Salary vs Hourly – the FLSA may decide
By · CommentsWhen deciding whether or not to pay an employee a salary or an hourly wage, the decision may not be up to the company. The federal government, through the Fair Labor Standards Act (FLSA) section 13(a)(1), has set out guidelines on the use of exempt salary for employees. An exempt employee is one who an employer is not required to pay overtime.
While one may think that an employee is an exempt salary employee, perhaps because of job title, it is wise to check the guidelines first. There are three tests that the government uses to determine if an employee is eligible for exempt salary.
*Salary Level Test – the employee must be guaranteed a salary of $455 per week.
*Salary Basis Test – the employee must be guaranteed a minimum amount (at least the $455) a week which is
not subject to reduction based on the amount of work or type of work being performed.
*The Duties Test – This Test contains three parts of which all three parts must be met.
* Supervises two or more employees
* Management is a primary duty of the position
* Significant Input or the ability to hire and fire employees
So when you are considering paying an employee an exempt salary, check with the Department of Labor or your legal professional as to whether or not the employee qualifies for an exempt salary position. The result of accidentally putting someone on an exempt salary could be fines, interest and unpaid overtime being paid to the employee and government as well as any other employees the Department of Labor may find that have not been paid correctly.
Shark Tank on ABC
By · CommentsLast night I watched a great show on ABC, called Shark Tank. I will first admit that I am intrigued by reality TV shows that work with small business and entrepreneurs, such as Peter Perfect and We Mean Business with Bill Rancic, to name a few. But, shark tank really got me excited.
The premise is that there is a panel of 5 business “sharks” who entrepreneurs are pitching their businesses to. These entrepreneurs are looking for investors in their company and are offering a piece of the company for some investment cash. The sharks are brutally honest about how they feel about the company, the entrepreneur and the products.
The part that I liked the most is it actually felt real. And by that I mean it is extremely tough to get capital for a new and often even an existing business. These sharks expected a large piece of the business for their cash. They weren’t just going to give someone a pile of money for a small stake in their small company. They were looking for a real Return on Investment. The entrepreneurs for the most part seemed shocked that the investors wanted such a large share of the business.
The fact is if you are the one putting up the money and in effect taking the risk, you expect to receive a high return. So I would recommend this show to gain an understanding of what it is like when you are out looking for funding and venture capital for your great idea. It is not meant to discourage people, but to let them know that while you came up with the great idea, the chances are high that someone else is going to profit as much or more off of that idea if you cannot afford to fund it yourself.
Check out Shark Tank Sundays 9/8c on ABC.
A Great Producer Does not Make a Great Owner
By · CommentsOne of the first mistakes most new business owners make is wanting to be in control of everything. They have just left their corporate nine to five and the last thing they want to have is a boss or someone looking over their shoulder. Well the problem with this mentality is that most new business owners are producers, meaning that they develop the product or service and are great at the specific execution of such, but they have never run a business before.
When starting your new business focus on what you are good at. If it is cranking out widgets, then crank out widgets. Have someone else execute the sales, accounting, and other operation tasks. This will allow you to turn out an exemplary product and not be bogged down trying to do every task your business requires. You are a specialist in your product and others are specialists in theirs, let them educate you and help make your business a success. You are still in charge and have the final say in what happens but you are allowed to move your business forward with highest quality product.
This way you will not lose focus on what your business is about. Many new businesses fail shortly after they begin because no aspect of the business is done well. The product suffers because the producer is focusing on other tasks. These other tasks are not executed well because it is not the expertise of the producer and eventually most aspects are done poorly and the overall business quickly deteriorates.
