Jake Snelson - Vyde

Small Business Owner’s Guide to Year-End Employee Bonuses & Holiday Gifts: Part 1

There is no one right way to show gratitude for your employees during the holiday season, other than to not show it at all. If you were to ask 20 small business owners what they do for their employees as a year-end reward, you’re likely to get 20 different answers. Many offer a cash bonus, some take the team to a nice dinner, some give individualized holiday gifts, and others throw a party for employees and their families. Small business owners can make their employees feel valued and appreciated, even on the smallest budget.

3 Ways to Give Year-End Employee Bonuses

If you’re planning to offer a cash bonus to employees, there are a few ways you can go about it. Here are three types of year-end cash bonuses to consider for your small business:

Performance Bonuses. Many employers are turning to performance-based bonuses to save themselves money and keep employees from expecting a given amount at the end of the year. The best way to do this is to give each employee individual goals to work toward at the beginning of the year, and then evaluate their performance based on those goals and other factors at the end of year. Goals may need to be adjusting quarterly, according to the employee’s progress. Scheduling a year-end interview with each employee will help you evaluate their performance and decide on an amount that works for you. This may end up being a percentage of their salary, or perhaps a flat dollar amount that is contingent upon them reaching their goals. This will motivate employees to work hard and give them some incentive to carry out their goals to the end of the year. This method can reduce hurt feelings if the bonuses are not even because employees know up-front how the amount is decided.

Non-performance bonuses. Some small business owners prefer to award year-end cash bonuses just to show their appreciation, without basing them on performance. Non-performance cash bonuses can also be a portion of the employee’s salary or a flat dollar amount. With non-performance bonuses, you’ll just need to make sure that everyone gets a fairly distributed amount to avoid contention and hurt feelings among employees who may not have been awarded as much.

Longevity bonuses. U.S. Bureau of Labor Statistics, people 35 years and younger change jobs every 18 months, and people of all age groups do so every three years, which motivates some companies to offer employees an incentive to stay put. Many employers offer bonuses for employees who have been with their 5, 10, 15, or 20 years, with a set amount for each milestone of employment. This can end up being less or more expensive for employers at the end of the year, based on how many awards must be given out and the years of service being rewarded. However, with this method, not everyone will get a bonus every year.

A Few Tips on Giving Year-End Employee Bonuses

Before you let yourself get overwhelmed with which type of bonus to offer, consider if offering a cash bonus is even in your accounting budget this year. If it’s not, choose another way to reward employees for a job well done. Many small business owners change their year-end bonus policy every year, based on the profits of the company during that year–and that’s completely fine. If your accounting and small business bookkeeping is up-to-date, you’ll likely have an easier time deciding how much to give.

If your company offers employee bonuses every year, but is unable to this year, be sure to let employees know as soon as possible so they don’t feel start prepping for their backyard swimming pool, like Clark Griswold in National Lampoon’s Christmas Vacation.

Be as fair as possible. While the actual dollar amount doesn’t have to be the same for each employee, bonuses do need to be distributed evenly and fairly. Make sure all employees are recognized during the holiday season–not just some. Bonuses should be consistent and unbiased.

FAQs about Year-End Employee Bonuses & Holiday Gifts:

What are common methods for giving year-end cash bonuses?
Employers often opt for performance-based bonuses, non-performance bonuses, or longevity bonuses to reward employees at year-end.
How do performance-based bonuses work?
Employees are given individual goals to achieve throughout the year. Their performance is evaluated against these goals, determining the bonus amount.
What are non-performance bonuses?
Non-performance bonuses are awarded without specific performance criteria. They can be a portion of the employee’s salary or a flat amount distributed evenly among employees.
What are longevity bonuses and how are they earned?
Longevity bonuses reward employees for their tenure with the company, typically after 5, 10, 15, or 20 years of service. The amount varies based on the milestone reached.
How should employers approach year-end bonuses when faced with budget constraints?
Employers should assess their financial situation and consider alternative forms of recognition if cash bonuses are not feasible. Transparency and communication about bonus policies are essential to managing expectations effectively.

