Feature Spotlight: Davidson Wicker, CEO of Ravetree

As those of you who have known us over the last few years are aware, The Bookkeeper grew quickly. When new employees were brought on board, it became obvious that our old, piecemeal system of digital file storage in one location, a time tracking app in another, and endless emails detailing project updates, would not be sufficient as we scaled.

We were fortunate to come across Ravetree in its early days, and to have the opportunity to adopt it to our business. It has been a true "game-changer" for us, and has really allowed us to stay on top of all of our client and operational needs, even during rapid expansion.

I got to ask Ravetree CEO Davidson Wicker a few questions about himself, his company, and their product.

Ravetree Logo

Courtney: I saw that your educational background is in Applied Physics. How did you transition that into a career in software development?

Davidson: I taught physics for a couple of years as I was building up my coding skills. We did some scientific programming in grad school, so that's where I started to get a taste of how fun programming could be.


Courtney: Was there a lightning strike, "Eureka!" moment that led to the idea behind Ravetree?
Davidson: I had the idea for Ravetree for a long time. It kind of started with the idea of a cloud-based "operating system" for businesses.
Courtney: How did the name "Ravetree" come about?
Davidson: Originally, Ravetree was going to have review capabilities, where users could "rant & rave" about things. And a tree is a kind of data structure. The two words fit together nicely, and the domain name was available, so the name stuck.
 Ravetree Screenshot
Courtney: In your Medium article, 3 Tools Every Agency Needs, you listed Project Management Software, Capacity Planning Software, and Time Tracking Software. I'm familiar with using Ravetree for project management and time tracking, but is there a way to use it for capacity planning as well?
Davidson: Ravetree has really powerful capabilities in terms of capacity planning. Users can view a list of all of their employees and see how many hours of capacity they have remaining. This makes it easy to see when you can take on more work, and if your employees are over or under utilized. We provide a lot of customization around this feature. For example, you can specify what a work week is for each employee, and what a work day is. Some employees may not work a standard Monday through Friday work week, and may be part time. All of that can be set up in Ravetree.
Courtney: As we've discussed, my only real "complaint" with Ravetree has been that it's so all-encompassing that I often feel like I'm not utilizing it fully or that there are things I'm missing. What is the best way for a new user to learn Ravetree?
Davidson: Admittedly, we need to get better at providing online training materials, but we do have some tutorial videos. For most of our clients, we get on a few WebEx meetings to give them a walk through. This seems to work well, but definitely won't scale as we continue to grow.
 Ravetree Screenshot
Courtney: In their feature on Ravetree, Forbes wrote that you have created a "software to help businesses transition their entire operations from waterfall to agile." That is a big task. How can businesses use this tool to transform their operational mindset to "agile" thinking and work behaviors?
Davidson: We're not in the business of training people on how to be Agile, or convincing them that they should embrace Agile. Fortunately for us, a lot of companies have already embraced Agile, as they recognize the numerous benefits of taking an Agile approach. Ironically, several of our customer are not Agile at all. What this tells us is that Ravetree isn't overly opinionated, and will allow non-Agile companies to derive value from our platform.
Courtney: Is there anything upcoming in Ravetree that you can share with the public?
Davidson: We are constantly getting user feedback and improving our platform. Some of the newest features we've added are: Custom Dashboards, Client portals, File approval workflows, and digital asset management. All of these updates came from customer feedback. Once thing that I find humor in is that a lot of people in the start up community would tell us "you're boiling the ocean", or "stop adding new features". We heard this a lot when we didn't have any customers. But, what we found out was that customers wanted an all-in-one full-featured solution, so we kept building out our platform. Then, all of a sudden we started landing customers, then more customers. Our early prospects kept saying, "you're almost there, but we want to see more." This is 100% the opposite of all the advice I was receiving.
 Ravetree Login
Ravetree has become an essential part of our day-to-day operations. If you'd like to try Ravetree for your business, visit www.ravetree.com/request-a-demo and request a free demo.

Local Entrepreneur Spotlight: An Interview with Dave Baldwin of Baldwin Management Consultants

Baldwin Management ConsultantsCourtney recently sat down with Dave Baldwin, of Baldwin Management Consultants, in Raleigh. From his website: "Dave Baldwin is an experienced marketer and self-taught entrepreneur who first went into business for himself in 2007 after ten years in the technical field, spurred on by a desire to help introverted entrepreneurs succeed in business. Dave has worked with clients in a variety of different industries."


Courtney: I can't start without asking about "Let's Not Have Coffee". Why do you think that piece has become so popular so quickly?


