How To Grow The Family Business

How To Grow The Family Business

In 1921, William and Salie Utz began selling potato chips, hand-cooked in their home kitchen, packaged in brown paper bags. Today, Utz Potato Chips is the leading conglomerate in the snack food industry. 

In today’s market, about 90% of American businesses are family-owned and controlled. Some companies, like Utz, have become full-blown enterprises that have cornered their prospective markets. While the path for every business is different and there is no clear-cut path to expansion, there are certain steps and considerations that have proven universal when looking to grow your family business. 

The path to expansion for any business requires a well-thought-out and innovative plan for what the stages of expansion should be. 

While your plan needs to leave room to be flexible and nimble to account for things like changes in the market, consumer climate, and national culture, there needs to be a relatively concrete path for how you intend to move the business forward. 

Take Stock Of the Current State of Your Business

Before you can healthily expand, you need to take full stock of the current state of your family business including revenue streams, work environment and culture, and agreement among partners in the business that expansion is the best way forward. 

According to Forbes, deciding to move a family business forward can be more difficult than some other small businesses because of the emotional attachment that is often involved. 

Make sure that all vested members are on board with the plan to expand. 

Assess Your Talent Needs

It is imperative that you make an assessment of your current workforce and decide where you need to make the first investments in attracting strong talent. 

Whether it be for a strong sales manager, an operations manager, or a business development lead, you will need to decide what steps you will take to create a position that will be attractive for ideal candidates. 

According to a survey by Glassdoor, three in five employees stated that benefits and perks were the most important aspect of a potential job offer to them, even over higher compensation. 

The top 5 most valued benefits to the employees surveyed were:

  1. Health insurance
  2. Vacation and paid time off
  3. Pension plans
  4. 401K/retirement plans
  5. Wellness programs 

While competitive compensation packages are a good way to attract talent, today’s workforce has started to lean more towards the benefits of working for a company, and how much the company will allow them to balance work, home, and health. 

Reach out to a company like Life Inc. Retirement Services to discuss options for creating a comprehensive and attractive benefits package to offer your employees.

Stay Strong To Your Values

Your family business likely has very core values that it was founded on, and expanding should not lead you to deter or sway from those values. 

Transparency and exceptional customer service are often key values of a family business, and those values should remain intact through the growth of the company. Be open with your employees and your customer about what your core values are, and reiterate that they will remain despite the expansion of the business. 

Customer loyalty is as important to an enterprise as it is to a small family business.

Scalability 

Before expanding your company, you need to ensure that the procedures and policies that you have in place can support rapid business growth. 

Streamlining and automating as many of your processes as possible is a great first step to making your family business scalable

Having too many manual processes that require manpower will inevitably begin to bog down your production and ability to grow once your amount of incoming business increases, which can result in massive operations failures and negative work culture. 

Forbes recommends five concrete steps to scaling your business that will help ensure its longevity. 

Be Patient, Be Flexible

No matter how well-devised your plan for expansion is, there will undoubtedly be hurdles and challenges involved that are unexpected and can feel overwhelming. 

Be patient in the process of expansion, and be flexible in your willingness to deviate from your plan to overcome these challenges. Make sure that you have the right people in the right positions to handle these hurdles as they come. 

Most importantly, do not forget the essence of your family business and why it was started in the first place. There is room for integrity and honesty in every part of the market.

Have more questions about growing the family business? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with Evaluator.

What Happens In A 401(k) Audit?

What Happens In A 401(k) Audit?

Yes, 401(k)s can be audited.  But, before you race to your file cabinet to find your records, let us explain what this means and we’ll dive into what happens in a 401(k) audit.

Federal law requires that 401(k)s and other types of retirement plans to be audited. 

The primary objective of a 401k audit is to ensure that the 401k complies with government regulations and the requirements specified within the plan documents. 

What Does A 401(k) Audit Involve?

A 401k audit looks at two major areas: 

  1. To see if the plan is compliant. The auditor wants to make sure that the plan is operating with the Department of Labor and IRS regulations as well as with the plan-related documents. 
  2. Financial reporting. They want to make sure that the financial information reported is accurate on form 5500, and the plan financial statements, including required disclosures. 

A big part of the audit is to ensure that the plan is “fair” to all employees eligible for the retirement plan.  The 401(k) audit is one way to help regulate this.

But, no reason to be stressed.  Use our Evaluator to see if you’re using the right retirement plan type for your company. 

How to Prepare For a 401(k) Audit

There are three steps you need to take to properly prepare for a 401k audit.  Doing these steps will save you a lot of time and trouble:

  • Make sure your documents are in order. Your 401k auditor will ask you to provide a lot of documents.  You will need to provide plan documents, payroll data, and time-stamped communications.  Having well-organized documents will save you a lot of time. 
  • Integrate payroll to prevent errors. You can avoid a lot of problems by integrating your payroll and record-keeping systems during your 401k deposit review. 
  • Work with professionals. You will need a good 3(16) fiduciary to handle the legal responsibilities of managing your 401k plan along with a competent third party administrator who helps you with designing the plan and the compliance around it. 

