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Another new year, another new law for business owners in Washington State to have to comply with. The new paid family and medical leave policy took effect on January 1st of this year. I'm going to break down the details as clearly as I can - but of course it's best to consult with a professional to help you find the best solution for your individual business.
Administered by the Washington Employment Security Department, this is a tax on gross wages that goes into a fund that will be used for benefit payments starting in 2020. The tax is 0.4% of an employees gross wages, capped at the same amount as the Social Security/Medicare cap ($132,900 for 2019). This tax is shared between the employee and the employer, with exceptions for businesses with less than 50 employees. However almost every Washington business has collecting and reporting responsibilities under the new law.
The cost can be shared between employee and employer, with the employer allowed to deduct up to 63.33% from employee pay, or the employer can elect to pay the entire premium themselves.
So if Jill Employee makes $2500 in a pay period, the total premium (tax) is $10. No more than $6.33 can be withheld from Jill's check, and the remaining $3.67 is the cost to the business; OR the business can elect to pay the entire $10 and not withhold anything from Jill.
Reporting and premium payments are due quarterly to the Washington Employment Security Department.
To qualify for benefit payments, the employee must work 820 hours in the qualifying period. The qualifying period is either the first four of the last five completed calendar quarters, or the last four completed calendar quarters. So if Jill Employee works at least 820 hours from April 2019 through March 2020, she is eligible for benefits from April through June 2020.
The benefits can only be used for certain leave, either family or medical. Family events are related to having or adopting a baby/child, caring for an ill family member, and certain military events. Medical events relate to the employee's own illness. Benefits range from a minimum of $100 to a maximum of $1000 per week and are based on a percentage the employee's gross wages. Again the process is similar to SUI - the employee applies through the Employment Security Department, who than make a decision and either begin benefit payments or deny. Appeals can be done if denied.
I'm going to throw in my two cents :) here - I don't think this is a bad thing. When I was going through chemo during my breast cancer treatments, I kept working and so did my husband because we had no other choice. I had deadlines and we had rent to pay. The guilt he felt walking out the door to go to work, leaving me alone at home the day after my chemo infusions can't be described. MAN, this program would have been nice! Until you go through something like that you might not understand how worth it the small cost programs like this can be.
As with any state program relating to payroll tax compliance and reporting, there's a lot to know. I strongly advise having a conversation with your accountant to discuss your particular situation and to formulate a plan to stay compliant!
Happy money making, and keep living a little too!
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Managing Time When You’re Self-Employed
Managing your time when you’re self-employed can be a challenge. Work-life balance can seem like a pipe dream when clients are constantly emailing and your to-do list never ends. It’s important to remember why you became a business owner in the first place, you wanted to manage your own schedule and be able to be where you wanted when you wanted, remember? Okay, easier said than done. But not impossible. Entrepreneurs like the word impossible, it’s just another challenge to conquer!
Imagine you have a rockstar employee. Like the person you know you couldn’t be successful without. Maybe you already have one... If so, congrats! They are dedicated to you and your business so want to properly compensate them for all they give to you. What’s the first thing you do? Do you make sure they have work-life balance, that you leave them alone once they clock out for the weekend so they can come back refreshed and ready to go for you Monday morning? If not, you should reevaluate how you do business because your rockstar employee is probably looking for another job... and most likely on your time.
The second thing you do is make sure you pay them well. The reason this is the second thing is that studies have shown over and over again that a happy employee is willing to take a little less money to enjoy going to work every day. But it’s obvious that the pay is not what’s most important... it’s more about making the employee happy so that they can do their best work for you.
Guess what? Even if you already have your rockstar on staff, your biggest star is YOU. Without you, where would your business be? Therefore you have to treat yourself the same as you treat your employee... starting with work-life balance. You need to show up ready to rock when that time comes. So rule number one is the first and most important step in managing your time...
Turn off your work phone and email after hours.
I use my personal cellphone for work and found this to be a challenge at first. I found a great solution by getting an online office phone number and only allowing it to forward during my set business hours. After hours callers get an after hours voicemail. It only costs me around $12 per month and I was able to remove my cellphone from all online advertising and my website, a huge bonus! Other clients already have my cell number and used to contact me whenever they had that “oh I forgot to ask Jen something“ moment. I had conversations with these clients, explaining that I won’t respond until my next business day, and they all understood! Same rules apply to email. If you have a hard time keeping up by Monday morning, go through them all at a set time on Monday. (I address email challenges specifically later in this post.)
Schedule your days, in detail.
Again, a good exercise here is to remember you are your best employee. What time do you need you to be at work by? How long do you need you to be there? When will you take breaks/lunch? Then... stick to it. Arrive on time. Once you get there, prepare your daily list, put out any fires, and then knock out your hardest task. Take your scheduled breaks, and stay focused in between them. Around 15 minutes before you’re off for the day, write down anything you need to address the next day and physically go through a process of closing down for the day. Leave on time.
If you work from home, this applies to you just the same. Get dressed as if you’re physically going to work and have a dedicated space in your home that you do all your work from. Schedule breaks and walk the dog or make some lunch, but NO HOUSEWORK! (What would you want your employee doing on your time? Probably not your laundry.) Have a desk lamp that only goes on while you’re working, and close your computer down and turn the lamp off when you “close”. You have to convince your subconscious that you’re done with work for the day.