Dave: From what people have told me, it struck a nerve with a number of folks. Anyone who has ever sat down and had coffee with someone and felt like they wasted time can understand that. At some time or another, we've all been there: sitting in a meeting and wondering, "Why am I here?" Also, some folks who are new to networking groups tend to copy what everyone else is doing. I often run into people who say they want to "have coffee" without giving any thought to what they want to talk about, what the purpose of the meeting is, or the expected outcome or next steps. Time is not free, but people act as if they had endless amounts of it to spend. Entrepreneurs can network their way to the poor house if they're not careful about this.


Courtney: I agree completely.  Unproductive meetings are an incredible time-suck for business owners. Moving on to what you do in your business...The word "consultant" can mean a lot of things nowadays. Can you describe what you do in 10 words or less?


Dave: I help people start businesses and grow businesses.


Courtney: Okay, and if you're allowed more than ten words?


Dave: My vision is making entrepreneurship accessible to people who classically have not had access to it for a variety of reasons. For instance, women have told me they feel they are not taken seriously by men in networking groups. Ethnic minorities have expressed frustration about how they are treated. I personally found that being an introvert worked against me back in 2007, because if you aren't talking a lot and shaking every hand in the room, people will perceive that as a lack of self-confidence.


Courtney: Business ethics and social consciousness come up a lot in your talks and writings. Is there any particular life experience that drives that?


Dave: If there's any experience that really ties this all together, it was the experience of going through my early life feeling like a second-class citizen. Starting from going to school as a child, through my adult career life, feeling like I was passed over for promotions because I didn't know how to ask for what I wanted. I didn't know how to use effective body language, how to project the right tone of voice, or how to communicate effectively. I found that people who knew how to say the right thing in the right way to the right person at the right time were more likely to move ahead, even if they were the least qualified for the actual job. I wanted to create tools to help the quiet people with rich undiscovered talent, which is what led me down this path.


Courtney: Do your customers face those same "pain points"?


Dave: There are two types of businesses I like to work with.


I love to work with established businesses in growth mode with a small handful of employees, when they're expanding the size of their teams. Any business that's hiring has the same pain points. They have trouble retaining employees because there's not an effective system in place. They don't delegate effectively and they rely on verbal instructions instead of writing. The business owner forgets what they told an employee to do, or the employee doesn't understand what they are supposed to do. Business owners tend to overestimate their employees' ability to self-manage. Sometimes it may be a matter of weeks or months until the disconnect is identified and the business owner realizes that things are not getting done. By that point, the situation is usually well out of hand.


In a start-up business, the biggest problem I see is confusion resulting from not knowing how to start or run a business. What tends to happen (especially with someone just leaving a 9-5), they are used to having the structure laid out for them and being told what to do each day. The tendency is to lose focus and say yes to too many things instead of focusing on revenue-generating activies. Startup entrepreneurs often don't know how to build a foundation for success, and so they set themselves up for failure. It is highly rewarding to help people put the right systems in place from the outset and avoid the hard and expensive path filled with unnecessary struggles.


What can affect both groups equally is health problems. When someone gets sick, they realize how much of the business depends solely on the efforts of one person. Many businesses go out of business or take an unrecoverable hit when the owner is knocked out of commission. Many business owners can't take a real vacation, because they have to stay glued to their phones and laptops the whole time. A good system is one that allows the owner to unplug without any disruption of revenue streams. A system also makes succession planning and exit planning much more manageable.


Courtney: What can you, as a consultant, offer that other consultants can't?


Dave: I think the most unique thing I bring to the table is my mix of professional skills. I spent my first ten years as an electronics technician and computer programmer, and my next ten years in the consulting arena, and the lion's share of my work was initially in marketing copywriting. This gives me a unique perspective for pulling apart business problems and developing solutions that other people might not think of.


When you write computer code, it forces your brain to rewire itself and think in terms of one simple instruction at a time. Computers are dumb machines. They will do exactly what you tell them to do, for better or for worse. As a programmer, I had to learn to break problems down into small pieces and write out the solutions as algorithms, one simple instruction at a time. I use that same basic approach when setting up processes and procedures for small businesses. I develop an algorithm for solving each business problem.


My other skill set is marketing copywriting, which is mostly a matter of speaking the customer's language. That's not easy, but I've developed some simple methods for uncovering what's important to customers. It starts with asking the right questions, and I've been told I have a gift for that. Being a consultant is not about telling someone what to do. It's about helping a client create a solution that they feel good about. Most people already have most of the knowledge they need to solve their own problems, but they just haven't looked at their situation from the right vantage point. A good marketing message should help them see things in a new way.


