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I’m beginning a multi-part series on employees and how to handle them today. Hopefully my readers will find these articles interesting and helpful in dealing with your own employees.

When you’re working for somebody else, the hiring process seems very simple. Turn in an application, go for an interview, fill out some tax forms, and you’re now part of whatever company you applied for. It’s easy for most employees to go through. However, as an employer, there are many more steps to be taken in order to bring that one person into your company.

The first thing you need is an EIN (Employer Identification Number). This is a way for the IRS to track who you are and how many employees you actually have. It also is necessary for reporting to state agencies. The IRS provides a wonderfully helpful guide on how to go about applying for one on their website, so take a few moments and find out exactly what you need to qualify.

Next you need to set up records for tax withholding. Now that you have employees, it’s your job to keep records of employment taxes for four years on all of your employees. You’re also required to have them fill out form W-4 in order to determine how much tax is being withheld from each check. Once a year, employers must also report to the federal government how much tax has been withheld from each employee in form W-2. Copy A should be sent to the Social Security Administration no later than the last day of February (last day of March if you’re doing so electronically), and a copy should be sent to employees no later than January 31st of the year following the one being reported. State taxes should be looked up by contacting your state tax agency.

The next important step is to make sure your employee fills out an I-9 form. This is a form designed to check for an employee’s eligibility to work in the United States. By federal law, it is the employer’s responsibility to verify this information, and they can do so by entering the data from the form into the government’s E-Verify system.

According to the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, employers must register new hires and new re-hires with their state’s reporting agency within 20 days. This is a relatively simple process, and instructions for it can be found here.

You are also required to get various types of insurance, including Worker’s Compensation coverage either through a commercial carrier on a self-insured basis or through your state Worker’s Compensation Insurance program, and Unemployment Insurance taxes, which can be determined by contacting your state’s tax agency. Also, if you have employees in California, Hawaii, New Jersey, New York, Rhode Island, or Puerto Rico, you’ll need to obtain Disability Insurance.

Once you have employees, you are now required by law to post certain notices in your workplace that inform your workers of their rights and your responsibilities to them. The posters are available for free from both federal and state labor agencies, and you can find the ones you’ll need by following this link.

As an employer, you now have many more tax forms to fill out, including but not limited to quarterly filings that must be made to indicate how much income tax, Medicare, and social security withholding you did for every employee. This requires you to file IRS Form 941 or 944 depending on how much you paid, an Employer’s Quarterly Tax Return, and several more besides. The federal government provides a good guide for what sort of forms you need to fill out on their website.

Of course, the mechanics of employment are not the be-all, end-all of being a good employer. It’s important to maintain a positive workplace, provide benefits, encourage workplace safety, and learn how to best manage your people. A lot is involved in having employees, but they’re also necessary if you want your business to grow.

I often focus my blog entries on American business topics. This is easy to do for several reasons, the first being that I am American and live in America where the majority of information I get deals directly with United States companies. My experience has also been primarily in dealing with American companies. However, it’s also important to note that the American economy has a major impact on economies the world over, many of whom are invested in us or rely on our product ion in some fashion. The crash precipitated by people on Wall Street had just as much impact on traders in the City or on the Nikkei.

What I found fascinating to read, however, was this article over at bizcovering.com about how UK entrepreneurship is in trouble because of this. Now, American entrepreneurship is also on the rocks, but consider for a second that before the crisis it was already more difficult to get money in the UK. I don’t mean to say this in an offensive manner, but UK lenders tend to be more conservative than American ones to begin with, not the least reason because of a culture that has promoted thrift as a major social virtue from time immemorial. Finding startup capital was already a struggle, let alone the capital to actually maintain a business through the first couple of years.

And it’s that first few years that seems to be the clincher. Several small businesses have been able to get startup capital, many before last October, but are now finding that they have their lines of credit cut short, have their debts called in early, or simply won’t be extended new loans to continue their business despite an initial plan to do exactly that when the first loans were approved. The liquidity exists to support these business, but the will to spend it has been cut abruptly short, exacerbating a pre-established tendency to not loan money.

I hope that with the bouncing of the US economy that UK bankers will start to lend again. In a world economy it’s important that new ideas come from everywhere. Part of that means that within nations everybody encourages smart investments and don’t get gun shy when it comes to lending money. The only way out is through.

Companies should always be looking for new ways to innovate. New products, new ideas, new concepts and approaches mean that business moves forward and the market benefits from increased cash flow and better service. It’s an elegant system that rests solely on a company’s willingness to continue to try new things. What’s interesting, however, is that the newest ideas are often hiding inside your business and can be exactly what you need in order to innovate effectively.

Instead of trying to pump money into brand new projects or find tiny changes that can be made without actually releasing anything significantly new, trying looking at what you have available with a new perspective. Start in your R&D department and see what sorts of projects or efforts were started but you found them to be unmarketable at the time. What’s changed between then and now? Maybe there’s a way to bring them out now that didn’t exist previously.