Small Business Owner’s Guide to Year-End Employee Bonuses & Holiday Gifts: Part 2

If you read our first post in the series on holiday bonuses and employee gifts, you already know that there is no one right way to show gratitude for your employees during the holiday season. The only way a small business owner can go wrong in this is to not show their appreciation at all. If a cash bonus isn’t in your company’s budget this year after you’ve consult your small business bookkeeping, there are still several ways you can show employees you care. Here are a few ideas to get you thinking about employee gifts this year:

Give the gift of time. Employees will undoubtedly appreciate an extra day or two off (paid, of course) a lot more than a $5 fruitcake. While this may inadvertently cost you money, it’s not money straight out of your pocket. You could either close the office a day or two early, or let employees know they have an additional day paid day off they can use at their leisure.
Throw a party. You can throw a Christmas party fairly inexpensively, if you plan it right. Hold the party during office hours with a sandwich platter and punch, or plan a more elegant or themed party for employees and their families on a weekend or in the evening after work. Purchase a few nice prizes to give away and offer some grab bags at the door filled with goodies.
Take your team out on the town. Whether you take your employees to a nice dinner, a ball game, or a night away at a nearby resort, they’re sure to appreciate the thought and effort put into planning an event where they get to mingle with their coworkers outside the office.
You can’t go wrong with gift cards. Everyone loves gift cards. They’re personal, but not too personal, and everyone is happy in the end. Whether you choose a $10 Amazon gift card or a $300 gift card for a luxury spa and resort, or anything in between, employees appreciate a little pampering during the holidays. You can even just opt for a Walmart gift card to help with your employee’s Christmas shopping or groceries, or a gas card to help them in their holiday travel.
Turkey and/or ham. A classic and common gift from employers–and one that won’t break the bank. Many small business owners make it a yearly tradition to provide the main dish of their employee’s Christmas dinner by giving a turkey or ham during the holiday season.
New computer or tablet. If you’ve got a large budget and opt not to offer a cash bonus, a computer or tablet is much appreciated and can also help employees be more efficient at work.
Satisfy their sweet tooth. Almost everyone loves a good box of something sweet. Think chocolate, toffee, caramel, popcorn, and other gourmet goodies. Be mindful of employees who don’t eat sweets and have a backup plan for them.
Give the gift of knowledge. Did you read an insightful, motivating, or great business book this year? Order up enough for the whole office and pass them around for employee gifts.
Calendars and desktop goodies. Think outside the box and give a unique desktop gift like a paper weight, hourglass, fancy pen, clock, or this bubble wrap calendar. This website has a plethora of uncommon and fun gift ideas for employees.
Meaningful office upgrades. Adding better equipment, safety measures, new computers, or ergonomic chairs are also good ideas when cash isn’t available for bonuses. Office equipment can also be deducted on your taxes–win, win!
It’s the thought that counts. If Christmas gifts and bonuses just aren’t in your budget this year, you don’t have to feel guilty by not doing anything at all. Share your genuine appreciation for employees by offering a thoughtful, handwritten card. Try to make up for tight funds at Christmas by taking a mid-year office field trip or adding an extra $100 to employees’ paychecks, just because.

Whatever you decide to do for employee gifts this year, make sure it is thoughtful and genuine. A little goes a long way with employees who work hard all year to make your company great. What are you giving out for employee gifts this year? Share your ideas in the comments below!

The Business Standard Mileage Rate and How Do I Use it for My Small Business?

If you own a small business, you’ve likely heard the term “Standard Mileage Rate.” Some business owners spend a great deal of time behind the wheel, logging up to 20,000 miles in a year. Most of the time, they’re using their personal vehicle for business travel which can end up being quite expensive. The IRS has provided a Standard Mileage Rate to ensure those miles driven for business are tax deductible.

Here’s how it works:

Standard Mileage Rate Explained

Rather than adding up every mile driven, gas tank filled, oil changed, car wash and window cleaning, tire rotation, and other vehicle expenses in a year, the IRS offers the Standard Mileage Rate which provides a 57.5 cent deduction (2015) for every mile driven for business in a year. That way, business owners only have to track miles driven, and not every other cent they spend on their car. To figure a standard mileage rate, simply take the number of miles driven and multiply it by the current standard mileage rate (which changes every year).

Example: Jenny, a realtor, drove his car 15,000 miles for business during 2015. To determine her car expense deduction, she simply multiplies her business miles by the applicable standard mileage rate of 57.5 cents per mile. This gives her a total deduction for the year of $8,625 (.575 × 15,000 = $8,625).

