When people talk about full-time and part-time employment, they typically refer to work hours. But this isn’t the only difference between part-time and full-time work. You also have to consider numerous perks and benefits when picking your future place of employment. If you are an employer, however, you have to pay attention to regulations surrounding part-time and full-time employees or risk paying hefty fines.
What Is Considered Full-Time Employment?
It’s a common belief that full-time work includes anything between 30 and 40 hours, and this is generally true. The trick, however, is that federal law doesn’t regulate any classification of full-time and part-time workers, so every company can create its own policy and define full and part-time employees' work hours for benefit eligibility. Therefore, a company can set full-time work at 30 hours per week and part-time hours at 25 a week if it suits its needs.
What Is Considered Part-Time Employment?
Some people prefer part-time jobs because they typically involve working fewer than 30 hours per week and frequently don't have a set schedule. The two most significant differences between part-time and full-time employment are that part-time employees are paid hourly but do not receive the benefits and perks that full-time employees do.
Be aware that there is a significant distinction between part-time employees and independent contractors in how they go about their tasks and when it comes to taxes.
Why Is the Distinction Between Part-Time vs. Full-Time Employment Important?
Every employer is responsible for keeping track of how many full-time and part-time employees they have, as well as ensuring that each one receives the perks and benefits outlined in the employee handbook and to which they are legally entitled under the contract.
While federal law does not regulate the classification of workers as part-time or full-time, it applies to all employees or sets its own specific rules for the eligibility of employees.
Employer’s Obligations and Benefits Toward Full-Time vs. Part-Time Employees
In an effort to attract talent and boost retention, businesses offer various benefits to prospective employees, including health insurance, dental and vision insurance, 401(k) retirement plans, mental health benefits, disability insurance, and professional development.
Such benefits used to be available only to full-time employees, but with the competitive market, we’ve seen an increase in businesses offering said benefits to all hires, including part-time staff. Never assume you'll be eligible for a benefit, though. Instead, inquire about it during the job interview to be on the safe side.
Federal and State-Regulated Benefits and Obligations
While some benefits are optional, others are mandatory and regulated by the federal government or the state.
The Fair Labor Standards Act
The Fair Labor Standards Act regulates the minimum wage, overtime pay, recordkeeping, child labor, and what constitutes working time. It applies to all employees, be they part-time or full-time, but it does classify workers as exempt and nonexempt employees when it comes to overtime pay eligibility.
Affordable Care Act
When it comes to the Affordable Care Act, also known as Obamacare, the law classifies all companies with at least 50 full-time employees and full-time equivalent employees as an Applicable Large Employer. All ALE classified companies have to provide their full-time employees with a minimum coverage health insurance plan.
Because full-time employee and part-time employee classifications aren’t regulated by federal law, a company's and ACA's classifications can differ. ACA considers an employee who works at least 30 hours per week or a total of 130 hours per month as a full-time employee, even if the company doesn’t classify it as such.
In order to avoid confusion and mistakes that can lead to fines, many businesses follow the ACA classification for full-time workers even though it isn’t required by law. As per the ACA, they are considered full-time workers only for the purposes of calculating if the company is an ALE and providing minimal health insurance.
Counting full-time employees is only one part of the ALE calculation. To see if a company can be classified as ALE, you also have to take full-time equivalent employees into account. All other workers with fewer hours than 30 hours per week or 130 hours per month go into this pool. Their monthly time is combined and then divided by 120. The result represents full-time equivalent employees. When you combine full-time and full-time equivalent employees, you can see if a company is classified as ALE, and this has to be done each month.
The Family and Medical Leave Act
The Family and Medical Leave Act, just like the ACA, applies only to companies with 50 employees or more. Whether they are full-time or part-time employees, all workers have the right to request an unpaid leave of absence in the event of a birth, if they are given custody of a child, to care for a family member, or if they are suffering from a long-term illness.
In order to qualify for FMLA leave and protection, an employee must have been with the company for 12 months and worked at least 1,250 hours during that time.
Medicare and Social Security
While many believe they are the same thing, Medicare and Social Security are two separate obligations introduced by the Federal Insurance Contribution Act. Both aim to improve the lives of retired or disabled Americans who have paid the same tax for at least a decade. This obligation is shared by the employee and the employer.