How Long Does the Audit Take?

The 401k audit process usually takes about 6 to 8 weeks.  It generally includes a short review and information request stage, 2 to 4 hours of information gathering interviews, a review of the preliminary report, and the final delivery of the audit report. 

What to Do When the Audit Is Finished 

Once your 401k audit is finished, attach the report to form 5500.  This annual report, registered with the Department of Labor and the IRS, provides information on your 401k. 

Form 5500 comes with 28 pages of instructions, that’s why it’s important to have a good team around your 401k plan to handle this annual requirement.

Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with The Retirement Plan Evaluator.

How To Become An Absentee Owner

How To Become An Absentee Owner

“Let’s be honest.  If you’re a business owner, you’ve probably thought of how to become an absentee owner one day.  

The notion that your company cannot operate without you forces you to assume a few mundane tasks from each department, and you become the “go-to-person” every time. As much as that may appear necessary, you may also be denying yourself some time away for adventure and vacation, which will affect you in one way or another.

Being busy on the phone while addressing concerns and questions from your customers as well as managing your employees is not all that life has to offer. Maybe, you could “autopilot” your company and shift your attention elsewhere. 

Here are some tips on how you can run your business operations without being on the ground. 

You can learn which retirement plan would best fit for your company’s budget by clicking here

1. Attract High-Level Employees

Today, potential job seekers appreciate work-life balance working models and the freedom to work remotely. The implication, in this case, is that these are critical factors to consider for any employer focusing on attracting top talent.

On the other hand, creating the right working environment for your employees can increase their productivity, and in turn, micromanaging them becomes unnecessary.

In that case, attracting high-level employees is paramount. The reason is that such workers can meet or even exceed your expectations when you are not on the ground to oversee the daily operations of your company.

Yes, you might see an in crease to your overhead.  But, you have to ask yourself, what is the price of complete freedom?

2. Let Go of Anything That Ties You to Your Organization

If you are the face of your company, disconnecting from it in one way or another may be difficult. However, if you want to run your enterprise without being there physically, you need to cut any link that ties you to it.

As such, starting to transition your marketing, networking and any other customer facing materials should be on your checklist.  Consider getting rid of the “wrapped” company car or publishing your personal number on social media, websites and other materials.

Basically, start to completely remove yourself from your company’s identity.

3. Consider Delegating Roles

Delegation is the most direct path for starting the journey towards running your company on “autopilot.” 

Some of your workers can indeed handle particular tasks better than you do, while others have natural leadership qualities that you can leverage.

So, if you are planning to step away from the hands-on operations of your firm, you should prioritize nurturing competent employees to assume your responsibilities.

Conclusion

If you adopt the tips above, you can create an enterprise that runs without you, and one that honors who you are, your principles, and your input over the years.

Once you have your team in place, start to reap the benefits of what you’ve accomplished by traveling, enjoy more family time, or even start on your next venture.

If you’d like to learn how to become an absentee owner by attracting high-quality employees, schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

What Is A Forfeiture Account?

What Is A Forfeiture Account?

If you make contributions to your employee’s 401k plan, you may have built up amounts called forfeitures.  

What is a forfeiture account?  A forfeiture is the non-vested portion of an employee’s account balance.  For example, if an employee is 40% vested in your profit-sharing plan terminates their employment with your company, the remaining 60% becomes a forfeiture. 

How Are Forfeitures Used? 

IRS revenue ruling 84-156 states that forfeitures can be used to pay for a plan’s administrative expenses and/or to reduce employer contributions.  This is determined based on the provisions of the plan.  Forfeiture accounts typically pay the administrative expenses of the plan.  

These expenses include accounting, auditing, record-keeping, or consulting fees.  If there are forfeitures remaining after expenses have been paid, the plan will indicate how they will be used. 

In most cases, any remaining forfeitures are used to reduce the employer contribution or be allocated to other employee’s plans.  Employer contributions offset by forfeiture accounts are not tax-deductible, and cannot be used for employee deferrals.  Forfeiture account funds also cannot be distributed back to the employer.    

You can learn which retirement plan would best fit your company’s budget by clicking here

When Should Forfeiture Accounts Be Used?   

Assets in a forfeiture account should be used in the year the employee terminated their employment.  Typically, no later than the end of that year.  You’re not allowed to let forfeitures accumulate from year to year before using them, no matter how small the amount is.  Any forfeitures left over from one year to the next must be used to pay expenses for the following year. 

To make sure that forfeitures are used properly you should monitor your account frequently.

