New Overtime Rules- Stay Within Budget-Know Your Options

Did you know that rules for paying overtime have changed?

They changed on May 1st, 2016.

“The U.S. Department of Labor is expected to release a new overtime rule in May that could have a big impact on small business payrolls.” “The current weekly minimum for salaried, overtime-exempt employees is $455. That will increase to $921 a week for most full-time salaried workers when the rule changes this spring.” “Small employers may misclassify employees as exempt just because they receive a salary and perform non-manual work.´ read the full article at http://www.manta.com/resources/small-business-trends/small-biz-owners-no...

Remember you don’t have to pay for full time employees. You have options.

Stay within Budget

1099 Contractors – you may choose to use 1099 Independent Contractors. There are rules to follow if you use this classification for your help. They are not employees so technically you cannot dictate their schedule. They work when they want to and you contract with them for work when you have work to do. I've seen this used in the construction industry, real estate industry, and by many small business owners who do not need full-time employees. I’ve also seen this used by small business owners who did not want to pay the appropriate taxes or benefits as would be required by having employees. They prayed they didn’t get flagged for an audit and were prepared to play dumb if caught. I don’t condone this practice. At the end of the year you will need to issue the worker a 1099 if you pay them over a certain amount if you are following the rules. Consult a tax preparer or enrolled agent for guidance.

Free Lancers – there are several freelance websites where professional list their skills. You post the job and they bid on the job. The freelancer is typically charged a fee to bid on the job and/or when he or she wins the job a percentage of his earnings is paid to the agency. A freelancer is responsible for paying his or her own taxes. You do not need to issue a 1099 to a freelancer. Consult a tax preparer or enrolled agent for guidance.

Interns – summer interns or interns who work during your busy season can be a great boost to your business productivity. Most states require you to pay your interns at least minimum wage or a fair wage for the work performed.

Regardless of who is performing the work you need to stay within a budget. This can be accomplished by asking the employees how long they estimate a project will take to complete. This should be asked prior to preparing a proposal. When assigning work you need to let your employee know how long you expect him or her to spend on the task. If the task is going to take longer than anticipated they should let you know that it will take longer, how much longer and why. This allows you to pull the plug if going over budget or devise a new strategy.

Employees don't often recognize the costs associated with making errors. Whether it is wasting copy paper and printer ink, boards, and other construction materials, or baking products they don't see how this is costing the employer. They also fail to recognize they got paid to do the work wrong and then got paid to do it over. Training and supervising your employees can reduce the cost of mistakes. Mistakes can easily run up overtime costs.

Now is the time to take a look at how you pay your employees or workers. Make an appointment with your accountant or enrolled agent to explore what is the best option for you and your business. You won’t grow your business unless you focus on the net and stay abreast in changes to the rules, regulations, and laws.