In addition to being an established local entrepreneur, Dave is one of the breakout speakers at the upcoming Triangle Small Business Summit, sponsored by Affordable Promos and The Bookkeeper. Dave will be speaking on Using Technology and Automation to Grow Your Small Business.

Guest Post: "What Does Marketing Strategy Have to do with Bookkeeping?" by Haley Lynn Gray

I have run across more than a few small business owners - some doing okay for themselves, others not - who take the shotgun approach when it comes to marketing their business. The first key is when they tell me that they have “The Facebook”, and they’re doing “ads”, and they are doing a bit of this and a bit of that.

I know that they are likely trying everything they come across, with little regard for the strategy and overall marketing plan. It’s not that I don’t believe in being spontaneous, or even getting creative with part of your marketing. But the reality is that nearly every piece of your marketing should come together; it should all work together, sort of like an orchestra.

6263-illustration-of-a-megaphone-and-announcement-text-pvIf you start running Facebook ads without a solid presence and good organic reach, the cost of your ads is going to be significantly higher, and the cost per client for acquisition is going to be dramatically higher. In some cases, I’ve seen the cost of a lead being 5-10 times the cost that it would be with a good organic strategy.

The same concept applies to Google Adwords. The lower your SEO ranking, and the less high quality content you have on your website, the higher your cost will be to advertise with Google Adwords.

I see people who toss up a landing page using Web.com, YP.com or others. Unfortunately, if you take this approach, you might be building links to a website that isn’t your own. It won’t help you get that organic reach for your website and you’re losing control of the process. You’ll also end up spending more money for fewer leads, and thus end up with fewer results.

It’s important to have a strategy with all the pieces coming together. Sometimes the tweaks can be tiny, like adding a clear call to action on every blog post, or making a point of collecting email addresses so that you can stay in touch with people via email campaigns. It takes strategy and planning to collect those email addresses and to execute a well thought-out marketing campaign. By thinking through how all of the pieces should work, and with help from a strategist if you need one, you can end up saving a lot of money.

Every business needs a strategy and a budget. So does a marketing plan. Everything should be measured, and data should be collected on how your system is performing so that it can be tweaked and improved. Do these steps for every aspect of your business and you will see savings and a healthier bottom line.

Haley Lynn Gray is CEO and Founder of Leadership Girl, a digital marketing agency, where she uses her skills as a sales and marketing strategist and social media expert to help small business owners grow their business.She combines her years of real-life and business experiences with her MBA from Duke’s Fuqua School of Business to benefit her clients. Haley works with them closely to set goals and put processes in place so they can achieve and exceed their goals.

Haley, along with her team, can also help with social media management, website updates, drip campaign management, and all aspects of business marketing.

In addition to running her business, Haley is a mom of four, a Girl Scout Leader and an author of two best-selling books. Haley is truly passionate about helping entrepreneurs achieve their potential, and empowers them to overcome obstacles in entrepreneurial ventures. www.leadershipgirl.com


Raising a Business from a Puppy

This past weekend, after months of my boys wearing me down, we went to the animal shelter and adopted a puppy. And not just any puppy, but a hound/terrier mix that is estimated to reach 65 pounds at adulthood. After a lifetime of owning tiny dogs (mostly Pomeranians), I knew Charlie would be a new adventure.

As we have been adapting to a puppy-friendly house, I have been thinking about how similar raising a puppy is to growing a business. There are similar challenges, but similar strategies to face them, as well.


HavCharlie2e set rules.

The first thing I did was to set ground rules early on, before the puppy had even set foot in the house. I reminded my sons that he was never to be fed people food, not allowed on the furniture, and that allowing him to roughhouse and "play-bite" was a bad idea.

In a business, it's also easier to practice good habits early on, and to avoid the bad ones. Getting into the practice of having separation of duties and staying on top of bookkeeping is easier when your business is small, and sets you up for success as your company grows.


Protect your assets.

Charlie has a crate he sleeps in and to which he is confined whenever the family isn't home. We have also stressed to the boys the importance of keeping toys and other valuables off the floor and in their rooms, where they are safe from puppy teeth. (I learned the lesson myself, when a laptop cord I'd left next to my desk was chewed through the first day.)

A new business, if not well-protected, can be even more destructive for an owner. Not having the proper insurance or levels of separation can not only be disastrous for the business, but can bankrupt you personally. And since none of those protections can be applied retroactively, it is best to have them early on, before you need them.