Standard Mileage Rate vs. Actual Expense Method

Most business owners find it quicker, more efficient, and financially advantageous to use the Standard Mileage Rate. However, it doesn’t hurt to keep track of receipts and expenses and see which method gives them a better deduction for the year.

To use the actual expense method, a small business owner must keep track of every purchase made for their vehicle. These expenses include:

gas and oil
repairs and maintenance
depreciation of your original vehicle and improvements
car repair tools
license fees
parking fees for business trips
registration fees
tires
a portion of insurance premiums
car washing
a portion of lease payments

The Actual Expense Method can offer a larger deduction at the end of the year, but it require diligent and meticulous record keeping.

Which method is better?

Determining which method is better for a small business owner requires calculating both ways to see which offers the bigger deduction. Keep in mind that smaller cars usually get better gas mileage and may not require as much as maintenance as larger vehicles. In this case, the Standard Mileage Rate is almost always the better option. After you calculate both ways for the first year of using your vehicle for business, you’ll likely stick with the same method year after year. However, you are allowed to switch back and forth between the methods from year to year, but with some restrictions. Ultimately, most small business owners elect to use the Standard Mileage Rate, but both are important in tracking business expenses and deductions.

An Attitude of Gratitude: Showing Clients You Care

After a client begins using your products or services, it’s easy to focus on gaining even more clients, rather than focusing on the ones you already have. Thanksgiving is the perfect time to show your existing clients how grateful you are for their loyalty, and expressing that gratitude doesn’t have to be expensive.

Here are 12 quick, easy, and inexpensive ways to show gratitude for your clients this November:

1. Go old school with a handwritten note. The importance of this simple gesture cannot be overstated. In fact, in an increasingly fast-paced, technology-driven world, handwritten notes are becoming a lost art. Have trouble sharing your feelings? Try this guide.
2. Send them a treat. Cookie tins are always a hit, and can fit into almost any budget. Other popular treats are fudge, meat and cheese trays, fruit baskets, gourmet candy, and freshly baked bread. Have them delivered to your client’s office before they’re bombarded with goodies in December.
3. Share your knowledge. Communicate with clients and share your expertise. Whether it’s an email newsletter, helpful hint on social media or printable checklist, customers love useful information about the service or product they’re purchasing.
4. Remember special occasions. If you have inside information about a client’s business anniversary or special occasion for them, send them a quick email or message congratulating them or wishing them well.
5. Offer them 15 minutes of fame. Spotlight a client in your newsletter or social media page. Offer some free publicity by linking to their website and giving a quick shout out about how great they are.
6. Reward them with a coupon or gift. Get in the gift-giving spirit by offering an awesome discount at your store or business. Design the coupon around a theme of gratitude for that extra holiday touch.
7. Host an event. This idea may be a little more costly, but if the money is in the budget, host an event at your business. It doesn’t have to be anything extravagant–order a sandwich tray and some punch and get the party started! Send out invitations asking your clients to stop by for lunch and a quick visit.
8. Give a great read. Get your Christmas client appreciation done early by choosing a great book that is inspirational and thought-provoking for your clients. Be sure to include a handwritten note or bookmark in the cover. You may even choose a few of your favorites and put some thought into which book to send to which client.
9. Start a loyalty program. If you haven’t already, start a program that gets customers excited about continuing their business with you. Offer special discounts, extended shopping hours, or extra perks during the holiday season for loyal clients only.
10. Discount their bill, just because. Clients will be surprised and appreciate the extra savings during a financially stressful time of year. Slash their monthly bill by 50% one month or offer 25% off at the register, just because you appreciate their business.
11. Make them laugh. If you’ve got a creative mind on staff, have them step up and create a funny and personalized client gift or message. One idea: Photoshop your client into a famous movie poster, rename it something clever and email the picture with your note of “Thanks for your business!”
12. Most importantly, do all that you can to improve their customer experience. Nothing shows clients how much you care quite like asking for honest feedback, responding personally and thoughtfully to it, and then making changes to better serve them. Be open and willing to adapt. Your clients are sure to appreciate just knowing their voice has been heard.

FAQs:

1. Why is it important to show gratitude to existing clients?

Expressing gratitude fosters loyalty and strengthens relationships, leading to long-term client satisfaction and retention.
2. What are some inexpensive ways to show appreciation to clients during Thanksgiving?

