As a small business owner, I understand how ramping up can be extremely rewarding and simultaneously challenging. This experience is a fast track to learning about business and yourself. How do you discover new skill sets you didn’t know you needed? What parts of the business do you want to be involved in? What are the things you’d rather outsource to an expert in that space?
At Montani, we categorize People Operations “to dos” for the small business into three categories that all small business owners should be aware of and ready to tackle. Either by themselves or with a trusted consultant.
- Red is the “Get this done or you’re going to be in trouble with a capital T” type stuff. These are the things you must do or not do to be compliant with federal, state, and municipal laws.
- Orange – the “You really need to prioritize this before it turns into a red flag or stunts your company’s growth” issues.
- Yellow – the “Hey, want to make your life easier and your business better? Get this on your radar for the next couple of quarters” items and projects.
As recently reported, North Carolina and the Cape Fear Region, in particular, are experiencing explosive growth of new businesses. So, what should new business owners prioritize while getting their operations up and running?
The following list is a brief but essential list of items that will help you avoid some of those significant red flags – things every small business owner needs to research further to prevent any bad PR, sleepless nights, or – for real – Trouble.
- Worker’s Compensation. If you have even one employee, we advise that you carry Worker’s Compensation insurance. If your employees are based in North Carolina, and you have three or more, maintaining such a policy is a legal requirement.
- Unemployment Insurance. You must register for Unemployment Insurance with each state where you have employees, even if you only have one employee. Unemployment Insurance payments should come out of each employee’s paycheck. Employer contributions will be adjusted each quarter based on the employees currently employed.
- General Liability Insurance. This insurance protects you from claims from your clients. It doesn’t have to be too expensive, and the coverage type is based heavily on your industry. You do not want to do business without it.
- Exempt / Non-exempt Classifications. It is of the utmost importance that your employees are correctly classified as exempt (are not eligible to earn overtime) or non-exempt (are eligible to earn overtime) according to Department of Labor FLSA guidelines. There is a quick but essential “test” you need to conduct internally on each job you have to determine their classification. Get these wrong and you could be paying back wages and looking at hefty fines. Keep in mind that exempt / non-exempt definitions may also vary by state. So if you have an employee in another location, ensure that the exempt / non-exempt classification tests you’re running are state-specific.
- Written Policies. You do not have to get fancy with your written policies, especially if you’re a small start-up company. However, we can not stress how important it is to at least write your policies down and circulate them to your employees. One policy to make sure is clear to all is your Paid Time Off Policy. (Do you pay time off out when someone leaves the company? Does it roll over year to year? How is it accrued? Do you have a separate sick policy?). The answers will depend on federal, state, and local law. You also want to be sure you’re writing down and communicating your pay policies. How are people paid? What is the definition of your work week for the purposes of calculating overtime? (Monday – Sunday is standard, but it can differ!)
- Basic Labor Laws (for your size company). All business owners should be well versed in basic labor laws, including what you can and can’t ask during an interview, what to do if an employee is injured on the job, how to lawfully “break up” with an employee, and payroll law.
We know this list can be overwhelming to the business owner working around the clock as their own Customer Service, Marketing, Business Development, and so-much-more team. That’s where Montani Consulting’s team of experts steps in and takes the burden off the business owner. Leaning on experts that have your back helps you focus on what you do best – and sleep better at night knowing capital T trouble will not come knocking at your door.
Written by Katherine Daniel and spotlighted on the Wilmington Business Insights.