/Entrepreneuring

National Small Business Week: What It Means For You And How To Make The Most Of It

Sunday, April 30, 2017, marked the start of National Small Business Week. From that day through Saturday, May 6, the U.S. Small Business Administration (SBA) has organized a variety of events to celebrate small businesses and the impact they have on our national and local economies.

According to the SBA National Small Business Week website, “More than half of Americans either own or work for a small business, and they create about two out of every three new jobs in the U.S. each year.”

I say that’s reason to celebrate! Don’t you agree?

We’re celebrating at CorpNet.com by offering  10 percent off of the cost of any complete business formation package this week only! Visit the CorpNet website’s home page and click the “Get Started” button to view the formation packages for your state. At checkout, use code CNSBW to apply your discount.

Other highlights of the week will include: small business award ceremonies; a live chat over social media with SBA Administrator Linda McMahon and Facebook’s VP and Chief Privacy Officer for Policy Erin Egan about how to start and grow a business; a road tour that kicks off in the Indycar town of Indianapolis and continues with stops in Arlington, Texas and ends in Fresno, California; and free webinars.

What Does This Mean For You?

In a word: Plenty!

As the SBA is promoting National Small Business Week, you can piggyback off the momentum and remind your customers about why supporting small businesses is the way to go.

  • Local small businesses typically hire local people from within their communities.
  • Local small businesses often seek to source raw materials from local suppliers, thus further stimulating the local economy.
  • Local small businesses tend to be vested in and give back to their communities in time, talent, and dollars to improve the lives of those around them.
  • Local small businesses build personal relationships with their customers and nurture a sense of community.

How Can You Get Involved?

For starters, check out the SBA National Small Business Week website for what’s happening each day from April 30 to May 6. Also, generate some buzz by posting about National Small Business Week on social media (hashtag #smallbusinessweek). And consider offering some special deals to draw people to your local small business. Even better, partner with other local small businesses in your area to cross-promote each other’s products, services, and special offers. That’s a powerful way to show your solidarity as small business owners.

A Time To Shine

SBA’s National Small Business Week is a perfect time to reflect on your business success and move onward to an even brighter future. And if you’re an aspiring entrepreneur who wants to move past kicking the tires and start your own business, what better time to take your first steps?

*Image from the National Small Business Week website*

How to Start an Accounting Firm

If you’re a CPA or an accountant, the transition from working for someone else to being your own boss has probably crossed your mind. Self-employment offers an opportunity to have more control over your own schedule, allowing you to better balance your professional endeavors and personal life. It also enables you to manage your firm the way you want to manage it.

Here’s seven steps to start your own accounting practice:

1. Select a business name

Think about whether you want to market your business using your own name (e.g., “Jane Smith, Accountant”) or create a business name (e.g., “Accounting You Can Count On”). As a solopreneur accountant, you might opt to use your own name because you and your brand are one in the same. On the other hand, choosing a business name might help you be perceived as well-established and experienced.

If you go with a business name, make sure it is available to use before you start printing it on business cards and other marketing materials. Check to see if the name is available in the state where you’re planning to operate your business by checking with your state’s secretary of state office. We have a free business name search tool here at CorpNet that can help, as well.

Also check to see if the domain name for your business is available (e.g., accountingyoucancounton.com). Sites like GoDaddy.com will let you instantly find out if there’s a suitable domain, and they will offer suggestions for alternate names if the one you want is already taken.

No one in your state is using the name you want? Excellent! Next, you’ll want to search the U.S. Patent and Trademark Office to see if anyone has a pending request for or has successfully registered a trademark for the name. Don’t skip this step because you’ll land in legal hot water if you infringe on another company’s trademark.

2. Choose a legal structure and register your business.

The business structure you choose will affect your business from both legal and tax standpoints. Solo accountants and small firms often choose to register as an LLC (Limited Liability Company),  PLLC (Professional Limited Liability Company), or PC (Professional Corporation). As state constructs, these business entities are subject to different rules in different states. You can find the specific rules for accountants in your state via the CorpNet website or you can call the Secretary of State’s office in your state to get the details you need.

