Organizational Structures for Small Businesses

In life, we need to keep things organized so that we know what to do. When it comes to business, organization is important to keep everything flowing perfectly. Everybody has a role to play and these roles need to be made clear so that staff and employees know where to go if they need something. Organizational structures are formal systems that show the tasks and hierarchy of the people in the organization. It classifies the responsibilities and roles of the different positions and what relationship in present between them. A good structure coordinates and controls the organization’s resources and helps motivate employees in achieving the collective goal of the company.

Distribute Authority

An organizational structure should establish an order that determines each of the position’s responsibilities. It should also show how the different positions are related with each other. In management, people need to know who decides what; this is where authority comes in. Authority can either be centralized or decentralized. Supervisors can make decisions for the majority or a collective decision must be made.

DeterminesSpanor Range of Control

Even in a small business, there should be a guideline that sets how many people a supervisor or manager takes charge of. This span or range of control varies greatly between different organizations. Some manager might have narrow spans and only manage a few people whereas others might have wide spans and manage a big group of people. Either way, this helps set management to prepare how they will manage these people.

Organizational Height

There is always a hierarchy in any organization. Think of it as a cake with different layers. However, an organizational structure’s height is what sets it differently. Some organizations might be tall, which means that they have narrow spans of control while others flat with wide spans of control. Organizations with a more flat organizational height tend to adapt faster.

Staff or Line Structure

Highlighting and determining staff and line positions and tasks is one of the most important uses of the organizational structure. A line position is the most directly involved position to the organization’s main goal. For example, line positions inside a manufacturing business are the one that participate in producing the businesses products. Staff positions, like marketing officers, provide help.

Creates Departments

When small businesses decide to expand, an organizational structure can help with creating more specific divisions or departments for responsibilities and tasks. This process is called departmentalizing and can be done in different ways. A department can be made based on product, function, geographic location, and even by client.

Small Business Taxes – Know Your Enemy

This article will guide you through the small business tax maze and describe in details the various tax types your small business may be expose to. Use the article to learn which federal and state taxes you, as the owner of a sole proprietorship, general member in an LLC or officer of an S. Corporation is responsible for.

Federal Income Tax

The Internal Revenue Code (the IRC) is the source for imposing income tax on small businesses. The tax code treats each entity type a little different but in the end the income tax on the business taxable profits is payable by the small business owner. Sole Proprietor has to file schedule C to report business income and expenses and then report the taxable income on form 1040 where he discloses all of his income sources. Member of a partnership or an LLC reports his/her share from the business taxable income on form 1040 and Owner of an S. Corporation does the same. The rates of the federal income tax that a small business owner will pay depend on his/her filing status and residency status. For current tax rates please refer to IRS Publication 17 To register with the IRS you must fill out IRS form SS4 to obtain Employer ID Number (EIN).

State Income Tax

If your business is operating in a state that imposes income tax on business income, you will be liable for that tax in addition and regardless of the federal tax due on the same income. Very few States (Seven to be exact) do not impose income tax and among them are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two others, New Hampshire and Tennessee, tax only dividend and interest income. In general state income tax rates range from the lowest rate of 3% in Illinois to the highest rate of 11% in Hawaii. To register with each State’s Department of Revenue, you must complete the applicable registration forms to obtain State Tax ID Number.

Payroll taxAs soon as your business start hiring part or full time employees, it will be subject to Federal & State tax withholding from the employees’ gross wages (For current Federal Withholding rates please refer to IRS Publication 17 and for the Stare withholding rate, please refer to the State’s Revenue or Finance department), Social Security, also known as FICA (currently at 6.2% of gross wages is the employer’s responsibility and the same amount is the employee’s contributions with cap of $106,800 on gross wages) and Medicare (currently at 1.45% of gross wages is the employer’s part and the same amount is the employee’s contributions), Federal & State income tax withholding (at the rates publishes by the IRS and each State’s department of Revenue), Federal Unemployment, also known as FUTA (currently at a rate of 0.008 of gross wages up to $7,000 per year) and State Unemployment, also known as SUTA, at rates assessed by each State Unemployment Insurance Department. To register with each State, you should complete an employer application with the Department of Revenue and open an account with the State’s Unemployment Insurance Department.

Sales Tax

Sales tax is tax imposed on gross sales made to end users (as appose to resellers who purchase the product for inventory) and has many names: transaction privilege tax, gross receipts tax, general excise tax and more. The tax is imposed by each State, and in many cases includes Base Rates for all States residents and then additional rates that vary by county and city. Rates of sales tax vary by States with few States that impose zero percent tax (such as Delaware, Montana & Oregon) and others that impose rates in excess of 10% (such as Chicago Illinois)

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Importance Of Small Business HR Training

The small business owner needs to consider taking small business HR training courses in order to be able to handle the many functions required by the business. The human resources development is a vital part of business operations. The fact that the business only has one employee means that this person is involved with the development of the business, profits, advertising and marketing which is a major part of the human resource department.

What are Human Resources?

The HR department consists of many different tasks that are important in helping to operate the business. The first most important asset is human capital. The larger corporations usually have multiple employees to carry out the functions of the department; however, the small business owner must rely on one or two people. In most cases it is the owner who is carryout the functions of the department. The person who functions in the human resource department is often the director, manager, analyst, in charge of employment compensation and the manager over the benefits for the employees.

These are just some of the functions required of the human resource department but in a small business all one person does the tasks, which is usually the owner. That is why it is advisable for the owner to take small business HR training. The special training will enable the owner to perform all of the required duties of the human resource department. The human resource person must recruit and train new employees. The small business needs to hire employees that can be versatile in doing many different functions.

The employees must know the policies and procedures of the small business because often they are called upon to handle situations when the owner is away. It is important to hire the right employees to prevent a high turnover rate, which causes an extra expense in training etc. The hiring of well-qualified employees saves the HR department extra work and it is helpful in providing better benefits. There are a number of training courses available to help the owner handle the many different functions of the department.

What Training Is Available?

The business owner can take courses to help them with the business functions, legal courses, and courses that help with the foundation of operations. The introduction courses are a great place to start then the owner can take other courses to help them with other important functions like payroll, benefits, recruiting, hiring, training, disciplinary action and termination of the employee. The business owner may want to take specialty courses that give them the opportunity to focus on the area that they need the most for the operation of their business.

The business owner may want to focus on such things as the HR law, workplace safety, job descriptions, and training handbooks. It is important to know about compensation record keeping and performance management. These are all specialty courses made available for the small business owner. Today thanks to modern technology, the small business owner can take these courses over the internet making it much easier to do since they can take the courses in their own time.

The ability to know how to do human resources management is a vital part of running a small business. That is why Human resources training programs give the business owner the advantage of learning how effectively operate their business.