Plan Accordingly

Just like anything else in business, you need to plan on how you use forfeitures.  There are many options when it comes to utilizing forfeitures.  Be sure to go over your plan to make sure it aligns with your goals. 

You need to understand when forfeitures will occur, how to use them, and when to use them.  Failure to understand these could lead to IRS violations..  So, if your employees ask you what is a forfeiture account, you can tell them.

Have more questions about forfeiture accounts? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

5 Unique and Creative Employee Benefits

5 Unique and Creative Employee Benefits

For most people, landing a new job is not just about how much money they’re going to make, but about the employee benefits they’ll receive.  According to research from Glassdoor, 57% of people said benefits and perks are among their top considerations before they accept a job. Four out of five workers say they would prefer new benefits over a pay raise. 

Here are the top 5 best employee benefits workers prefer:

  1. Health care insurance (medical, dental): 40%
  2. Vacation/paid time off: 37%
  3. Performance bonus: 35%
  4. Paid sick days: 32%
  5. 401k plan, retirement plan and or pension: 31%

However, there are some unique and creative employee benefits that some companies provide their employees.  Here are 5 examples of creative employee benefits some top companies provide their employees. 

1. A Pet-Friendly Environment

If any of your employees have pets, you might want to consider providing benefits for them.  PetSmart offers employees several pet-related benefits.  They receive a 15 percent discount on pet-related merchandise and grooming.  They also receive free training classes and discounted veterinary services.  They can also bring their pets to work with them. 

Dogtopia provides its employees with a personal wellness fund that can be used for doggy daycare and vet visits.  Employees that don’t have pets can use the wellness fund for gym memberships and healthy lunches. 

You don’t have to be in the pet business to provide pet benefits.  Zappos provides its employees with pet insurance.

You can learn which retirement plan would best fit your company’s budget by clicking here

2. Unlimited Vacation Time

Netflix employees get to choose how many vacation days they take each year.  It could be two weeks or two months. 

Metis Communications not only gives their employees three weeks of vacation, but they also get their birthday off too.  They also get a bonus vacation week during the last week of December.  After four years of employment, workers get an extra week of vacation.  After five years, they get paid Friday’s off during the summer.   

3. Get Paid to Volunteer

Salesforce rewards their workers for volunteering.  They get six paid days off to do volunteer work.  They also give employees $1000 each year to donate to the charity or cause of their choice. 

4. Freezing Your Eggs

Female employees at Spotify who wish to delay pregnancy can have their eggs frozen.  Spotify will pay the cost of egg freezing and fertility assistance.   

5. Paying Down Student Loan Debt

Paying off student loans can eat away at your paycheck.  PwC helps its employees pay down their debt.  They give their employees $100 a month towards their student loan debt.  This benefit is available for up to six years.  This can help save employees save up to $10,000 when you factor in interest. 

You might want to consider offering your employees some of these benefits or none at all.  The important thing to remember is that to attract top talent for your company, having an attractive benefits package and an excellent work culture is a must.

Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

Tax Credits for 401ks for Small Business Owners

Tax Credits for 401ks for Small Business Owners

A lot has changed in the last few months for small businesses, but one of the positive changes we’ve seen comes from the SECURE Act. Previously, employers who had implemented a 401(k) plan for their company received a flat $500 tax-credit, which wasn’t enough of an incentive for some. With the SECURE Act, employers will be guaranteed a minimum of $500 with a maximum of $5,000 for up to three years! If you are looking for tax savings, this is a great place to start. The final amount is determined by the number of employees that sign up for the plan. Shameless plug: we help make enrollment simple for you and your employees!

Encouraging Employees To Enroll
Automatic enrollment (often called auto-enrollment) is a great tool to get more employees enrolled. Participants have the option to opt OUT, but aren’t dealing with the hassle of enrolling. It’s a great way to urge employees to start saving for their retirement. We find that one of the top reasons that employees don’t enroll is because they don’t understand or it seems complicated. What’s more, is that the SECURE Act offers an additional $500 tax-credit for those 401(k) or Simple IRA plans who use automatic enrollment for their participants!

Extension Of The Timeline
The SECURE Act has also pushed the timeline for employers to decide if they want to implement a 401(k) or Cash Balance plan. Instead of the December 31st deadline, they now have until their next filing date (including extensions) to decide whether or not they want to implement a plan for the previous year.

This rule goes into effect for plans starting in 2020 for the 2020 tax year.

This won’t be eligible for the 2019 tax year.

These incentives give the employer a way to offset the costs associated with a retirement plan that helps with recruiting high-quality employees, employee retention, and tax management.

We see the passing of the SECURE Act as positive for small businesses. If you’d like to read more about the SECURE Act, we’ve written a blog that covers extension of the implementation deadline, and eligibility for part-time employees. Read more here.

Contact us for a free consultation or head over to the Retirement Plan Evaluator to see which plan is best for your business.

Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.