3. Obtain the licenses and permits you’ll need.

Regardless of which state you’re operating your business in, you’ll need some form of licensing to provide public accounting services. You will need to hold a CPA license and your firm may need a public accountancy license. To determine the requirements in your state, check with your State Board of Accountancy.

Besides CPA accreditation you may also need other state and local municipality permits, as well. They might include a general business operation license, a signage permit, and possibly a home occupation permit (if you’re operating your business from home. CorpNet can help you determine the license and permit requirements applicable to you, or you can check with your local government office.

4. Apply for a Tax ID Number

Also called a Federal EIN (Employer Identification Number), this allows the IRS to track your business’s transactions. LLCs and corporations are required to have an EIN and many banks will require that you have one before they’ll allow you to open a business bank account.

5. Open a bank account exclusively for your business.

It’s important to keep your personal and business finances separate—for both legal and tax purposes. In fact, that separation is mandatory for LLCs and corporations. After you’ve registered your business with the state and have your Tax ID number, you will have the information you need to open a business bank account.

6. Get insurance to protect your business.

Even though officially forming an LLC or incorporating your business will help to lower your personal liability related to business debt and lawsuits against associates, it will not protect your personal assets if action is brought against you due to your own actions. That’s why it’s a good idea to consider getting an insurance policy for peace of mind. Talk with a knowledgeable and trustworthy insurance agent who understands the needs of accountants and other businesses in the financial services industry. A reliable agent can guide you to the type of coverage that will best protect you, such as a Business Owner’s Policy (BOP), Professional Liability, Insurance, Data Breach Coverage, or others.

7. Know your business compliance responsibilities.

Registering your business is just the beginning. LLCs and corporations have ongoing requirements to keep their businesses in good standing. For example, most states require LLCs and PLLCs to file an annual report each year and show proof of a valid certification. Corporations have more corporate compliance responsibilities. Besides annual reports, they must conduct annual meetings, prepare meeting minutes, and meet other compliance requirements.

I know it can be tough to keep up with everything that’s required and when it’s due, so I recommend using the CorpNet B.I.Z. (Business Information Zone) compliance tool. It’s a free monitoring tool that can help you stay on top of your state filings and fees due throughout the year.

The steps to starting an accounting business aren’t overly complex. To make sure you launch your business on solid legal ground, you’ll want to make sure you do it right. Consider talking with a legal professional who can guide you and look to CorpNet to ensure your business forms and filings are done accurately and on time.

 

7 Small Business Expenses to Account for in Your Monthly Budget

Budgets are essential to manage your costs and keep your small business profitable throughout the year. Due to the dynamic nature of any small business, you can’t just set a budget in January and let it sit unchanged until the end of the year. Every month, take stock of your business’ performance and expenses and use that data from the prior month to update your budget.

Your monthly budget needs to provide you with enough detail so that you can identify potential cash crunches in the near future as well as opportunities to make the most out of extra cash. To get that level of detail, let’s review seven key small business expenses to account for in your monthly budget.

1. Vehicle Expenses

With the tax deadline rapidly approaching, you may now know that you’ll be able to deduct vehicle expenses for business purposes. Go beyond just the number of dollars spent for gas and include applicable vehicle registration fees, repairs, and insurance payments. Also, keep track of business miles driven because you can deduct 53.5 cents per mile in 2017. For more details, consult Topic 510 from the IRS.

2. Advertising Expenses

Depending on your marketing budget and number of promotion projects that you have going on, you could be eating up your ad budget too fast (or even, too slow). Reconciling your monthly payments to advertisers allows you to fine tune your promotion efforts so that you have enough left for those peak periods, such as the summer or December holidays.

3. Tax Payments

Dude, where’s the budget for April? Your tax liability might have taken a big bite out of it, hurting your available cash on hand to pay suppliers and (gasp!) employees that month. Including all outgoing cash flows is a key part of building a budget for your small business, and tax payments are no exception.

4. Wages

As your small business grows, you’ll find yourself wishing that you could hire an extra help of hands to handle the extra work. But is it worth to have full-time staff throughout the entire year? By keeping track of wages every month, you’ll be able to determine if you could be better served by part-time, seasonal, or contract workers on specific months. Plus, it helps you to be ready for Form 941 every quarter and its equivalent at the state level, if applicable.