This one squarely lies on the shoulders of the employer, and it’s paid out from the Unemployment Tax Fund in cases of wrongful termination and staff layoffs. Unlike most other obligations and benefits, this one is regulated at the state level because each state has a different base wage used for calculation. Businesses are required to pay unemployment insurance for every part-time and full-time employee.
Workers Compensation Insurance
Workers' compensation insurance is one of those benefits you are glad exists but also hope you will never need. It’s mandatory in one form or another in all states except Texas, where it’s a benefit an employer might offer. It covers various work-related injuries, treatment, and death benefits in the worst-case scenario.
The Difference Between Full-Time and Part-Time Employment
In the end, the main difference between the two types of employment is the work hours and benefits offered.
Working hours per week
From all to none
Covered by the FLSA
Part-time workers also get to enjoy a little bit more free time and typically have more flexible work schedules compared to full-time workers, but they are also the first to go in case of layoffs. If a part-time worker isn't a specialist brought in for a certain project, it also means that the pay is lower than what a full-time employee would receive.
Both types of employment are viable, and sometimes a part-time job is an entry-level position in the company. This allows both the employee and the employer to test the waters before committing to full-time employment.
By Danica Jovic ·
We live in unprecedented times, and starting a new business may sound like a risky proposition. More than 10 million Americans remain unemployed, and the COVID-19 pandemic closed 23% of small and medium businesses at its peak.
But amid the economic meltdown and the subsequent signs of recovery, an increasing number of businesses need accounting firms to help them keep their operations on track, manage loans, and identify potential sources of revenue.
If you’re trying to figure out how to start a bookkeeping business, you’re probably not alone. According to at least one survey, accountants are busier than ever, with 69% experiencing a higher than usual workload. So, if you’ve found the perseverance to launch your small business, check out the bookkeeping basics below, which will help you develop the right strategies and give you the confidence to move forward.
What Do Bookkeepers Do?
Contrary to popular belief, the leaders of the accounting profession aren’t a bunch of gray-haired men who are sitting around crunching numbers all day. Starting a bookkeeping business can pave the way for a modern, innovative, and creative job that involves keeping and interpreting financial records.
In addition, accountants are tasked with ensuring compliance with local laws, preparing tax returns, managing income and expenses, processing payroll, and dealing with a broad range of other paperwork. Of course, some businesses don’t need this level of assistance and prefer to go with virtual bookkeeping services.
Before we delve any deeper into the bookkeeping business, it’s important to make a distinction between bookkeepers and accountants. These two terms are often used interchangeably, but there are subtle differences.
While every accountant can perform the tasks of a bookkeeper, not all bookkeepers can be accountants. A bookkeeper will typically record daily financial transactions.
On the other hand, an accounting business performs a broader range of tasks. Upon collecting and recording data, an accountant analyzes it. They need to be licensed, and they charge more for their services.
Checklist for Starting a Bookkeeping Business
We’ll take you through our step-by-step guide with tips and tricks on how to do bookkeeping. Get ready for a detailed lowdown on each and every move you need to make in order to kick things off successfully and land your first client.
1. Get your certification
The first step is getting your credentials. Although having a bookkeeping license is not a must for doing this job, many bookkeepers choose to get certified to gain credibility with clients and charge more for their services.
While you’re figuring out how to start a small bookkeeping business, the certification process should be at the top of your list. Having a certificate can be a game-changer in the bookkeeping business. You can become a certified public bookkeeper through a number of organizations, including the American Institute of Professional Bookkeepers and the National Association of Certified Public Bookkeepers.
AIPB is a more suitable option for those without a formal education in bookkeeping and accounting. You can get certified once you meet the 3000-hour work experience requirement and pass a certification exam. Meanwhile, CPB requires proof of a degree in accounting, and you’ll also need to pass an exam to get the credentials.
2. Create a bookkeeping business plan
Every business needs a long-term vision, and the business of bookkeeping is no exception. But before you can reach your long-term goals, you’ll need to outline your strategy and identify every significant aspect of your business. Here’s a roadmap for your business plan:
Before you start thinking about a bookkeeping business launch, make sure you have a timeline of all the key milestones.
Analyze your market, the level of demand for your services, and the competition.
Hammer out all the start-up costs and financial projections for your bookkeeping business.
Create a straightforward management structure.