Get help from the experts. puppy

I know a lot about animals, but I also know I can't be an expert in every area. We have a veterinarian to help take care of our pets' health. I may be comfortable giving the dog a bath, but I still prefer to take him to a professional groomer for things like a nail trim. And though we are reinforcing training at home, we already have Charlie signed up for puppy training classes. I don't have the time to provide absolutely everything Charlie could need, and there are experts who can offer those services much more efficiently than I ever could.

Businesses also need a lot of help, and it doesn't make sense for the owners to handle everything. Even if you're planning on doing your books yourself, get an expert to help set-up and train your and your staff. If you wait until your business is large to come up with a bookkeeping solution, you'll have an unmanageable beast on your hands.

Leadership Girl

Guest Post: "The Value of Referral Sources for Your Business" by Haley Lynn Gray

The lifeblood of many businesses for getting clients is referrals. But you have to find the right places to get referrals, otherwise known as referral sources. The trick is to find people who are in complementary fields. Thus, if you’re a realtor, you need to have a group of house cleaners, painters, handymen, and other trades that you work with. If you are a business coach, you’ll also want to find others such as accountants, attorneys, life coaches, mindset coaches, and more. In the senior long term care industry, your power group will likely include hospice, skilled nursing facilities, long term care insurance providers, and doctors. The only real limit is your creativity.  
The idea is that you make referrals to people and they make referrals back to you. Sometimes this relationship is a formal one, such as in a networking group like Business Network International (BNI), where referrals to your fellow BNI members are highly encouraged. Sometimes the referral relationship is fairly informal. Either way, you’ll want to find people who you can make referrals to and who will refer back to you. The goal is to form great business building symbiotic relationships.
As you go along in your business, you’re going to meet competitors and many other providers. Your job is to keep finding other entrepreneurs who you can refer to easily, but who can also refer to you to help you build your business.  
By building relationships with a power team, you’ll have business support you need. Plus, you’ll have lots of people who are willing and able to refer to your business and provide you with a pipeline of customers for your business. 

Haley Lynn Gray is CEO and founder of Leadership Girl, a graduate of Duke’s Fuqua School of Business, and a serial entrepreneur. In addition to her many business ventures, she is also a mom of four and a Girl Scout Leader. Haley is passionate about helping women achieve their potential, and empowers them to overcome obstacles in leadership positions and entrepreneurial ventures. www.leadershipgirl.com

Business Partners

Guest Post: "Accidental Partnership" by Richard Bobholz

“Oops, I tripped,” won’t work too well as an excuse if you find yourself under scrutiny for an accidental partnership. Despite having the potential to be incredibly damaging, these arrangements happen all the time in business.


What is an Accidental Partnership

An accidental partnership is a partnership that was entered into inadvertently. Yeah, I know that didn’t help at all. These commonly occur when two or more businesses get together to try to put on an event, coalition, or joint marketing efforts.

For example: the very first instance I encountered this was very shortly after I began my firm. A colleague approached me and told me all about this great expo that she and a few other colleagues were going to put on, and she wanted to know what risks there were. That’s when I told her about the accidental partnership.


The Law

North Carolina defines a partnership as “an association of two or more persons to carry on as co-owners a business for profit.” Person can mean any individual, company, or association of any type. What constitutes a business for profit is very broadly interpreted and includes any activity where profit was desired, not necessarily achieved.

In the example above, it was actually a partnership of LLCs that was getting together to put on the expo. Since the expo was to be separate from each of their businesses and yet not an incorporated or organized entity, we’re looking at a partnership.


What does that mean for the partners?

A partnership is not necessarily a bad thing. Each of the individuals in the partnership would have had personal liability protection because of the nature of their LLCs, so they wouldn’t lose any personally owned property if something went bad. However, under the partnership, every partner is 100% liable for anything that goes wrong. That means that if one partner causes huge damages to an attendee at the expo, any partner could be held liable. The person who was harmed can choose one or all of the LLCs involved in the expo to sue for damages.

Partnerships are defined largely by contract law. This means that the partners can define a lot of the rights and responsibilities of the owners and of the company itself. There are default rules that cannot be contracted away, such as the duty of each partner to act reasonably prudent when acting on behalf of the company.

Unless a contract specifies otherwise, the ownership, profits, and losses are divided equally. Additionally, the liability and management are owned wholly by each partner. That means that each partner may make any decision on behalf of the partnership, and the other partners could be held liable for those decisions. This is a scary position to be in.


How do I protect myself?