5. Expenses Related to Accounts Receivable

Your budget may have a category tracking one-time (or unusual) expenses. From that list, single out any charges for collecting money for sales made on credit, or write-offs from money that’s never recovered. Such charges will tell you the whole story about your sales numbers and whether or not you need to make changes to your policies for sales made on credit.

6. Cash Outflows from Operating Activities

When doing a cash flow analysis, you want to break down cash inflows and outflows into operating, financing, and investment activities. Get in the habit of reconciling your cash flow balance by adding and subtracting applicable inflows, such as depreciation and decrease in inventory, and outflows from operating activities, such as increase in accounts receivable and decrease in accounts payable, and you’ll have an indicator of potential cash crunches or opportunities for investment.

A number that’s too low for many months would indicate that you should start looking into forms of business financing and one that’s too high for many months would point out that your small business could afford to invest in a new piece of equipment, hire a new employee, or spend a bit more in promotion.

7. Loan Advances

If you have an existing term loan or line of working capital, write down how much you have used on the previous month. This allows you to evaluate your existing form of financing: Are you tapping into your line of credit only during certain months? Do you have adequate reserves for an emergency? Do you need to increase your limit?
As you can see, monitoring your business expenses is a great financial habit that allows you to make more informed decisions and reach your business goals. Depending on the size of your small business, hiring a bookkeeper to maintain your monthly budget and other financial documents, such as income statement and balance sheet, will free up your time and enable you to focus on the core activities of your operation.

Job Interview Questions That Are Illegal

As a small business owner, it’s important to understand which job interview questions are illegal. Laws at the federal and state level exist to protect people from being discriminated against during the hiring process. As an employer, you need to carefully formulate the questions you ask during a job interview. In our office, anyone interviewing a potential job candidate must follow a standard set of best practices for interviewing job candidates. Such practices are critical for avoiding a job discrimination lawsuit that could tear down the business success you’ve worked so hard to achieve.

So what types of questions should you steer clear from so your company doesn’t land legal hot water?

Generally, any questions that guide job candidates into revealing information about their race, color, age, religion, national origin, sex, gender identity, sexual orientation, marital status, disability, or genetic information should not enter into your conversation. You also need to be careful about asking for criminal background information.

Several examples of questions you may want to avoid include:

  • Do you have a husband (or wife)? While you might want to ask this question to find out whether the candidate will have enough time to dedicate to the job, don’t ask this question. According to the U.S. Equal Employment Opportunity Commission, questions about marital status are frequently used to discriminate against women and illegally deny or limit employment opportunities. This type of question might also be construed as trying to get an individual to disclose gender or sexual orientation.
  • How many children do you have? By law, you cannot deny someone a job because they have children, are pregnant, or plan to have children sometime in the future. If the impetus to ask this or a similar question is to figure out how much time a candidate can devote to the job, then consider asking something like, “What hours would you be available to work?”
  • When did you graduate from college? Because this could enable you to figure out a job candidate’s age, you need to nix this question. The Age Discrimination in Employment Act (ADEA) protects prospective employees from being turned down because of their age.
  • What was the nature of your discharge from the military? The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects people from job discrimination based on their past, present, or future military obligations. You can ask a candidate about the skills and training they received during their military service but not why they were discharged.
  • Are there any religious holidays you honor? Title VII of the Civil Rights Act of 1964 prevents employers from denying employment based on an individual’s religious affiliation. Don’t set your business up for trouble by asking this type of question, even if your intention is simply to get a sense for how much time off a job candidate might expect.
  • Have you been arrested at any time in the past? Federal law doesn’t prevent you from asking about a candidate’s criminal history, but using that information when making a hiring decision might violate Title VII. And some states have made it illegal to ask about arrest records or to wait until later in the hiring process to inquire about them. Generally, you can’t disqualify a candidate because of a conviction record, unless the offense directly relates to the nature of the job. For example, someone with a child molestation conviction could be denied an elementary school teaching position.
  • Do you drink socially? Although you might be asking in a friendly way to break the ice, this question could be trouble for you. The Americans With Disabilities Act (ADA) of 1990 protects qualified individuals who have had problems with alcohol abuse.
  • When did you last use any illegal drugs? This is a tricky one. Although asking job candidates if they presently use illegal drugs (current users are not protected by the ADA), you may not ask about past drug use.
  • What is your first language? Avoid this and similar questions that could be interpreted as a way to determine where someone is from or what their nationality is.

