many business
owners. But before you decide to use an independent contractor,
make sure the person you hire is a genuine freelancer who is
not needed to perform services integral to the operation of
your company. Otherwise, the government could determine retroactively
that the worker is actually an employee of your company -- a
change in classification that can result in severe financial
and legal consequences for your business.
While companies outsource jobs to independent contractors for
a variety of reasons, a primary motivation is often to save
money. For employees, companies are obligated to withhold federal,
state, and Social Security (FICA) taxes, and pay unemployment
and workers’ compensation insurance. Many employers also
provide a range of voluntary benefits to employees, such as
health insurance, retirement plans, and vacation and sick leave.
Because these taxes and benefits can add 20% to 30% to the cost
of hiring an employee, the temptation is great for a company
to instead classify a worker as an independent contractor.
Classification Rules
You should be aware, however, that the
Internal Revenue Service (IRS) and other federal agencies apply
a set of common-law rules to differentiate an employee from
an independent contractor. While a worker must not meet all
of the government’s criteria to be considered an independent
contractor, the onus is on the hiring firm when questions are
raised to demonstrate that the contractors it hires are in business
for themselves and are not employees-in-disguise.
The IRS has established as a general rule that the hiring firm
has the right to control or direct only the result of the work
performed by an independent contractor, but not the means and
methods of accomplishing the job. Independent contractors may
not be given extensive instructions by the hiring firm about
what hours they should keep, where they should perform the work,
what tools or equipment they should use, whom they may hire
as assistants, or from whom they may buy supplies or services.
Businesses are also not permitted to issue detailed instructions
to independent contractors on how to perform the assigned work.
Because the rules specify that independent contractors should
not be responsible for jobs that are integral to the business’s
day-to-day operations, contractors do not usually receive training
in company policies and procedures. Indeed, an independent contractor
more typically provides specialized services that are not otherwise
performed within a company, such as IT support or legal advice.
Another defining characteristic of an independent contractor
is, in the eyes of the IRS, financial autonomy. When considering
whether a worker or service provider may be properly classified
as an independent contractor, the IRS views favorably evidence
that the contractor has a significant investment in his or her
own tools and equipment, charges flat fees, covers his or her
own business expenses, and has the opportunity to make both
profits and losses. Independent contractors often work for a
number of clients simultaneously and may publicly advertise
their services.
A worker who relies substantially on the income provided by
a single a client is less likely to pass muster as an independent
contractor. An individual is typically considered to be an employee
if he or she works full time for the hiring firm, is engaged
for an indefinite period of time rather than for a specific
time frame or project, receives hourly pay (with the exception
of law and certain other professions), works on the firm’s
premises, collects employee benefits, and is entitled to quit
without incurring liability for breach of contract.
If the IRS determines that a worker you have classified as
an independent contractor is actually an employee, your firm
will be required to pay back taxes, as well as a penalty that
could amount to as much as 35% of the taxes owed. A failure
to classify workers properly can also lead to charges of labor
law violations.
Making the Most of Section
199
Enacted in response to rulings by the World Trade Organization
(WTO), the American Jobs Creation Act of 2004 (AJCA) phased
out the extraterritorial income (ETI) regime and other export
tax benefits, replacing them with a new set of tax incentives.
The centerpiece of AJCA is Section 199, which allows U.S. manufacturers
to write off a wide range of domestic production activities.
Expected to be worth $76 billion to U.S. companies over the
next decade, the Section 199 deduction applies to more than
just traditional manufacturers. The definition of "manufacturer"
under the AJCA was broadened to include areas such as film and
sound production, utilities, construction, engineering services,
architectural services, agriculture, and software development.
The deduction first became available in 2005, and it phases
in over five years.
The deduction is available to C corporations, S corporations,
partnerships, sole proprietorships, cooperatives, estates, and
trusts. For pass-through entities, this deduction applies at
the shareholder or partner level.
Calculating the Section 199 Deduction
To determine their eligibility for the
Section 199 deduction, companies must calculate their qualified
production activities income (QPAI). This is done by offsetting
domestic production gross receipts (DPGRs) attributable to qualified
production activities conducted in the U.S. with the sum of
the following:
- The cost of goods sold allocable to such receipts;
- Other deductions, losses, or expenses directly allocable
to such receipts; and
- A ratable portion of deductions, expenses, and losses not
directly allocable to such receipts or to another class of
income.