First and foremost, being able to recognize these types of situations before you enter into them will provide huge protections. Anytime you join together with another company or individual to conduct anything business related, there’s a good chance you’re looking at a partnership. At that stage, you should think of whether or not you want to be in that partnership. You can always avoid it by removing the ownership components, instead either being a contractor or making the other participants contractors. In those cases, contractors should get paid, and management should only belong to the owners.

The best way to protect yourself if you do go forward with a partnership is two-fold:

  1. Create a separate entity for the project or business activity you’re doing in conjunction with other businesses. An LLC acts like a partnership and provides that liability shield.
  2. Create a clear and concise contract between the partners so that in the event something goes wrong, there are terms in place to protect you. This should also define what the rights and responsibilities of each partner is, as well as how to resolve any disputes as they come up.





Law Plus PlusRichard Bobholz is the Managing Partner at Law++, a revolutionary and award-winning business law firm in Durham, North Carolina. Law++ sets itself apart by offering flat rate pricing, easy to understand retainer packages, and the highest quality customized legal services to all their clients. They were also the first law firm in North Carolina to become B Corporation Certified.


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Working When Overwhelmed

There will frequently be times in your business when you feel overwhelmed. There will be days or weeks when setbacks pile upon themselves, when everything that can go wrong will go wrong, and all at once. And you'll fall behind.

The danger in being overwhelmed is that it can lead to two disastrous pathways: one in which you're paralyzed into inaction by the seemingly insurmountable mountain of tasks before you, or one where you fall prey to the temptation of "multitasking" and fall to pieces trying to do too much at once.

Fortunately, procrastination and busyness are really two sides of the same evil coin. Today we're going to discuss how to catch up on what you need to do, even when the sky is falling.

Let's examine the Who, When, Where, and How of working when overwhelmed.


This seems obvious enough. You, right? Well, if you have employees, there might be some tasks you can delegate. The trick is to assign appropriate tasks in a manner which does not eat up your time or create more work for you. If an employee is already capable and available to take something off your to-do list, that's great. If you are going to have to expend time and energy in explaining the assignment, it is better, while you are behind, to go ahead and do the task quickly yourself. Training can come later when more time is available.

Also, asking an employee to assume additional or different duties is not a time for the two of you to hold a vent session on how busy and behind you are. It's nice to have someone in the business with whom to commiserate, but that will have to come after you're finally caught up.

Work EnvironmentWhen

Now! If you are behind on work, start with the first thing on your to-do list and get to it. Don't go make coffee, don't check Facebook "real quick", and don't cultivate your Pandora station. Give yourself little breaks to do those things as rewards for tasks completed. But if you're waiting until everything is "just perfect" to start, you'll never get ahead of the work.


As mentioned before, don't spend too much time getting your environment ideal before you address your to-do list. However, it is imperative that your area be relatively distraction-free. Put your phone on silent; close your office door if you have one. Even if you're in a co-working space, you can put in headphones, or something else that sends the message that you're not available for small talk. Do not have social media tabs open in your browser.

HowTo-Do List

Start with taking a quick inventory of everything you need to get done. (No, don't make a complicated, color-coded Excel spreadsheet of your task list. That's just procrastinating with the illusion of working.) Personally, I love the Wunderlist app for keeping to-do lists, as it allows you to make categories and re-order your lists. See what assignments you need to complete first, and what can be put off. (Maybe have a to-do list for today, this week, etc.)

Block off time on your calendar for these tasks. Not only does it help you get in the mindset of, "I am scheduled to work on this, now", it sends a clear message to anyone you work with that you are busy. It particularly helps if you have the sort of business that includes frequent meetings, as it serves as a visual reminder to leave some time for solo work.

Get the first item on your list done as quickly as you can, with no breaks unless absolutely necessary. Check it off your list. Once you have made that first bit of progress, you'll be amazed at how much it motivates you to knock out the next item. Getting a few things out of the way can help you build momentum and feel accomplished. After that, you can battle that "overwhelmed" feeling and start to see that, though you are very busy right now, there is a light at the end of the tunnel and, when you get this backload of work completed, things will calm down for a while.

If work has piled up on you and you're feeling like you'll never be out from under it, try these steps. And stay tuned for our upcoming article on how to get organized and avoid becoming overwhelmed in the first place.

Living a Lie: The mistakes that make entrepreneurs go broke

"You have to spend money to make money."

"Maintain the image of success."

"Fake it 'til you make it."

There is an ideal of the successful entrepreneur as a jet-setting globetrotter, someone living high on their quickly-amassed profits earned through their brilliant business insight.  We want the overnight success and rock star-status of Richard Branson.  (Comparatively, Larry Ellison, who has over eight times the net worth of Branson, took a less meteoric path to wealth, and is relatively unheard of.)

