Contractor - Business
Often times we find the "fieldwork" easy and the "office work" harder or at least annoying.
We hope to ease the burden by informing our users of what we have found to be good practices through our experience as well as other professionals.
Running a business can be tough, running a business with employees can be tougher. Interviews, payroll taxes, workers compensation, benefits, and relying on others for work to be completed can be stressful, especially with the wrong people in your staff.
That's why it's crucial to spend the extra time needed to FIND the right employees. That's right, find. It's a rare occurrence that an all-star employee walks in and applies, you will have to find them.
Some might say it's a never-ending process, and we are likely to agree. Even if you are fully staffed, making connections with potential employees is a good idea. You never know when one of your employees may end up leaving and you need a replacement.
Some common ways one might find employees :
Job Posting Services- Indeed, Monster, Zip Recruiter, etc.
Banner or Posters- print postings
Friends & Family- have an exit plan
Social Media posts
Interviewing & Selection
Interviewing potential employees can be another tricky task to overcome in your business.
How do I know if they are a good fit? Are they suited for the job or blowing smoke? And many more questions are going to run through your head. Which you'll probably find (especially the longer you are in business) you will hire the wrong person, and probably more than once. Each time you become more refined in your selection process and people reading skills.
Asking situational questions can help identify characteristics you're looking for in potential candidates. Some obvious ones that go a long way in any business are
Pride in their work/craft
There are plenty more but these basic ones are a must for any decent employee.
Payroll Taxes & Workers Compensation
Along with employees come payroll taxes and workers compensation. Payroll taxes refer to Federal Income, Social Security, Medicare, and Federal Unemployment.
Workers compensation or workers comp is insurance to help cover lost wages or medical expenses in the event an employee is hurt during work. Most states require workers comp but laws vary from state to state. Payroll taxes however are absolutely required and are a common area for businesses to go wrong.
FICA tax: includes Social Security and Medicare. The employer is responsible for 6.2% for Social Security and 1.45%. The same amounts are to be withheld from the employee's pay and paid at appropriate times. It is highly recommended to get an accountant to keep you on track. This is something you don't want to get behind on.
FUTA Tax: Includes unemployment insurance which totals 6% but most states have a credit for 5.4% meaning most pay around 0.6%
Payroll taxes add at least 8% to base labor pay, while state taxes can add few more percentage points. Workers comp can add 7-15% on top of that- workers comp rates vary depending on the industry.
For example rough calculations
Employee 1: pay rate- $15 per hour
Payroll Tax- $1.20
Workers Comp- $1.50
Total 17.70 per hr.
As the employer, you'll be responsible for withholding federal income tax from your employees pay as well as the other payroll taxes.
Equipment, Tools, Storage, etc.
Deciding on what equipment to get or tools for the jobs or trailers to get your equipment there can be tough. Sometimes the decisions are no-brainers and other times, not so much. Should you finance? Save up and pay cash? Rent or Lease? Not sure if its worth it? We'll try to help you answer these questions and more.
Finance, Rent, or Lease
Often times when starting a business one may not have a lot of financial support or money to throw around.
You have a few options, you can:
Get a personal or business loan- business loans typically require 2 years of active business
Finance equipment or tools
Rent- rental stores have just about everything you need and oftentimes you add this cost to the job cost
Lease- or long term renting
Buy used and repair
Essentially long-term renting, leasing has similar benefits to renting along with different downsides.
Typically easier to get approved
Better rates than financing
Write off payments
Option to buy at the end
Large equipment or vehicle companies offer in-house leasing and financing which can make it easier to get approved at those places. The downsides of leasing are:
Contract- with penalties if you break the lease early
Not yours at the end of the term
Financing equipment is good for keeping your cash reserve up and making the investment easier to manage across an extended period of time. It can be tough to get approved for financing. Some things taken into consideration are:
Business Credit History
length (time) and credit to debt ratio of each
When you finance you can write off the purchase amount or depreciate it over a certain number of years. Instead of paying money towards your taxes, it could go towards equipment, vehicles, or tools needed for the business. Owning/financing has benefits such as:
Write off purchases
Builds business credit
An asset of the company- at the end of the loan term
Financing can be riskier- should you decide you don't want it or it breaks your left to either sell it or repair it. Fortunately, a lot of equipment and tools purchased new come with warranties which can minimize some of your risks. A less risky option would be renting.
Renting equipment is a less risky approach to being able to use equipment or tools needed for your projects. Major Benefits would be
Daily, Weekly, and Monthly Rates
Peace of mind- no fixing, can be swapped out that day if faulty
Lots of tools at your disposal
Some not-so-good points about renting can depend on the length of rental times- days or weeks or months- the longer the rental period the less expensive per day it is.
Equipment can be faulty
The long term is more expensive than financing
Workaround time constraints- if you only figured one day and it takes two, you are stuck with eating the cost or an awkward conversation to ask for more money from your customer.
Storing your vehicles, equipment, tools and miscellaneous materials can vastly impact the profitability of your business. Being organized or as much as you possibly can improve your profits. Just think about it being able to find the stuff you need, load your stuff easily and unload them when your done will save you time alone.
Common storages for contractors might be:
Shop or Garage bay
Shed or enclosure
Enclosed trailers or vehicles
Front yard :)
Where ever one chooses to store their tools and equipment, having it organized is going to save you time, money, and materials.
Labeling storage areas in a shop, garage, or shed and discussing organization regularly with your employees & shop staff are two simple changes that make it very easy for new and old employees to follow.
Enclosed trailers are nice because you can essentially haul around a mobile shop with you. Keep your regular tools, materials, & supplies in there. Less likely to forget things and the trailer could help bring in more business by getting it wrapped or labeled with your name and logo. You bring it with you and park it in neighborhoods and businesses. why not have a billboard basically advertising your business where ever you are?
Sometimes you just have to store your stuff where you can. Sometimes that's your front lawn or your parents if they're willing. Starting out you have to do what you can and sometimes that means storing things in unconventional ways and places.