Realize this list of examples isn’t exhaustive and it isn’t meant as a substitute for legal guidance. But I do hope it will give you a better idea about the types of questions you should avoid when interviewing potential employees. Typically, you can play it safe by focusing your interview questions on asking about your candidates’ skills, behaviors, and work experience as they relate to their ability to perform the job position you’re filling. Also, do your homework so you understand the laws that pertain to you at the federal level and within your state. I also recommend that you consider seeking direction from a human resources professional and/or an attorney. They can assist you in developing or reviewing your interview questions so you don’t unknowingly break the law and put your business at risk.

Six Tips To Help Business Leaders Gracefully Handle Adversity In The Office

In an ideal business world, everyone working at a company would always get along famously and harmoniously collaborate day in and day out toward shared objectives they all believe in passionately.

Sounds nice, right? Unfortunately, it’s not very realistic—neither for the entrepreneur starting a business nor the business owner running an existing business for years.

In all companies, leaders face adversity within their ranks at times. Adversity isn’t usually fun, but it doesn’t have to be debilitating either.

How can you manage adversity gracefully so it doesn’t hurt your business?

Below are some ways I’ve found to effectively work through it.

  • Leverage Relationships

By focusing on your shared goals rather than what you’re butting heads about, you can neutralize an at-odds situation and discuss issues openly. Realize you’ll have had to lay the groundwork first by building relationships with your employees. I’ve found having mutual respect is of the utmost importance when talking things out with employees.

  • Give Them A Chance To Vent 

Sometimes people just need to get dissatisfaction off their chests. The mere act of listening without judgment can diffuse irritability. I try to give my team the confidence and capacity to vent (with proper boundaries in place, of course) when something is bothering them. It gives me an opportunity to listen and learn about what’s upsetting them, to acknowledge and validate I understand their feelings, and to collaborate on a resolution.

  • Never Make Assumptions

You know what they say about assuming! It’s true. If you jump to conclusions and try to figure out what your employees are thinking without asking them directly, you will shatter their confidence in you. Only they can accurately express what’s bothering them and why it’s causing them to act they way they are.

  • Show Integrity—ALWAYS!

Even when you find it difficult to reason with someone, you need to keep a cool head and act professionally. It’s never OK to talk behind an employee’s back or otherwise discredit their feelings and concerns. Always take the higher road—and always follow through on what you say you will do when resolving an issue.

  • Do A Post-Mortem

Aim to figure out what series of events or conditions caused the adversity to occur. If it was something within your control, make an effort to avoid that perfect storm again in the future. And if justified, apologize! A simple “I’m sorry” can go a long way toward healing hurt and restoring trust.

  • Don’t Let It Ruin Your Day

Sometimes adversity happens despite your best efforts. As imperfect humans, we will sometimes have misunderstandings, be less patient than we should be, and point fingers at one another. Don’t take incidents of adversity personally. Often, they arise because every person’s frame of reference and degree of adaptability is different. Realize adversity happens in every business—and it’s something we can use to become better leaders. Each time we handle difficult situations, we learn more about our employees and ourselves. The key is to harness that knowledge and use it to more effectively communicate and resolve issues in the future.

Unfortunately the ideal world I described at the start of this article doesn’t exist. But by handling adversity more adeptly, we can get closer to creating it.

Why deal with the adversity and headaches that come with trying to file the paperwork required to form an LLC or incorporate your business? At CorpNet, we’re here to complete your business filings accurately and on time. Contact us today

Partners and W3 – Choose Your Partners Wisely

I’ve written about partnering a lot in my life. I have not felt great about all the partners I’ve chosen. I’ve made some bad choices in personal relationships and in business. But today, I have the greatest partner I’ve ever had. I asked her to marry me last week. She said yes.