3. Incorporate your business
Now let’s deal with daunting administrative tasks that will make your business legal. First, select a catchy name that conveys your brand and clearly states what you do. Next, get insurance to protect your firm from potential threats, set up a mailing address that you plan to use with your clients, and open an account with a bank that offers favorable terms for small businesses.
While you’re working out how to start a bookkeeping business, bear in mind that the structure of your company impacts everything from your earrings to your taxes and your personal liability. The four most common structures are sole proprietorship, partnership, limited liability company, and corporation.
4. Choose the accounting software
Tracking your clients’ finances and creating financial reports can be exhausting if you’re doing everything manually. Thanks to modern-day technological advances, we can lean on accounting software to make our lives easier. If you’re starting from scratch and working on a budget, there are a number of free accounting software options that can help you with your bookkeeping business.
On the other hand, many of the businesses that prefer the paid option choose the QuickBooks bookkeeping software. Tailored to small and medium-sized businesses, the software can help customize your invoices, track expenses, and manage reports. This cloud-based program allows you to store information and forget about piles of paperwork on your desk.
5. Offer your services to the world
Once you’ve identified your target market, you’ll want to deliver a service with all the bells and whistles. Focus on services that are valuable to your potential clients. Think about designating your services in different tiers and offering different pricing plans.
Those navigating the ins and outs of how to start a bookkeeping business need to focus on making their services both reliable and affordable. Make a list of your core offerings: monthly bookkeeping, financial statement preparation, invoicing, sales, tax filings, and catalog the prices. Now, it’s time to tell the world about it.
6. Spread the word
The next step is implementing marketing strategies. Whether you’re offering bookkeeping services from home or your office, make sure people know about you. Business cards and a website with SEO-optimized content are not enough these days. Starting a bookkeeping business isn’t difficult, but staying in the game requires going the extra mile.
If you want to know how to start bookkeeping for a small business, you need to think outside the box and start diversifying your approach. Think about hiring a marketing company that can help you brand your services and come up with advertising strategies. Coming up with a unique logo can also play an important role in developing your identity. Additionally, you can advertise your services on social networking sites, start a blog, hit up local networking events, and mix business with pleasure.
7. Stay up to date
All these tips and tricks on how to start a bookkeeping and tax business won’t work if you stop there. It’s important to make connections with other people in your profession and never stop learning. In addition to numerous online courses that help you stay in the loop, you can also take some time to attend summits and conferences that are ideal for speed networking, panel discussions, and having some fun. If you work from home, bookkeeping can become a bit redundant, so taking part in social gatherings and mingling with other entrepreneurs can be extremely useful.
How to Start a Home-Based Bookkeeping Business
Renting an office when you’re starting from scratch might be costly. To keep the costs down, you can set up an office at home. Meetings with clients can be scheduled online, especially during the pandemic when virtual bookkeeping is becoming increasingly popular.
Arm yourself with a cloud-based accounting platform and make sure to have credentials because clients are less likely to put their trust in home-based bookkeeping agencies. Now that you’re up and running, spread the word about your online bookkeeping services and wait for your dream clients.
How to Start a Freelance Bookkeeping Business
Hiring freelance bookkeepers is becoming increasingly popular among small businesses trying to cut costs. As a freelancer, you’ll also need to purchase bookkeeping and payroll software and preferably have a PC with robust features.
Now let’s talk about money. Freelancers have to pay their own taxes for their bookkeeping business. It’s important to keep that in mind when you set your rates and offer your services.
After starting your online bookkeeping business, you should join freelancing platforms such as Upwork, Guru, or Toptal. Keep an eye out for job offers, and never stop learning through webinars, online panel discussions, and courses.