The unfortunate side effect of our idolization of instant-millionaire entrepreneurs is that many have come to associate that glamorized lifestyle with proof of product value.  In other words, "If I look and act successful, people will assume I know what I'm doing and hire me for my services!"

Here are the four most common ways entrepreneurs blow money on an image.

"I've gotta get my name out there."

Advertising is great.  Advertising is essential.  By all means, advertise!  However...

Don't blow your budget on advertising.  While seeing your company on a billboard or hearing your name on the radio is a great feeling, don't throw your money away on that illusion of the "big-time" without knowing for sure that you are going to get a good return on your investment.  This is a mistake we have seen time and time again.

I once personally witnessed a (now closed) local small business flush away thousands of dollars on a radio ad which they were convinced would result in a flood of customers to their large weekend sale.  They scheduled additional staff, opened early, and...no one showed.  The ad was ineffective.  In their frustration and desire to not have their money wasted, they played the ad on loop inside the store (i.e., the place where customers weren't), succeeding only in driving their employees crazy.

For the majority of small businesses, big-budget ad campaigns are not worth it in the early days.  A local tv spot might make you feel like a celebrity (for better or for worse, given the quality of most local tv ads), but it cannot match the per-dollar effectiveness of a decent website, solid social media engagement, and positive word-of-mouth.

"I have to have a nice place to meet clients/customers."

The information age has transformed the world, and the way we do business in it.  Meeting clients over coffee or lunch is a perfectly valid option, as is selling products online without a physical storefront.  However, many entrepreneurs still seem to feel as if their business is less legitimate without a physical location.

Rent on offices and storefronts is a significant monthly expense, and that does not include furnishings, utilities, etc. Having a separate workplace to travel to on a daily basis has mental benefits in improving productivity, but it is not a cost to be considered lightly, nor is it a business essential nowadays.  A gorgeous office with a big mahogany desk is a nice long-term goal, but it is not worth putting your company in the red.

"Yeah, I think I've got a place in the business for you."

We have written before on the dangers of expanding too early.  However, this becomes doubly dangerous when owners begin creating positions for the sake of hiring friends and family.  Middle management, and other positions which are not directly involved in revenue generation, are rarely necessary in a young company.  It is good to be surrounded by people you like and trust, but, until your business has enough sustained profitability, employing people for positions you really can't support is like inviting people onto a raft with a hole in it.  Everyone just starts sinking more quickly.

"The company's buying dinner tonight."

This is the big one and, really, the issue from which all the others stem.  It appears that, since the invention of commerce, owners have fallen prey to the temptation to treat the company as a personal piggy bank, not realizing that they are essentially robbing themselves.  Personal expenses being run through the company tanks profits, and can become risky from a tax perspective.  (Inaccurately deducting too many things as "business expenses" sends up a red flag to the IRS.)

In some cases, a failed understanding of accounting reports results in owners bankrupting their own companies.  For example, Owner's Draw does not show up on a Profit & Loss report.  So, when an owner views the Profit & Loss report, they might see that the company is very profitable, and think everything is fine.  Meanwhile, their overspending is bleeding the business's Retained Earnings dry.  When an unexpected setback occurs, they suddenly realize they're out of money and the company goes belly up.

So what should you do?

Though stories of those who got rich quick are fun, it has to be accepted that, for the majority of us, success will be a longer journey.  Just as we individuals must live within our means, so much our businesses function within their budgets.  Slow and steady wins the race, a penny saved is a penny earned, etc.

"He worked hard and was patient, and eventually earned wealth and a comfortable lifestyle," might not be the most exciting story, but it beats that tired tale of the guy who tried to have it all right away and lost everything.

FLSA Compliance: Three Distinctions to Understand in Classifying Workers

The Fair Labor Standards Act has been in the news a great deal, lately.  Multiple class-action lawsuits have been filed on behalf of unemployees who believe they have not been fairly compensated.

Many of these lawsuits have ended in either large settlements, or employers paying hefty fines and back wages.

To ensure that your business is in compliance with FLSA guidelines, understand the following three distinctions in classifying those who work for your business.

Who is a contractor and who is an employee?

Some employers have tried to lower their wages and tax liabilities by hiring independent contractors in place of employees.  This is an option so long as you follow the criteria for contractors.

Per the IRS's "common law rules", there are three categories assessed when judging whether a worker counts as an independent contractor.

Behavioral Control.  For an independent contractor, the business does not direct or control how their work is completed.