Next, take a look at your distribution networks. Is there a way to improve them? It’s not just about shopping around for new companies to move your product, it’s also about seeing where people want to go and evaluating if that place will be a good market for what you have to sell. Often if companies are already traveling someplace, they’ll have better deals on the transport.

Finally, take a look at your research. All of those studies that you commissioned, all of the tests you ran, labs you contracted to, have given you valuable information. I don’t mean valuable just in terms of being able to tell you what you need to know about your product, but valuable to others who may have a similar market area that they’re working in. They can commission their own reports or they can buy yours which is equally good data and probably cheaper. There’s no reason to let that information sit and collect dust when you can pass it along to another company and make back part of what you spent on it originally.

There are plenty of ways to innovate and find new sources of cash flow while also making your business more efficient, but they require you to take a look at your business with a fresh perspective. Re-examine the things that you once rejected with new eyes and you might find a hidden gem that was just waiting for you to use.

They’ve been around for several years. Back in 2004 there was a minor craze for ebooks, before that in 2001, and even as far back as 1996 the concept has been floated as a new and exciting enterprise for the digital age. Each time the hype died back down shortly after as obstacles like an ironic public unwillingness to read books on their computers and lack of intuitive measures in e-readers made it infeasible as a format and insoluble as a business. Combine that with the lack of interest in publishing companies to produce high quality ebooks of popular novels, and you have a lot of hype that amounts to very little in terms of an actual industry.

Recently, an ebook distributor called LibreDigital got $15 million in venture capital for second round financing from several different firms. Considering the incredible difficulty in getting funding for business in the floundering world economy, especially from venture capitalists, this speaks volumes for the viability of this company. One must wonder exactly what it is about it that attracted a class of businessmen and women known for very careful investment to this particular company.

My guess would be that many of the hurdles that prevented the ebook fad from taking hold previously are being overcome by expanding technology. 2009 has seen the release of nine new ebook readers (compared to seven total from 2006-2008), seven of which were released between June and now. These portable devices allow for the storage of gigs of books and easy access to all of them, not to mention ease of reading. The advent of devices such as this which are also small and light enough to carry on an airplane (though not for long the way airlines are limiting luggage), mean that ebooks may actually become a profitable enterprise this time around.

There is an old saying in law enforcement: “Follow the money.” This also applies to business. Business trends are often set by what is invested in them, filtering up from the street only when money is infused into marketing and sales. In this case, the money is going into R&D and I suspect soon actual advertising. Either way, watch the ebook business over the rest of the year, especially during the holiday season, for a huge expansion.

LLCs (Limited Liability Companies) are a relatively new form of business structure created by state statutes, but one that is gaining quick popularity. There are a lot of real advantages to registering your business as an LLC, mostly evident in flexibility. There are drawbacks, too, but for many eligible companies, this is a sound way to go.

Before we continue, I want to point out that the “C” in LLC is for “company,” not “corporation.” In fact, LLCs are specifically unincorporated associations, which give them a greater ability to alter their structure as needed for the good of their business.

The primary advantages to having an LLC are in terms of taxation. You can register the company with the IRS as a sole proprietor, partnership, S corporation, or C corporation, (Check-the-box taxation) always assuming that it would otherwise fit the criteria for such. That being the case, so long as it’s not registered as a C corporation, you have the availability of pass-through taxation, which basically means you don’t have to worry about being double taxed on the same income.  Owners are called “members” and are taxed at the member level with this type of structure.

Even more importantly, however, is that members are protected from liability for acts and debts of the LLC. This means that if another member makes poor financial decisions that cause the LLC issues, you won’t necessarily be held responsible. In most states LLCs are considered separate legal entities from the individual members, leaving more direct responsibilities with individual partners in the company and alleviating a lot of the “rise together, fall together” mentality that has been so prevalent in the business world since the conception of business partners.

There are, of course, some disadvantages. For one, the structure is still reasonably new, so investors are less likely to back a system that they are unfamiliar with. Even worse, some will require that members agree to be personally liable for debt accumulated by the company, which of course misses part of the point of an LLC. Some people are unfamiliar with a company that doesn’t have to have officers like a corporation, and taxation jurisdictions outside of the US may tax the LLC as a corporation regardless if you’re operating there.

That being said, most of the disadvantages associated with LLCs are based in their unfamiliarity. That will be cleared up in time, but the potential advantages far outweigh those, as well as the advantages of being at the front of this.

So consider that your business might benefit from being an LLC. Not all companies will work best with this structure, however don’t be afraid of it because of unfamiliarity. It might be what you need to run the best, most efficient company that you can.

A quick internet search about “business tips” or “marketing strategies” is almost assured of bringing up the phrase “network marketing.” Some people will wonder what it is, click on the link, and begin immediately to get sucked into an old idea that has been given a new name by enhanced technology.