For 2006, Section 199 provides for a 3% deduction equal to
the lesser of a company’s QPAI or taxable income for the
year. The deduction increases to 6% for 2007-2009 and then rises
again to 9% for 2010 and thereafter.
The Section 199 deduction is limited to a maximum of 50% of
the W-2 wages paid by the company during the taxable year. When
calculating wages paid, all members of an expanded affiliated
group are treated as a single corporation.
More about Gross Receipts
Domestic production gross receipts are
defined as the gross receipts of the taxpayer derived from any
of the following:
- A sale, exchange, lease, rental, or license of qualifying
production property that was manufactured, produced, grown,
or extracted by the taxpayer in whole or in significant part
within the United States;
- A sale, lease, rental, or license of a qualified film produced
by the taxpayer;
- A sale or exchange of electricity, natural gas, or potable
water produced by the taxpayer in the United States;
- Construction activities performed in the United States;
and
- Engineering or architectural services performed in the United
States for construction projects located in the United States.
Not to be included in domestic production gross receipts are
the sale of food or beverages prepared by the taxpayer at a
retail establishment and property that is leased, licensed,
or rented to a related party.
Some companies will have gross receipts from transactions that
do not fit the DPGR definition. For the purposes of claiming
the Section 199 deduction, the IRS requires taxpayers to accurately
identify the gross receipts that qualify as DPGRs and those
that do not. To satisfy IRS rules, companies may need to consider
adopting new accounting procedures. Software programs are available
to help companies track their receipts and allocate them accurately.
In some cases, firms will find their current tax planning strategies
do not allow them to take maximum advantage of the Section 199
deduction. We can help you maximize your deduction and minimize
any compliance issues, simplifying the process of integrating
this new opportunity with your current tax and financial strategies.
5-Step
Section 199 Deduction Checklist |
- Identify qualifying production activities.
|
- Upgrade internal processes and procedures to ensure
your technology supports your accounting requirements.
|
- Gather data to calculate QPAI.
|
- Organize supporting documentation to substantiate
your deduction.
|
- Consult your tax professional.
|
The Benefits of Automatic
401(k) Enrollment
Growing numbers of employers are tackling the persistent problem
of low retirement savings rates among American workers by automatically
enrolling their employees in 401(k) and other defined contribution
plans. The need to boost participation in 401(k) plans is especially
acute among companies in the process of phasing out defined
benefit pension plans and those with large numbers of lower-income
workers.
The do-it-yourself approach required by 401(k) plans made more
sense when they were first introduced in the early 1980s to
supplement employer-provided pensions and profit-sharing plans,
a 2005 report on automatic 401(k) features by the Retirement
Security Project pointed out. Because participants’ basic
retirement needs were already met by pensions and Social Security,
workers were given a substantial level of discretion over how
to manage their 401(k) accounts. But as the 401(k) gradually
becomes the primary retirement savings vehicle for most American
workers, the presumption that large numbers of employees would
take the initiative required to participate successfully in
these programs is proving increasingly risky for sponsors, researchers
noted.
Automatic enrollment places a percentage of an employee’s
paycheck in an individual 401(k) account, without requiring
the worker to take any action. In addition to automatic enrollment,
employers may add other automated features to their retirement
plans, including automatic escalation, in which employee contributions
automatically increase over time as their earnings rise; automatic
investment, in which the worker’s portfolio is rebalanced
on a regular basis to improve diversification and asset allocation;
and automatic rollover, in which an employee’s 401(k)
account funds are automatically rolled over into an IRA when
he or she changes jobs.
Several studies of automatic enrollment programs have shown
that, when workers are forced to take action to avoid participating
in a retirement plan, most remain enrolled. While 401(k) plan
enrollment rates seldom exceed 75% when the onus is on the individual
worker to sign up, participation is often as high as 85% to
90% when the employee must make an explicit choice to opt out
of the plan.
A recent study by Hewitt Associates found that 23% of the companies
surveyed expect to add automatic enrollment features to their
401(k) plans by the end of 2006, 13% intend to add contribution
escalation features, and 20% expect to add automatic rebalancing
of 401(k) accounts.
"Companies that have already implemented automatic features
to their 401(k) plans have seen significant results in helping
employees save and invest better for retirement. This is creating
momentum and prompting other companies to consider them as well,"
said Lori Lucas, director of participant research at Hewitt
Associates.