Options include handwritten notes, sending treats, sharing knowledge through newsletters or social media, acknowledging special occasions, and offering discounts or coupons.
3. How can I personalize client appreciation gestures?

Tailor gestures to individual clients by acknowledging their business anniversaries, spotlighting them in newsletters or social media, or sending thoughtful gifts such as books with handwritten notes.
4. Is hosting an event for clients feasible for small businesses?

Hosting an event doesn’t have to be extravagant. Even simple gatherings at your business with refreshments can provide a personal touch and foster client engagement.
5. Why is it important to prioritize improving the customer experience?

Actively seeking and implementing client feedback demonstrates a commitment to their satisfaction. Adapting based on their input enhances trust and loyalty, ultimately benefiting both parties.

Get Ahead of the Game: Prepare for Year-End Finances Now

It’s never too early to get a headstart on your end of year finances and begin preparing for tax season. With less than one quarter left in 2015, here are a few quick and easy things you can do to see where you’re at and how your finances will look at the end of this year:

Talk to your accountant with any questions you may have. Prepare a list of questions you need to ask about your year end finances and small business taxes.

Review last year’s deductions. To ensure you maximize your small business deductions, review last year’s tax deductions to determine if you’re still eligible for those same ones this year.

Legally reduce your tax liability. If your business did well this year, you can guarantee Uncle Sam will want his generous cut. If you have a favorite charity, consider making your contribution before December 31st. You can also consider increasing your expenses by giving your employees a bonus, purchasing that new camera or computer you’ve had your eye on, or putting extra money toward your business loan. If you reduce your taxable net income and increase your tax deductions, your tax liability may be less, which is to your advantage. Consult with your accountant to make sure there are no negative implications of this and create a tax strategy for your business.

Review your year to date finances. While it won’t yet give you a whole picture of how the year will end, reviewing the last nine month’s profits and loss statements will help you get a clear picture of where you’re at and make predictions about how the year will end. This will help you begin 2016 strategically in regards to your small business finances.

Research changes to the tax code. Take 20 minutes to do some research about tax laws that may have changed in 2015 that may impact your taxes.This will help you take advantage of every credit or deduction possible. Your accountant should know and inform you of any changes that will affect your business, but it never hurts to do a little studying of your own.

Start preparing 1099s. If you used a contractor or freelancer earlier in the year and know you won’t be needing their assistance in the next two months, you can start preparing their 1099s now.

Create a payment plan or save now for your tax payment. If you think you will owe taxes for this year, you’ll want to decide whether to set up a payment plan with the IRS or save money now to meet this tax liability when the time comes.

A little planning and preparation now can save you a lot of stress and headache in April. Close out 2015 quickly by getting ahead on the financial aspect of your business and party on this holiday season!

Frequently Asked Questions:

Why should I talk to my accountant about year-end finances?

Your accountant can provide tailored advice, ensure compliance, and help maximize deductions, potentially reducing tax liability.

Why review last year’s deductions for my small business?

Reviewing previous deductions ensures you capitalize on eligible ones, optimizing tax benefits and minimizing liability.

How can I legally reduce my tax liability before year-end?

Options include charitable contributions, employee bonuses, or business expenses. Consult your accountant for personalized strategies.

Why is it important to research changes to the tax code?

Staying informed helps identify new credits or deductions, ensuring you leverage all available tax advantages for your business.

When should I start preparing 1099s for contractors or freelancers?

Begin now if you won’t need their services in the next two months. Early preparation streamlines year-end processes and compliance.

10 Steps to a More Organized Office or Workspace

As if fall schedules aren’t already full enough, the transition of a changing schedule and rapidly approaching new year can leave things around your office a little messier than you’d like. Here are a few tips on how to have an organized office before your holiday vacations this year.