What is now being called “network marketing” was once known to old-timers like myself as “multi-level marketing” or MLM. Many of you know that among the most successful users of this marketing technique is Amway. I’m not suggesting that Amway is in any way not legitimate, but they ride a very thin line in regards to their marketing strategy. The reason why is that MLM relies not on a person’s ability to sell a product, to make a product, or to provide a service. Rather, it is based primarily on their ability to garner more sales people. The advantages of actual sales are eclipsed by the advantages of selling the company.

The major problem is not in the companies themselves. Nor is it in the business model as a concept, which is basically a form of franchising on a very small scale. The problem comes from people who are not ready to actually participate and a structure that encourages people sales over product sales. People don’t realize that they are getting involved in a business, and that business requires that they treat it like any other business. In another business situation, you wouldn’t focus your efforts on encouraging people to compete with you, so what makes people think this is a viable strategy other than a graded payment structure that lends itself to recruitment?

MLM/Network marketing can be a viable marketing strategy, but the potential for it being nothing but a pyramid or Ponzi scheme is very high. Far too often companies base the profits on sign-up and renewal fees, with very few actual products being sold. This type of business is not sustainable and hurts both its employees and its clients, which happen to be largely the same people. Any business model founded on mindless acquisition of a larger sales force and not on the production of that sales force is highly suspect, and as a consumer and a business person you should be wary of any such model.

Business plans … the hard copy version of every small business person or every entrepreneur’s dreams … are some of the hardest documents you may ever have to write. They’re not hard from a technical perspective or from knowing what to include in them … there have been enough books and websites written about business plans that just about every possible question has been answered but people still struggle to condense their dreams and goals into a few words on a sheet of paper.

Perhaps that’s where the problem rests … how do you convert your dreams into something as formal as a business plan? If that is the case for you then the best way to make a start is by writing the easiest business plan of all. You see, there are three different business plans that you may need for your business and if we start with the easiest one the other two will just flow on from there.

The operational business plan
This business plan looks into the business and it’s used by the business to help focus on the goals of the business. It identifies those goals and which part of the business is responsible for achieving those goals. It’s a blueprint that will help you set your budgets and measure your successes or failures. It’s definitely not set in stone and it certainly should be reviewed regularly and updated at least once a year.

A summary business plan
This is a short document that highlights the important information about your business and where it’s headed. This business plan is focused on people outside of your business and those who will read it are those you are looking to for help. This business plan needs to clearly state the specific requests that you are making of the person who is going to be reading the document.

In some circumstances this type of business plan is suitable if you’re looking for a small load from a bank or you’re attempting to give someone a snapshot of your business before giving them the full business plan.

The complete business plan
When you’re after major finance such as you might attract from an angel investor or venture capitalist or you’re attempting to bring on board some strategic partners then this is the business plan you need. In the complete business plan you go into much greater detail than you did in the summary and so you can expect this plan to run to many pages. While a complete business plan is not beyond most people’s ability to write it’s probably something that should be left to a professional business advisor to assemble.

And now I’m sure you can see why starting simple is perhaps the best way to go but don’t do the easy one and skip the others. Spend time writing your business plans and your business will have a much better chance of growing.

Business plans are a bit like roadmaps, they show you where you are, where you want to go and how to get there but unlike a roadmap, some business plans are creatures that are alive and frequently changing as circumstances and the world around you changes.

To my way of thinking a business should always have two business plans.  One is the plan you write in pencil, it lives in your desk drawer and should be brought out often for review, amendment and appraisal. It’s the one that’s written in simple language that may be light on detail but heavy on dreams, hopes and desires. It’s the one that uses arrows and text bubbles and other bits and pieces that mean very little to anyone other than the person who wrote it. It’s the one you can write yourself and change frequently as new opportunities arise.

The other business plan is the one that is written for the banks, for the venture capitalists and for other investors. This business plan is light on dreams but heavy on detail and heavy on terminology that’s important for those whose assistance you’re seeking. It lacks arrows and squiggles but could contain charts and graphs and other appropriate images.

This business plan looks totally different to the first but ultimately the goals outlined in this business plan will be the same goals that you have nominated in your pencil plan.

While one is easy to write because it comes from the heart the other is much harder to write for it needs to be carefully worded, analytical and focused. Mistakes don’t count for much in the first business plan because they can be corrected with an eraser. In the second business plan mistakes can mean the difference between obtaining funding and struggling with zero capital.

So should you write the second business plan yourself or hire someone to do it for you? Well that depends on the nature of your business and your technical expertise. If you’re a boat builder and you’re training is in building boats then it’s unlikely that you will have the skills necessary to write an acceptable business plan. On the other hand, if you’re a lawyer or an accountant then the chances are that you could write a very acceptable business plan.

Of course having someone write a business plan for you is going to cost you money but that’s money that’s well-spent if the business plan you paid to have written helps your business get the funding it needs to grow. If your finances are really tight and you simply cannot afford to pay someone to write the plan for you then you will find that there are online courses to help you … but really that should be an absolute last resort.

A properly written business plan can be a great tool for you to use to attract investment so be prepared to spend some money on buying the tool that will work for you.