"Automated features change the equation so that inertia
around retirement saving and investing works in employees’
favor: if an employee does nothing, it is okay because the 401(k)
plan is on autopilot," Lucas added.
The legal issues surrounding automated 401(k)s have not yet
been completely clarified, but recent guidance suggests it is
permissible under federal law to enroll employees in 401(k)
plans automatically, provided the employee is notified in advance
and is permitted to leave the plan if he or she so chooses.
According to a 2004 Congressional Research Service (CRS) report,
the IRS has ruled that employers can create a default under
automatic enrollment stipulating that some of the employee’s
pre-tax pay will be deducted and directed into a retirement
account unless he or she instructs the employer not to do so.
The employer is merely obliged to notify the employee in advance
of the deduction and to offer him or her the option to drop
out.
In subsequent rulings, the IRS has clarified that automatic
enrollment is permissible for both newly hired and current employees.
Provided the worker is informed, companies are also allowed
to increase an employee’s contribution over time. Workers
are, of course, entitled to override the default options of
a 401(k) plan, making their own decisions about whether and
when to save, and how they wish to invest their savings.
Improve Efficiency with
an Intranet
Even in smaller organizations, fostering effective communication
and collaboration among employees can be a challenge. When vital
pieces of information are missing or a key participant in a
project is unexpectedly unable to attend a meeting, work can
slow or stall altogether. While it is impossible to eliminate
completely the possibility that such breakdowns will occur,
the introduction of an intranet can help an organization operate
more efficiently through better communication and sharing of
knowledge and resources.
Like a miniature version of the Internet, an intranet is an
internal network that allows employees -- as well as clients
and other partners with authorized access -- to share and view
data and software tools via a Web browser. Varying in size and
complexity, an intranet may be tailored to the needs and budget
of just about any organization.
Intranets can make many routine, but essential, administrative
and human resource functions run more smoothly. Some of the
basic elements of a typical small business intranet include
address books, calendar functions, and message postings. Address
books make it easier for employees to contact clients, suppliers,
and one another; calendar functions can simplify the task of
scheduling meetings with multiple participants.
Intranet message boards can alert staff quickly to important
company information, such as industry updates, revised sales
targets, or new strategic goals. Policies and procedures manuals,
as well as company newsletters, can be posted on the intranet,
saving printing and paper costs. Intranets can even be used
to conduct interactive training and e-learning sessions.
Access to an intranet can be particularly valuable for sales
personnel or other staff working off-site who need to communicate
regularly with the head office and tap into its store of information
about products, suppliers, and clients. Interactive forms can
be made available through an intranet network, enabling employees
to place orders on behalf of customers, file expense reports,
or put in requests for supplies. Video and audio teleconferencing
can be conducted over an intranet using voice over Internet
protocol (VOIP) technology, instead of more expensive cell or
landline telephone connections.
Another important feature of an intranet is that it can ease
the distribution of software, averting many IT maintenance and
support issues. Rather than having copies of software programs
installed on each individual desktop, employees can use a browser
to access applications stored on a server.
Some companies may wish to allow customers or suppliers access
to parts of their intranet, giving them a greater depth of information
about the company and the opportunity to interact with sales
and customer service representatives. Known as extranets or
customer portals, these external features of an intranet can
be used to enhance client relationships and build more efficient
supplier networks.
Any company with a basic network infrastructure connecting
individual employees’ PCs can set up an intranet. In many
cases, much of the required hardware and software is already
in place. The cost of establishing an intranet can be as low
as a one-time investment of a few thousand dollars, which may
be followed by monthly user fees. Smaller companies may wish
to outsource intranet hosting to an application service provider
(ASP), while firms with in-house IT departments will likely
be able to handle hosting themselves.
An intranet with as few as four users could offer sufficient
economies of scale to justify the investment. For many firms,
it makes sense to start small and allow these flexible and easily
scalable networks to grow along with the business.
Pricing for Profitability
For both start-ups and established companies, the business
plan is a "roadmap" toward success. And, since running
a business is a little like embarking on a journey without a
final destination, it may be necessary to consult, or even reconfigure,
your map from time to time.
