Moving a home firm to an office
Dear Karen: My home business is growing and I’m considering a move to an office space. How do I decide whether to do it? Answer: Budget out your first-year office expenses and determine whether your revenue can keep pace. Figure in overhead, such as utilities and equipment, and personnel (you may need to hire an office manager or receptionist). Don’t forget the loss of your home office tax deduction.
If the numbers look good, start with a small space and a flexible lease. Getting tied into a three- to five-year lease now, with commercial rents still falling, could be disastrous, said Sande Golgart of Regus, an outsourced office service provider. Look for a one-year lease with an “out clause” that allows you to exit early.
“Use shared resources until you’re exploding at the seams,” Golgart said. A building that provides communal kitchens, copy rooms and office managers is best.
Seeking clues to employee fraud
Dear Karen: Your recent column on employee fraud made me wonder about an employee. What signs should I look for? Answer: Some embezzlers display telltale behavior that may justify your suspicions, said Dana Basney, director of forensic accounting services for Meyer Hoffman McCann. “A Hell’s Angel who’s all tattooed? Don’t worry, nobody will give him the authority to steal. It’s the Sunday school teacher at the next desk you should watch out for,” Basney said.
Unfortunately, the traits that inspire management to rely on a trusted employee often create the opportunities for fraud.
If your employee goes to extremes in consideration of co-workers, he or she may be your best worker or someone who is building trust to take advantage of you.
“Employees who work excessively, refuse assistance, don’t delegate and refuse to take time off often singularly handle several duties, causing their employers to place all of their reliance on them,” Basney said. This situation is ripe for fraud. If those “heroic” employees produce poor accounting records, be suspicious.
Following rules for contractors
Dear Karen: I’m thinking about cutting my staff and hiring freelancers to do certain jobs. Is this legal? Answer: Hiring independent contractors can save on personnel costs, but make sure they are truly independent or you could violate tax and employment law.
Jay Zweig, an employment law partner with Bryan Cave, said freelancers should work outside your firm, set their own hours and own their equipment. You should write instructions on the results you expect and specify a deadline, but don’t provide work space or supervision, Zweig said.
Write up a term sheet that you and the independent contractor sign. “The document should also specify that this is an independent contractor relationship,” he said. Don’t sign a boilerplate agreement that the contractor presents to you, Zweig said, without having your lawyer evaluate it.
Temporary or short-term workers who fill in for your regular employees should be paid employee wages and treated as part-time employees. Guidelines are laid out at the IRS’ website: www.irs .gov/businesses/small/article /0%2C%2Cid=99921%2C00.html.
Got a question about running or starting a small enterprise? E-mail it to ke.klein @latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.