Financial Control.  If the business controls financial or business aspects of the worker's job (such as purchasing equipment, advertising the worker's services, etc.), the worker is an employee.

Type of Relationship.  Whether a worker is an independent contractor or an employee is determined by such aspects as the duration/permanency of the relationship, contracts describing the relationship, benefits provided to the worker, and whether the work performed is "a key aspect of the regular business of the company".

In addition to the IRS classifications, the U.S. Department of Labor provides their own "six-factor realities test" to determine whether a worker might be considered an independent contractor.

1.  Is the work an integral part of the employer's business?  This is similar to the language in the IRS rules regarding type of relationship.

2.  Does the worker's managerial skills affect their opportunity for profit or loss?  In other words, is the worker managing the business of the services they provide (for better or for worse) or is the employer directing that?

3.  Compare the worker's relative investment to the employer's relative investment.  If the business is providing the supplies, equipment, training, etc., the worker is likely an employee.

4.  Does the work require specialized skills and initiative?  Independent contractors are frequently professionals with specific skills over or in addition to those of the company's regular employees.

5.  Is the relationship permanent or indefinite?  Though they may work for the company for a very long period, contractors typically operate on a project-based or monthly contract.

6.  What is the nature and degree of employer control?  This correlates with the "behavioral control" aspect of the IRS common law rules.

Incorrectly classifying employees as contractors shifts tax burden to the workers, a misattribution which might later be remedied in court.

Of course, even if you only hire employees and no independent contractors, you still need to know...

Which employees qualify for exempt status?

"Exempt" employees are, essentially, those to whom you do not have to pay overtime.  (Specifically, they are legally classified as being excluded from the FLSA overtime rules.)  Non-exempt employees must be paid overtime in any period in which it is earned.  As might be surmised from the topic of this article, knowing the distinction is important.

Certain professions are essentially exempt by definition.  These are typically the classic "learned professions", such as doctors, lawyers, teachers, clergy, etc.  However, they can also include high-level administrative positions.  This does not mean that you can sit a secretary at the front desk for 60 hours a week and not pay him or her overtime wages.  To be considered high-level, administrative employees must be intensely involved in the running of the business, or in assisting executives to do so.  Think of a character like Pepper Potts from "Iron Man", who helps keep Stark Industries running by managing every aspect of Tony Starks's life.  She would qualify for exempt status.  (If you're not a fan of superhero movies, think of Emily Blunt's character in "The Devil Wears Prada".)

Excluding those jobs which are already considered exempt, there are three "tests" a position must pass to be considered exempt from overtime.

1.  The salary level test.  An employee must be compensated gross wages of $455 weekly ($23,600 annually) to be exempt.

2.  The salary basis test.  For any week in which any amount of work is performed, the employee is guaranteed a minimum amount.  (Typically, the weekly figure is calculated by dividing a contractually-guaranteed annual salary.)

3.  The duties test.  This is actually three tests in one, and is designed to protect employees from being labelled "managers" in order to deprive them of overtime wages.  For someone to be accurately considered an exempt supervisor:

a.)  He or she must supervise two or more other employees.

b.)  Management must be their primary duty.

c.)  He or she must have genuine input into the job status (hiring, firing, promoting, etc.) of other employees.

To give an example, a store cannot put someone in a "keyholder" position (where they might just be the "Manager on Duty" available to customers, but with no genuine managerial authority over other employees, and the majority of their duties not specific to managers) and then work them over 40 hours a week without overtime.

What if the worker in question is not a contractor nor an employee?  What if it's just a young person hanging around to learn the ropes?

For our third and final category, we are discussing...

When should interns be paid?

There have been several high-profile lawsuits recently regarding wage theft of unpaid interns.  Young people hoping to get a "foot in the door" in their industry of choice were instead worked ragged with no compensation.

Fortunately, the U.S. Department of Labor has provided a clear six-part set of standards to determine whether an unpaid internship is valid under the Fair Labor Standards Act.

1.  The internship must provide similar vocational training to an educational environment.  The internship should resemble an educational training program more than it does a job.

2.  The intern should be the primary beneficiary in the relationship.  In other words, the intern should receive more education and experience from the employer than the employer receives work out of the intern.

3.  If the intern is performing work for which the employer would have otherwise hired additional staff or required staff to work additional hours, the internship should be paid.  Again, the employer can't use an unpaid internship to get work performed without compensation.

4.  There should be no immediate benefit to the employer and the internship should be to the intern's interest.  The employer might even be temporarily inconvenienced by the internship.  However, under the ideals of an unpaid internship, it is presumed that the employer might recover long-term benefit from later hiring the intern as a well-trained employee, already familiar with company culture and procedures.