1. Purge your office. Take a look around and get rid of everything you don’t need or use. What haven’t you used in a while? If that dusty old printer (or fax machine or scanner or laptop…) is still sitting in the corner broken, either toss it or send it out for repairs. This goes for furniture, equipment, office supplies, and anything else in your office that’s been sitting for a while. If it isn’t useful
2. Create a place for everything. Gather up everything that has a place and put it there. For those items that remain homeless, grab some totes or storage bins and make them a home. Don’t forget to label! The same goes for paper–grab some paper trays that sit on your desk or hang on the wall or even a few binders and label them according to their use.
3. Rethink efficiency and proximity. Do you find yourself walking all the way across the office for paper for the printer that sits at your desk? Keep the items you use most close to your desk and store the supplies you rarely use.
4. Set up a charging station. You undoubtedly use some form of technology for your small business like for the small business bookkeeping. Rather than lugging your phone, ipad, and camera chargers to and from your office, grab an extra of each and set up a charging station in your office. Use surge protectors to guard against electrical damage and keep your cords untangled to make them last longer.
5. Revise your filing system. Store your files digitally to maximize efficiency, but make sure to always have a backup either in the cloud or on an external device. Keep a few usb drives in your desk drawer and label them according to their contents. If digital storage isn’t for you, sort through your filing cabinets and toss the papers you don’t need anymore to make room for a more organized filing system.
6. Assign discard dates. You don’t need to keep every piece of paper indefinitely. Mark on files or documents when they can be tossed or shredded. Some legal or financial documents must be kept for specified length of time. Make sure you know what those requirements are.
7. Straighten your desktop and drawers. Keep only the essential things on top of your desk–this will reduce clutter and give you more room to work. Having two paper trays–one for completed tasks/projects and one for your “to do” projects, will help you keep your desktop free of clutter.
8. Use vertical space. This often overlooked tip can save you tons of space, especially in a small office. Hang a few shelves for photos, knick knacks, and souvenirs that would normally sit on your desk. You can also utilize vertical space by hanging white boards, filing systems, and calendars.
9. Invest in a good label maker. Label your files, supplies, and storage bins. That way, whenever someone needs something, you will know exactly where it is.
10. Make time for weekly organization. If you’ve got an efficient system of organizing your office, make time for weekly maintenance to clear the piles and straighten your desktop. Make a checklist to keep in your drawer including tasks like sort mail, throw away sticky notes, log receipts, etc.

Follow these steps to organize your office and you’ll be off to a great start in 2016! For more tips on maintaining a tax deductible home office, visit this series.

FAQs on Office Organization:

1. How do I decide what to purge from my office? Assess items you haven’t used recently. If broken equipment or unused supplies linger, consider repairing or discarding them to declutter your space effectively.

2. What’s the importance of creating a designated place for everything? Assigning specific spots for items reduces clutter. Use labeled storage bins, trays, or folders to organize belongings, facilitating easy retrieval.

3. How can I improve efficiency in my workspace? Optimize proximity by placing frequently used items near your workspace and storing infrequently used items farther away to streamline workflow.

4. Why set up a charging station in the office? Establishing a charging hub with spare chargers prevents the hassle of carrying devices back and forth. Surge protectors ensure safety and prolong cord life.

5. What’s the best approach to revising a filing system? Digitize files for efficiency, backing up data in the cloud or on external devices. For physical files, sort and discard unnecessary papers while adhering to legal retention guidelines for vital documents.

8 Quotes to Encourage You to Achieve Your Small Business Goals

There is plenty of time to accomplish that one thing that you promised yourself you’d do this year. Take time today and make a plan. Follow up on sales calls, take your spouse on more dates, clean out your office, eat healthy, be grateful, increase profits, send an email blast to clients – whatever it is for you, make a decision TODAY and a goal for the end of Q4. Then get busy making it happen. EVERY DAY. That’s what we’re doing over here.

We’ve compiled a list of 8 great quotes to remind you of how important your goals are and encourage you to conquer them one by one. Download the printable version, here.

Small Businesses Required to Adopt EMV Chip Card Technology

As small business owners we have to be extra vigilant to protect ourselves. If you’re accepting credit card payments, please make sure to update your systems immediately.

The responsibility of EMV chip card technology updating is now on the shoulders of small business owners, and they could be the ones facing the consequences if their systems are not up to date.

Stanley Nakano, the Small Business Administration’s Acting Regional Administrator said:

“A major transition is happening in America and small business owners who fail to act may pay a huge price. U.S. credit card companies have set October for the national adoption of chip cards (also known as EMV Cards). Businesses that have not integrated EMV technology to process chip cards will become financially responsible for fraudulent transactions previously covered by the cardholder’s issuing bank.”

Read the full article here.