Scheduling your days also includes penciling in time for the kids, your spouse or significant other, and yourself. Often we are at the mercy of our clients, but if you want to volunteer to chaperone a field trip or maybe even treat yourself a massage, schedule it in and block that time out! If you need to be home by a certain time, build your work schedule around that. It’s okay to leave early or arrive late occasionally if you plan ahead. I use a cool feature from Square that links to my Google calendar and my website where clients can see my availability and book me directly from the website. Google calendar in particular has been a great tool for my business.
How to deal with constantly incoming emails.
Like cell phones, email has made our society a 24/7 communication world. Entrepreneurs are notorious for being night owls, working at two and three in the morning on a Tuesday. I have gotten more than my share of prospect emails at all hours of the day. I also have multiple emails thanks to upgrades over the years. I came across my personal solution by accident when I hired my own rockstar assistant Kristen. I set her up with an admin email account. When I thought of random tasks that I needed her to do I just sent Kristen an email which she would check when she got to the office.
Recently I sent Kristen to go work on site at one of our clients; However, I continued sending all my tasks to the admin email, essentially creating my very own morning to do list. Anytime I get an email when I’m not at work that I need to follow up on, I forward it to the admin email. When I have an “OMG I need to do that” moment, I write a quick email to the admin email. I then check the admin email and write down everything on my to-do list as part of my daily routine, and respond to new emails as they come in during working hours. If the new email involve a task I add it to my to-do list and write a short reply with a follow up when the task is completed.
If you want to go another step, you can add an auto-responder to reply to client emails during non business hours so you don’t feel like you’re neglecting them!
Build time into your work day for non-operational tasks.
Most of us are do it all ourselves people, and that’s okay when you’re small. If you can’t afford to outsource your marketing and/or accounting then undoubtably some of these tasks fall on you as well. Problems arise when you’re spending your off hours working on these tasks, as they can be physically and emotionally draining. As I’ve mentioned in previous blog posts, you probably aren’t in business to be an accountant or a marketing guru, so these are not most likely your strong points. But if you are in the position of having to handle all three corners of your triangle on your own, it’s especially important to build these tasks into your day.
The first step is to find out how much time you actually spend on these tasks. If it is more than a few hours a week, you may want to consider hiring a marketing or accounting firm within your budget. Time is money, and the more time you are spending not working on your business operations the less money you are making. If you do find that you can complete your non-operational tasks in a reasonable amount of time on your own, schedule them into your working day. If you need to start the day at your computer for one hour a day, do it, knock out the tasks, and move on.
A final thought regarding time management in general...
Someone told me once that I cannot make time, I have to take it. I think of this often when I start feeling like there’s not enough time in the day. There’s always enough time if you take time for what’s important to you. If you’re scrambling around feeling like you’re always working and never resting, it’s quite possible that you’re just aren’t very good at managing your time. When you are working, stay focused. We have to stay disciplined during our working time so we can enjoy our off hours. Nobody I’ve ever met became a business owner so they could work 24/7. We all do what we do to try and create a life for ourselves, and our work is what we do it’s not who we are. As a recent cancer survivor I can say from experience I wasn’t thinking about my clients when I got the news that changed my life. Today I work my butt off for my clients partially so they can create their own lives, but mostly so I can create my own.
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The Business Management Triangle
When it comes to running a successful business, there's really only three main elements that need to be focused on - sales and marketing, finances/accounting, and operations - i.e. your actual product or service delivery. I refer to these as the cornerstones of business, or "corners of the triangle".
Sounds simple, right? Unfortunately the hard reality is that most self-employed people are focused on their service/product corner - and they own this corner, hardcore. This might sound like you. You are excellent at what you actually do, be it doing hair or teaching dance or building houses. Money is coming into the bank account on a steady basis and more customers have been calling requesting your services. I know this from firsthand experience.
A little background on myself. I was working up the retail management ladder when I became a victim of a round of corporate layoffs and suddenly found myself an unemployed single mom. I took this as a sign and ended up in a small business management program at my local junior college, learning under adjunct professors that ran actual businesses. All I wanted was a 9 to 5 job but I came out with an entrepreneurial mindset that set in for life. After a relocation back to my hometown in the Seattle area, I started freelance bookkeeping for first one, then two, then three local business owners. I basically fell into owning my business almost by accident while looking for a "real job".
Fortunately for myself, that one year of college was all-encompassing and I was taught all three corners of the triangle, and being a natural numbers person gives me the rare gift of being able to excel at TWO corners of my triangle. However; nobody can excel at all three corners. This is where the biggest and hardest jump into being a true business owner happens, when you realize this and you embrace the famously dirty word - OUTSOURCE.
Shark Tank's Daymond John had this to say about hiring an accountant:
That old saying rings true when it comes to being a small business owner - you don't know what you don't know. This applies to every corner of the triangle, but again, we are in business because we are good at what we do - the operations corner. So typically we need to outsource both the accounting and the marketing corners in order to be successful.
Is this easy? No! Most of us are type-A personalities that would rather do it ourselves than risk someone not doing something to our standards. Here's where we must stop and be honest with ourselves and ask the hard questions - are we really better at accounting or marketing than a professional? What would it look like to hand those corners off to a trusted professional and truly be able to focus on doing what you do?
Owning a business means sometimes making hard choices. Just relax, do some research and make those choices are educated ones and you will be on the path to success!