Some of the assumptions in a business plan are based on "hard"
data (e.g., cost quotes for materials, supplies, and various
services), while others are based on "soft" data or
projections of what you reasonably expect to happen in the future
(e.g., sales one year from now). In between the "hard"
and the "soft" lies the key to a happy bottom line
-- pricing your product or service to help ensure profitability.
Pricing Strategy
A well-conceived pricing strategy is
based on a combination of factors that consider cost, demand,
and competition. Having the hard data on cost is essential,
but cost alone is insufficient for establishing profitability.
A clear picture of profitability can emerge only by relating
cost with demand at various price levels, and understanding
how the competitive environment works to set some limits.
However, estimating demand requires more sophistication than
simply striving to have the lowest price in the marketplace.
It requires evaluating the relationship between price
and value, and realizing the price that customers are
willing to pay is often related to characteristics they perceive
as important such as quality, accessibility, and product guarantees.
Consequently, the key to proper pricing is having your customers
perceive good value for their money.
Knowing how your product or service compares to others in the
market, and understanding the demand for such a product or service,
will help determine realistic price levels. Although formal
market research can be helpful, you can gather valuable market
information by talking with customers and recording their responses.
Sometimes this informal database can provide the impetus for
revising a particular strategy or changing a course altogether.
Finding Your Road to Success
While proper pricing is the mechanism
that can turn an exciting idea for a business into a profitable
ongoing enterprise, there is no "best way" or "single
formula" for establishing the price of a particular product
or service. That is, it is possible to create a pricing strategy
that is primarily cost-based, demand-based, or competition-based
or, more likely, a combination of all three factors. The nature
of the industry in which your business operates, as well as
the specific product or service you provide are significant
factors influencing the creation of a viable pricing strategy.
Irrespective of how your company’s roadmap is drawn,
it might be best to view it as a work in progress. Changes in
the business climate or rapid change within the business may
require a reexamination of various assumptions that went into
an earlier pricing model. The critical point is to have your
pricing strategy keep you well positioned for staying ahead
of the competition on your road to success.
Reduce Workplace Stress
-- Improve Your Company’s Health
In today’s increasingly demanding work world, it is not
surprising that workplace stress is on the rise. The National
Institute for Occupational Safety and Health (NIOSH, 2005) reports
that 40% of workers describe their jobs as "very or extremely
stressful" and 25% of employees view their jobs as the
most stressful area of their lives.
Some employers may rationalize that stressful working conditions
are a necessary evil, assuming that companies must constantly
demand more from workers to remain competitive, productive,
and profitable in today's economy. However, work-related
stress can have serious consequences, not only for the
health of employees, but also for the overall success of a business.
Stress raises the risk of workplace accidents, cardiovascular
disease, psychological problems, and other health disorders.
Business owners may also pay a high price through increased
employee absenteeism, tardiness, and disability claims, as well
as reduced employee satisfaction and productivity.
Conditions That Cause Stress
What exactly is job stress? According
to NIOSH, job stress is defined as harmful physical and emotional
reactions that occur when job demands do not match workers’
abilities, resources, or needs. Researchers disagree, however,
on whether the primary cause of work-related stress centers
more around worker characteristics, such as personality or coping
style, or working conditions.
Although the impact of the differences among individual workers
cannot be ignored, certain working conditions are likely to
contribute to the stress levels of most people. These
include the following:
- Work Roles. Without a clear definition of reasonable job
functions, employees may feel stress. Having conflicting
tasks, vague job expectations, or too much responsibility
may contribute to this problem.
- The Nature and Design of Tasks. Job functions involving
heavy workloads, fast turn-around times, long work hours,
infrequent breaks, and routine or mundane tasks may contribute
to employee stress.
- Management Style. Employee stress may be the result of a
lack of communication within the orignazation; poor communication
techniques of a direct manager; exclusion from decision-making
that affects job functions; and a need for family-friendly
policies, which allow workers to meet pressing personal responsibilities.
- Interpersonal Relationships. A poor social environment and
the lack of support from managers and other coworkers may
intensify feelings of stress among employees.
- Career Concerns. Employee stress may be related to sudden
or rapid changes in organizational structure; job insecurity;
and a lack of opportunity for growth, advancement, or promotion.
- Conditions of the Work Environment. Unpleasant or dangerous
physical conditions, such as air pollution, noise, crowding,
or ergonomic problems, may also contribute to stress for employees.
Solutions That Work
Business owners can benefit from the
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