Ok, so this post isn’t about me and it’s not about falling in love. It’s about finding great partners. But if you can’t find a great life or love partner, how will you know the right business partner? I have learned so much by my mistakes. I now use my W3 concept. It’s really simple. The partnership must benefit you, your partner and your customers. If all 3, then it has a chance for success. Missing one of the 3, forget it and move on.

Every relationship requires benefits for all involved. In love, you both must feel loved and be truly happy. In business, it’s about money and delivering value. If you and your partner solve each other’s problems and make money, that’s good. But if the customers also see the value, that makes it great.

Don’t get me wrong, liking or even loving your partner isn’t always a bad idea. But it’s not the goal. It’s not what keeps the relationship together. There must be gain on both sides, and for the customers.

Let’s have a look at Costco and American Express. They had a long standing partnership because:

Costco wanted to provide its members with something special;
Costco wanted to ride on the AMEX brand;
Costco wanted a deal with AMEX and more than likely, information too;
AMEX wanted Costco’s customers;
AMEX also wanted information, buying habits;
Members wanted a deal;
Members wanted status;
Members wanted another way to pay beyond debit cards or cash.

So W3 works perfectly here. But why has this relationship ended after 16 years? Well, nothing lasts forever and quite frankly it came down to money, but more specifically it came down to money related to one of the 3 Ws – Costco wanted a better deal. So they found a new partner in Citigroup and VISA. AMEX either made a terrible error in judgment or they didn’t see one or more of the 3 Ws anymore, so they let it go.

I wrote this post for those that are considering partnering with companies like CorpNet. W3 works here, well. CorpNet gets sales without massive marketing spend. Partners get paid commissions, big ones. Customers of the partners now have an easy and awesome way to form their business structures and handle compliance through their trusted advisors. Get it now?

BTW, W stands for win. Look for win, win, win situations in partnering with CorpNet, and you’ll end up ahead of your competition and a little richer and happier. Good luck!

Four Ways Busy Entrepreneurs Can Show Their Loved Ones They Care

Although Valentine’s Day has passed, it doesn’t mean the time has expired for us busy business owners to show our family and friends we love them. Building and nurturing relationships never goes out of season. And now more than ever, with the divide among people getting wider as the political and social climate becomes ever more heated, I believe we all need to step up our efforts to show we care.

But when you’re an entrepreneur bogged down with countless tasks and multiple concerns on your mind, how can you mange all that AND show your people some love?

That’s challenging for all business owners—whether you’re starting a business or have been running one for years.

I’ve found the key is to plan ahead and make a conscious effort every day.

Some ideas for ways you can show your loved ones you care despite your hectic schedule include:

  • Break bread with them. Although it may be tempting to work through lunches and dinners, set time aside to dine with your significant other and/or family and reconnect. You will likely find you’re more productive and mentally alert after breaking away and spending time with them.
  • Listen to their concerns and challenges—even when you’re inundated with your own. They need you! And I always find it’s therapeutic to lend an ear and know you’ve made someone’s day better by just being there to hear what’s weighing them down.
  • Schedule one-on-one time. Whether a romantic rendezvous with your spouse, a shopping trip to the mall with your teen, or an hour at the local café with your best friend, schedule time to communicate one on one. When you’re dealing with daunting deadlines and a never-ending list of to-dos at the office, it may be the only way to ensure you and your loved ones have alone time together.
  • Embrace the power of “it’s the little things that matter.” Whether it’s stopping at the local convenience store on your way home to buy them their favorite ice cream or giving them a big hug “just because,” realize even the smallest gestures of caring can demonstrate your love in a big way. Best of all, this can literally require only seconds or minutes out of your jam-packed day.

The Difference It Makes

When you make the time and effort to give your loved ones the attention they deserve, everyone wins. They will feel needed and cared for, and you will feel better about yourself and less personally stressed because you’re not neglecting the people who matter. I find it also helps me maintain a positive attitude in my work. When your personal life has harmony, your mind has greater peace and can more fully focus on doing what it takes to make your business succeed.

Want more time to show your loved ones you care? Free up more time by using CorpNet.com to prepare and submit your business filings. Contact us today to save you time—and money!

