Small-Business Answer Book

Q: What kinds of benefits should I offer my employees? My business is growing, but I'm not sure how much I can afford to offer them.
A: A lot of business experts and entrepreneurs ascribe to the idea that your employees should be who you look out for first, followed by your customers. It's not just Pollyanna-type thinking. If your employees are happy, they're going to look out for your customers. If they're not happy to work for you, then you're steering a ship with sailors who really couldn't care less if the business runs aground.

So the answer is: Offer as many benefits as you can without seriously hurting the health of your business.

The types of benefits you have to offer, according to the law, probably won't be a surprise, but nevertheless, here they are: You need to allow your employees time off to vote, serve on a jury and perform military service. You must comply with all workers' compensation requirements, withhold FICA taxes and pay your own portion of FICA taxes, giving employees retirement and disability benefits. You have to pay state and federal unemployment taxes so your unemployed workers can receive benefits. If your state requires it, you also have to contribute to state short-term disability programs, and if you have 50 or more employees, you must comply with the Federal Family and Medical Leave Act.

You don't have to offer a 401(k) plan or a life insurance plan. Unless you're in Hawaii, you don't have to offer a health plan, either. You don't even need to give employees paid vacation, holidays or sick leave. Most employers, however, provide (at minimum) paid holidays for New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. And if you don't offer some type of benefit to your employees, even you will have to wonder: Who will want to work for me, and do I really want that type of person working for me?

Q:I'm establishing a partnership of sorts with a vendor I've been working with. How do I write the contracts?
A: There are numerous books and software that can help you write a business contract, including Ultimate Book on Forming Corporations, LLCs, Sole Proprietorships and Partnerships by Michael Spadaccini and Business Contracts Kit for Dummies by Richard D. Harroch . A lawyer doesn't need to be brought in, but if what's at stake is complex and worth millions of dollars, then you'd be foolish not to have an attorney look over your contract.

In your contract, some items you should cover are the obligations that you and the other party are expected to fulfill. If something goes wrong on your end, you should limit your liabilities--and likewise, the other party will expect the same gesture in return. You should set a time frame under which the terms of the contract will be met, as well as how each party will pay or be paid. And you'll want to have some language that keeps your contract flexible. People are human--they finish projects a day or two late, or they pay a week or two later than they intended. That may be acceptable to you if the other party is in contact with you and you know what's going on. Contracts aren't designed to hurt anyone; they're designed to keep businesses from being hurt if another company isn't keeping up its end of the bargain.

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the November 2006 print edition of Entrepreneur with the headline: Small-Business Answer Book.

Loading the player ...

Shark Tank's Daymond John on Lessons From His Worst Mistakes

Ads by Google

Share Your Thoughts

Most Shared Stories

1
Want Media Attention? Target Trades First
2
50 Favorite Online-Marketing Influencers of 2014
3
10 Surprising Things You Should Know About Social Media (Infographic)
4
It Takes 3 to Run a Business
5
What I Learned From Being a Broke, Unemployed Graduate