What Back-Office Firms Can Do for You
I’m not a do-it-yourselfer, not by any means.
I give my taxes to H&R Block and my laundry—well, most of it—to the dry cleaners. They’re happy to see me each week; in fact, I get a volume discount. I like take-out, and I keep Chinese, Thai and Mexican restaurants on speed dial. Frankly, I call this “cooking,” and if I could afford one, I’d have a maid—in fact, I’d have two or three, which you’d understand if you saw my apartment.
So when it comes to running my business, I’m a fan of back-office firms that save you time, if not money. After all, when you chose the free-lance life, you planned to build networks, write some Perl or do a Web site or two. You never planned to spend the bulk of your time on payroll, a Byzantine tax code that gets worse every year or a mountain of bills. It’s a simple fact: We like the work that we’re good at, and we like to get paid for it. Payroll, receivables and payables, not to mention the ream of paperwork needed to run a project, were not a part of the bargain. But a back-office firm can help.
Pay to Get Paid
Far and away the hardest, strangest, most baroque part of the tax code, with the exception of the sleight of hand brought to you by Enron et al., is the set of rules that applies to small-business payrolls. Witness the 940, 941, 8102, W-4, W-2, FUTA and FICA, to name a few. All in all, it’s a mound of paper large enough to form its own climate, right on your desk. Worse, mistakes can be costly. The IRS has a way of enforcing fines with precision, and they’re unforgiving. What’s more, the hours you spend on payroll are hours you miss with your clients, the ones you have and the ones you want.
Enter the payroll firm. For a small fee—it varies, but can run as low as $20 a month—these firms will do your payroll for you, soup to nuts. How’s it work? You enter the basic info on their Web site—a time sheet, salary and so on—and they spit out the forms, write and mail the checks and pay the government on your behalf, taking the money right from your bank account. (Some require a separate account you’ve opened with them, and some pay on your behalf and send you a bill, making your payroll experience no different than paying the phone company.)
Since payroll is their bailiwick, these firms are accurate (they’ll do the right arithmetic for all the federal, state and local taxes), easy to use (it’s not that hard to hit a Web site, do a little data entry and click the “Go” button) and safe (you’ve got a better chance of using the right forms, including the dozens of forms owed the IRS, than when you go it alone). As for advanced features, a payroll service can help you make your contributions to IRAs and 401(k)s, can help you track vacation and sick days, deals with consultants and contractors, offers direct deposit, gives you reports of monthly and yearly liabilities and exports data to your software of choice. If you’re a fan of Money, QuickBooks or Quicken, most of these firms have software that integrates nicely with yours.
Need more info? Try these sites for starters. You can find more at Yahoo and Google. Just search on “payroll service.”
Get What You’re Owed
It happens to all of us, and I’m sure it’s happened to you: Every so often a client won’t pay, and you’re left with the bill. I once had a client who failed to pay a bill for three months in a row. Given, it was only a small bill—$500—and no reason to bite my nails. Besides, they’d paid other bills in the interim, some of them larger, and they were, by and large, worthy of trust.
So I sent them some e-mail, made a few calls and sent a letter or two. Still, no payment. Four months later they’d racked up a hefty bill for new projects, and their past due balance had grown. By now I’d been told no less than four times that the check was in the mail. They’d apologized and promised a payment, but failed to produce one.
It was time for collections. For those of you who’ve been there, you know the minefield that small-business collections can be. On the one side is your lawful right to be paid; on the other, and just as explosive, is your need to keep clients in a tight economy. The tone of a collections call can run the gamut, from “pay now or I’ll put a live snake in your underwear drawer” to “polite but firm.” I chose the latter and got, by way of response, the worst tongue-lashing I’ve ever had from a client. I also got a headache and, in the end, a check.
You can avoid this nightmare for a reasonable fee. A receivables firm—one of the best is YurCor at www.yurcor.com—will automate your billing and collections so you can spend your time on the important things, say, The Sopranos. (Apologies to fans of Six Feet Under.) Using a Web site, you’ll enter your time and project data, the amount you’re owed and your client’s name, rank and serial number. They’ll send the invoice, track its aging, dun the client if needed or take more serious collections action for the deadbeats among us.
It’s a twofold advantage: You get to keep your relations with clients on a smooth and even keel, and you save the time—and trouble—it takes to run the billing process yourself.
Bills, Bills, Bills
Speaking of bills, I’ve got bills for my phone and utilities, rent, Web hosting and car payment in the corner of my desk. I’ve put them in a pile where they’ll sit, untouched, for the next two months, but worry me not in the least. Why? They’ll all be paid on time and in full, automatically.
These days everyone from Citibank to Yahoo lets you receive and pay bills online. You can use their services—sometimes as low as $5 a month—to automate your accounts payable.
With a quick trip to bills.yahoo.com, you can write checks to anyone in the free world, have them mailed automatically, schedule payments for recurring bills such as car, rent or mortgage, get e-mail reminders of upcoming bills, project your cash flow (de rigueur for small-biz owners) and store your payment history for later reporting. Or you could do this yourself, if you’ve got a few hours to spare each week. I don’t.
Web sites that are run by your bank are even more efficient since they tie your payables to your bank and credit accounts, letting you transfer funds at the last moment possible and thus maximize your interest while avoiding late payment fees. Check with your bank for its options; the larger banks—Citibank, Bank of America, WaMu and others—have poured millions into online banking that’s now in its fourth and fifth generation. Features are often superb.
While You’re At It …
While you’re automating your back office, why not automate the rest of it as well? In fact, why not get rid of it?
As independents, we often work in teams of coders, designers, project managers, copywriters and more, brought together from the corners of the earth for the needs of a given project. Some of us work in Miami, some in Seattle. If you’re lucky, you might work in the same town as one or two members of your team. No matter the location, you’ll have to share documents, schedules, time cards, task lists and more, a logistics nightmare worthy of Tommy Franks.
A good extranet can help—in fact, it can let you work anywhere in the world, with anyone you want. All you’ll need is a high-end server or two, a WAN, a great backup system and a secure data facility with guards 24×7. That, or $50 a month for a back-office outsource.
Try Intranets.com. You can store and share your documents with search features, security and automatic backup, keep an online calendar and task manager, run a discussion forum, build a simple, shared database for sales reports,