5.  An unpaid internship can come with no job guarantee.  This prevents employers from stringing along an intern for free work with the lure of future employment.

6.  Both parties understand that no wages will be paid.  An intern must be made aware from the beginning (before their first day at the internship) that this is not a paid position.

5 Things Business Owners Don't Realize They Need

We've all heard, "You don't know what you don't know."  This is particularly true in business, where it can be easy to develop tunnel vision and focus on your own expertise at the expense of the company.

Accepting the premise that you don't know what you don't know, we can extrapolate that you can't get what you don't realize you need.  Everyone knows they need sales avenues, customers, etc.  But there are other business essentials which, though not as well-known, are utterly necessary.  Here are five things businesses need (which you might not have thought of yet).

1. General Liability Insurance

It's no wonder that no one likes to think about getting insurance for their business.  Buying personal insurance, for your house, car, or health is enough of a hassle.  Getting quotes and comparing premiums and benefits for your business?  That's just piling on.

However, general liability insurance for your business is an absolute essential.  You can hope to never need it (I'm sure you're never planning to get sued) but, in the eventuality that you do, you will be grateful for it.  Depending on the nature of your business, Commercial Property Insurance might be a recommendation, as well.

2.  Workers' Compensation Coverage

Even more insurance!  Laws vary by state but, in North Carolina, you are required to carry Workers' Comp if you have three or more employees, or if you have at least one employee and your business works with radiation.  (If your business works with radiation, you'll definitely want those general liability and commercial property insurance policies, as well.)

Many employers try to avoid purchasing workers' compensation policies, but it is not a wise choice.  Not carrying coverage opens you up to charges of fraud, huge fines and, in some cases, even jail time.

Now let's move away from insurance and segue into something else that can protect you from being sued by employees or the government...

3.  A Good Payroll Provider

Unless your business is large enough for an in-house full-scale accounting department (in which case, we're flattered you're reading our blog), you need to be outsourcing your payroll.  Running payroll manually is intensely time-consuming, and very risky.  If you do not have a payroll expert on your staff, you are taking a big gamble with your tax withholdings and filings.  According to the IRS, 40% or small businesses pay an average of $845 per year for late or incorrect filings or payments.  (That's over a third of small businesses.)

Furthermore, outsourced payroll services have become ridiculously inexpensive and painless.  We at The Bookkeeper are huge fans of Gusto Payroll, and frequently recommend them to clients.  Their customer service is excellent, the interface is user-friendly (even for avowed Luddites), and packages start at less than $40 a month.  And Gusto is one of many simple, affordable payroll solutions.

Please, do not take on the headache and risk of penalities associated with payroll, without researching your provider options first.

And while we're on the subject of taxes...

4.  Sales & Use Tax

Who has to file sales and use tax?  According to the North Carolina Department of Revenue, "Every person engaged in the business of selling tangible personal property at retail, selling certain digital property at retail, renting or leasing taxable tangible personal property in this State, operating a laundry, dry cleaning plant or similar business, or operating a hotel, motel or similar business in this State must register with the Department and obtain a Certificate of Registration. This includes a person who sells tangible personal property and certain digital property, or provides a taxable service at a specialty market, flea market, fair, festival, sporting event, or another event or function."

Needless to say, there are many, many people who should be paying sales tax who aren't.  So if you are selling a tangible good, even if it's just from a booth at the fairgrounds on Saturdays, you should be filing sales and use tax.  And if you do not know to do so, contact someone who does.  If you are caught not paying sales tax, you may be assessed penaltyand interest.  The risk is simply not worth it.

Now that we've bummed everyone else by talking about insurance and taxes for four entries, let's move on to what's surely going to be the most controversial item on this list...

5.  A Website

In 2016, in order to maintain credibility, your business needs a website.  (No, a Facebook page doesn't count, though it's better than no web presence at all.)  A website (preferably with a unique, personally-owned URL, and not through a "freebie" site-building service) shows your customers and potential customers that you a legitimate, solid company.  Your website is the first place people will go to look for information about your business.  Not having any sort of web presence at all can read as very suspicious.

Furthermore, you are doing yourself a huge marketing disservice by not having a website.  Web marketing provides the absolute most "bang for your buck" out of any form of advertising.  Even if you have a successful business without a website, you could be reaching so many more potential customers and be more available to current customers.

Are there any other little-known business essentials you would add to this list?  Let us know, and we'll amend accordingly.