There’s no shame in being just a great entrepreneur or just a great player

I coach kids sports. I started when my oldest son was playing basketball at the YMCA. I didn’t know much about the game as a coach, but luckily I had another dad to help me and we figured it out. It was so new to me and I wanted to do a great job. They were only 6 years old, so we got by. As my son grew, more and more coaching opportunities arose. I always got involved, one way or another. Sometimes my company would sponsor, other times I would help coach. He loved basketball and I never really understood it enough to help him. So I did what I could. He became the top scorer for his club team and eventually a star in high school. I knew I wasn’t the right coach for him, so I let others do the job. It worked.

Later in life, I had another son. This time, it was very different. I coach baseball, soccer and I’m about to start coaching his flag football team. I think I can help him become a great soccer player, as that is my expertise and more importantly, my passion. But he’s a star in hockey, not my expertise, and he loves it more than any other sport. So I coach the sports I know and love, and let the dads that actually know the game handle hockey. Knowing your limitations in life, at least the ones that lead to your happiness, is important.

Coaching is a lot like being a business owner and an entrepreneur. I’ve learned many things at each, but the one thing I remember is a coach is respected most when they put as much into the game as the team. Same holds true in business. When the CEO gives it their all and works closely with their team, supporting them each step of the way, but also being the “boss” when necessary, teams have the best chance of success. Coach Lombardi said, “Leaders are made, they are not born…” and I believe this to be true. So if your desire exists, you can do anything. If your desire exists…

As a player, we learn the game. As an employee, we learn the business. Both grow. One might become coach. The other, the boss. Is it important to have played on the field before becoming a great coach? Can a business owner with no experience become a great CEO? Maybe, but that’s not the company I would want to work for. Remember what happened when Apple brought in the Pepsi guy. Then, when Jobs returned, the company exploded. Passion and on field experience returned.

Mark Zuckerberg and Bill Gates have been in the trenches, on the field and have proven that they are great entrepreneurs and amazing CEOs. Like a player on the field, these guys started at the bottom and worked their way up. Their passion and dedication to doing something transformative, not always about money, was their driving force. Not all entrepreneurs can do this and not all should.

To sum this all up, some of us are entrepreneurs and maybe become a great CEO some day. Some of us are players and perhaps we can become a great coach. Desire, passion and commitment is what leads to these stages. If you are a great player, but have no passion to be a coach, stay off the field after retirement. Same goes for you entrepreneurs and CEOs. In the end, you will win the race you choose to run and more will likely benefit. There’s no shame in being just a great entrepreneur or just a great player.

By | February 16th, 2017|Business Operations, Entrepreneuring, Other|0 Comments

You Can’t Put Your Heart Into Your Business If You Don’t Show Yourself Some Love, Too.

With Valentine’s Day finally here, February is perfect for reflecting on and celebrating how committed you’ve been to your entrepreneurial endeavors. It’s also an ideal time to assess how well you’ve been taking care of yourself.

As a small business owner, you likely work long hours, eat many meals on the fly (if at all!), regularly forfeit a good night’s sleep, and pass on countless invitations to enjoy activities outside of work. While those sacrifices may seem as though they’ll make you more productive and your business more successful, ultimately they can have the opposite effect.

I urge you to realize YOU are the most important asset your business has. And if you run yourself ragged, ignoring the needs of your mind and body, your business will suffer. Maybe not today or tomorrow, but eventually your entrepreneurial effectiveness will deteriorate due to your self-neglect.

As we celebrate the month of amore, how about showing yourself some love while you’re showing others affection?

To refresh your memory on how to do that, here are some ideas:

  • Get away.

Working non-stop can leave you frazzled and resentful. Even if for only a half-day, plan an escape from the grind. During your getaway, indulge in an activity you love whether it’s catching the latest blockbuster on the big screen or getting pampered at a spa.

  • Eat quality foods.

What you eat affects how you look and feel—which in turn impacts your self-confidence and energy level. I’m not saying you shouldn’t partake in some Valentine’s Day chocolates (I certainly intend to!), but don’t turn a holiday-inspired splurge into a chronic bad habit. Fuel your body and mind with healthful foods that offer the nutrition you need to perform at your peak.

  • Get moving.

Nothing can bust stress better than working out. Whether powerwalking on the treadmill, a Pilates session, or pumping iron is your thing, carve out time to treat your body right.

  • Take five.