By Danica Djokic ·
Getting your house in order is essential - especially if the house is your business paperwork. And while some companies hire a team of accountants to take the burden and handle it, not all businesses have the resources to do that. Most of the time, one clerk is enough. If you’ve been thinking: “What does an accounts payable clerk do?” and whether you need one at all, read on.We'll get into more detail about what accounts payable are, why it’s crucial to have someone to handle them, and what kind of person you should be looking for to hire for the job. Not everyone is suitable for the position, given that you’ll have to trust them with your business’s paperwork. Obviously, you don’t want your company to go under because of sloppy bookkeeping.What Are Accounts Payable?In short, accounts payable are invoices - money, really - your company owes to another provider of goods or services. Any invoice that has not yet been paid is considered accounts payable for your company.This usually happens when companies use credit to purchase goods or services. Essentially, your company, as a customer, is legally obliged to pay it up within a year - you have an IOU to a particular company. It’s a current liability that your business needs to pay up to avoid default. This is an account payable for your company, and for the company you owe payment to, it’s an account receivable. So, basically, the difference between accounts payable and accounts receivable lies in the standpoint.But what does having accounts payable mean for your business? It is a vital piece of every company’s balance sheet. The increase in the accounts payable implies that the company relies on credit a lot, while a decrease means it’s paying off debts faster. In essence, it’s an excellent way to keep track of your company’s checking account and cash flow.Still, as with any other credit, paying it up in due time is a good practice. Not only will you avoid accruing debt, but it’ll also positively impact any relationship you might have with those companies and vendors.What Does an Accounts Payable Clerk Do?Handling all the invoices and payments can take up a lot of your time. It’s an exacting process, error-prone, and can result in wasting time and nerves, which you could put to better use to grow your business and handle more critical aspects of your business. Now, what can an account clerk help you with daily? Think of all the day-to-day financial transactions, processing payments, verifying invoices, classifying, and recording the data about them. Keeping an eye out for all the changes in financial policies and procedures and staying up to date is something an accounts payable specialist can take off your plate as well. The person you hire will also be responsible for processing outgoing payments, tracking purchase orders, and handling employees’ salaries. Reconciling the ledger at the end of the month to ensure everything is accounted for and correctly entered is another of the accounts payable duties. Managing the payment of vendor invoices before they are due is another task they’ll handle instead of you. The clerk should also present you with accurate reports detailing the status of all accounts payable. Another one of the accounts payable clerk’s duties is to investigate and reconcile invoice discrepancies that may occur. A good accounts clerk should be acquainted with the relevant regulation, ensuring you don’t inadvertently break the law. In some companies, dealing with vendor accounts, including questions and possible problems, is entirely in the clerk’s capable hands. Ultimately, it’s up to the clerk to continually find ways to improve this process, report any unusual activity, and develop solutions regarding any issues that may occur with the paperwork.Now that we’ve given the overall accounts payable clerk job description let’s see what kind of person would be a perfect fit.What Are the Necessary Skills of an Account Clerk?We’ve already mentioned all the calculations the clerk should handle, so being proficient or at least fluent in financial operations is a must. As with anything related to money, the person applying for this position must have strong attention to detail.Now, the duties of an account clerk are varied, so another thing to pay attention to is the person’s organizational skills, especially if the company has numerous employees or deals with plenty of vendor accounts. The accounts payable clerk must handle contracts, invoicing, payments, and resolve any issues without overlooking anything in a highly error-prone job. Therefore, a patient and thorough person is an ideal pick.Next, in terms of practical skills, apart from being proficient in math and finances, the clerk should also be well-versed in budgeting and statistical examination. PC and data entry skills are also mandatory since long gone are the days of manually writing everything down. If we’re going to take it to another level, familiarity with the most popular accounting software such as QuickBooks, Xero, or Zoho Books, for example, are mandatory skills to hire someone for the accounts payable position.Can I Use Some of the Available Software Instead?There’s been a significant expansion of software that helps you handle account payables in the last couple of years, from automating accounts payable and receivable to comprehensive bookkeeping solutions for small businesses. Companies such as NetSuite and Quickbooks already have wide user bases, so it’s safe to say that this software is effective in helping business owners keep their books in order.While these solutions perfectly fulfill several duties listed in an accounts payable job description, they are still far from being able to replace humans entirely and require manual input. Yes, a large portion of the job is now automated, but the software won’t do everything by itself. A clerk or an experienced virtual assistant still needs to supervise it and ensure everything is in order.The First Person on Your Future Accounting TeamOverall, accounts payable, together with other paperwork, are an important part of every business. It’s vital to have an experienced and reliable person to handle them. Many small-business owners are tempted to cut the costs and do themselves a big part of what would typically be accounts payable clerk’s responsibilities, losing time and patience instead of making strategic decisions and running their businesses. Hiring the right person for the job, especially in the era of excellent job posting sites, is a rather simple process bound to pay off in the long run.For small-to-medium companies, this role represents the first step toward building an entire team that will handle accounting once the company expands. Having a detail-oriented person who is well-versed in finances and accounting software and systematic is a big part of achieving the goal of going big in the first place.
By Vladana Donevski ·