If getting away from it all for an extended period isn’t entirely possible, at the very least squeeze in short breaks throughout the day. They will give you opportunities to refresh your mind, regain focus, and, if necessary, adjust your attitude.

  • Say No.

Many entrepreneurs have a difficult time with this—and it’s to their detriment. I know, because I’m one of them! When you have an innate desire to help others, saying “no” to taking on tasks and responsibilities doesn’t come naturally. But if you say “yes” to every request, you’ll shortchange your ability to fulfill your existing priorities. Avoid overextending yourself by mastering the art of saying “no.”

Don’t treat tending to your own physical and mental well-being an afterthought. Make a conscious effort to show yourself some love this month, and make it a priority every month and year going forward.

Should I Call My Employee an Associate or Representative?

Small business owners often struggle when coming up with a job title for their new employee or when listing an open position at their business. Although we’d all like to think that a job title doesn’t mean that much, it’s actually really important from both an employer and employee point of view.

What Job Titles Mean – and What They Can Do

According to Fast Company, 80% of companies they surveyed use job titles to demonstrate an employee’s position in the company hierarchy. And 92% use job titles to define an employee’s role within the company.

Perhaps even more importantly, job titles can be used as recruitment tools. Since small businesses often struggle to recruit and retain employees, using job titles to find and attract potential applicants is a great tactic. The same Fast Company survey found that only 37% of companies think of using job titles as a recruitment tool, so using this tactic can give small businesses a competitive edge.

Clearly, job titles are more important than one might think at first glance. If your business is growing to the point where titles are important, there are ways to structure your system for clarity, consistency, and communications that will help your business thrive.

Choosing the Best Job Titles for Employees

Job titles help maintain structure within an organization. They serve as a shorthand and communications tool to help employees understand where they fit into an organization and how others do, too. And because they don’t cost anything, they can be used as a recruitment and retention tool.

So how do you go about choosing the best job titles for your employees? Consider these seven points when discovering the best titles for your company.

  1. “C” titles stand at the top of the hierarchy: The “C-suite” is a designation for the highest level of the company and is a common way to show decision-making power and authority. Reserve “Chief” titles for those in charge of multiple people and/or departments and with corresponding levels of increasing responsibility.
  2. Give everyone who manages staff a similar title: A consistent naming structure where people who are responsible for the performance of others all share similar designations helps people within the company understand roles and responsibilities. Whether you call them Managers or Directors, anyone who directly manages the actions of others should share a common title.
  3. Associate or representative? It can be difficult to choose between these two titles. Usually “representatives” designates a slightly higher rank than an associate. People often view associates as a starting position. Representatives “represent” their companies and as such, usually reflect deeper company knowledge and a longer tenure with a company.
  4. Titles aren’t analogous among companies: Job titles vary considerably in the scope of work assigned to the title. Look beyond titles when hiring, and make sure you designate via a written job description exactly what each position and title is responsible for so that there is no confusion.
  5. Use titles as part of a candidate’s compensation package: Many good candidates will negotiate compensation and other perks of the job. One area where it’s easy for you to compromise without affecting salary and benefits is in their job title. Consider changing or adjusting job titles, if warranted, to attract and keep great candidates for a job.
  6. Avoid “title-less” organizations: There’s been a trend over the past few years of “flat” organizations. This means that the organization eschews job titles and prefers to view everyone as colleagues. That’s fine as far as it goes, but it can lead to confusion. Customers, clients, vendors and others are used to a system of titles and responsibilities and will still ask for the Director of IT, Operations, Marketing, and so on. Even if your work environment is highly collegial and collaborative, you still need job titles.
  7. Base titles on job descriptions: It’s helpful to begin with the job descriptions you’ve created for your company and decide on titles based on descriptions. At small businesses, employees often wear many hats, and the scope of their responsibilities is broader than at larger companies where people can specialize. Decide the appropriate category for a job title such as accounting, marketing, finance, operations, etc. Then think about the amount of responsibility someone has and what that might mean in terms of job title.

Love them or loathe them, job titles remain an important consideration for employees and employers alike. As you structure your small business, structure your title system for clarity, consistency, and accuracy. You’ll set up your organization for strong growth ahead.