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2017

When you’re self-employed, investing for retirement is entirely up to you. Here are some ways to put away money for your future.

 

  • Start a savings plan. A popular option for the self-employed is a Simplified Employee Pension, or SEP IRA, says Thomas Carter, vice president of Personal Retirement Strategy & Solutions at Merrill Lynch. "These have a much higher contribution limit than traditional IRAs." Generally, a sole proprietor with no employees can make deductible contributions of up to 20% of her earnings from the business, up to the maximum annual limit ($53,000 for 2016).

    Callout.gifFor traditional and Roth IRAs, the maximum is $5,500 ($6,500 for those aged 50 and older). As with traditional IRAs, you contribute pre-tax dollars to a SEP IRA, which won't be taxed until you withdraw the funds in retirement.


  • Contribute steadily. Freelancers often contribute one lump sum to a retirement plan at year's end, says Carter. "But that means investing a year's worth of savings all at once," he says. Regularly contributing smaller amounts may allow you to capture lower prices as markets fluctuate, depending on the market prices at the time you contribute.

 

  • Seek additional income. If your gig doesn't let you sock away enough money for retirement, look for other ways to generate income. "Perhaps you have a spare room to rent out," Carter says. "Or you might consider driving for a ride-sharing company a couple of evenings per week."

 

3 Questions to Ask Your Advisor

  1. Could a SEP IRA be right for me?
  2. How much can I afford to put towards retirement savings each year?
  3. What are some more ways I can boost my retirement savings?

 


Keep in mind that dollar cost averaging cannot guarantee a profit or prevent a loss in declining markets. Since such investment plan involves continual investment in securities regardless of fluctuating price levels, you should consider your willingness to continue purchasing during periods of high or low price levels.

Last year I wrote a USA TODAY column outlining that my No. 1 small business trend was the rise of “the gig economy.” The gig economy refers to the rising number of employees who make a chunk of their income via various independent contracting and freelance work, or “gigs” (such as driving for Uber, delivering for Postmates, selling on EBay, or writing freelance content.)

 

Because the lines have become so blurry, it is fairly difficult to measure just how big the gig economy is (the Department of Labor is working on an official number). However, Intuit estimated that in 2015 there were about 3.2 million people regularly working in the gig economy, and that by the year 2020, that number will double.

 

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So what explains this labor trend, and what does it mean for your small business? There are two driving factors.

 

The first stems from what I call the Not-So-Great Recession. Once the recession hit, a lot of businesses – large and small alike – came to the conclusion that they could avoid the expensive requirements that come with hiring full-time employees such as, benefits, payroll taxes, worker’s comp – you know the drill. As a result, we are seeing a dramatic spike in the number of part-time employees and freelance workers (in fact, a whopping 79% of gig workers work other part-time jobs).

 

The second factor is that the digital age has made creating a side-gig very easy. There are tons of user-friendly websites and apps that provide ready-made platforms for these gigs, sites like UpWork and Freelancer. And, given the fact that nobody can make a living with part-time wages, it naturally follows that a lot of those part-time workers are doing whatever they can to grow their income. This is not a huge challenge with additional sites and options like Uber, Lyft, Postmates, Airbnb, and Craigslist available.

 

Related article: A Guide to the Gig Economy

 

As a small business owner, you might be wondering what the gig economy trend means for your employees and for your business. Maybe you’re concerned that if you have an employee who works one or two or three other side gigs, they’ll show up to work distracted, tired, and stressed. These concerns are not unfounded, but don’t jump the gun and enforce any strict rules on your employees just yet. First, consider these four reasons why an employee may join the gig economy:

 

1. First, many employees feel underpaid or underworked, and that is part of the reason they are driven to create a side gig. If it is absolutely critical to you that your employee is focused solely on your business, you might need to seriously think about either giving them a raise, more hours, or more interesting work. You have to decide what is more important to your business: Saving that extra buck or having an employee who’s all in.

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2. The gig economy is entrepreneurial. As any entrepreneur knows, taking control of one’s income and free time is very empowering and morale-boosting. You might find that your employee is actually more focused and present while at work because of it.

 

3. What used to make sense might not make sense anymore. That is, accepting this labor transformation is probably the way to go. As a business owner, you know how to adapt and expect change. It will behoove you to be flexible, thoughtful, and open to this shift.

 

4. Understand that the gig economy is happening everywhere. If you think this is just a local fad that will die out soon, you’re wrong. In fact, half of the U.K.’s workforce is expected to join the gig economy in the next five years.  Furthermore, the E.U. experienced a 45% increase in the number of independent workers between the years 2012 and 2013 alone. This is a global trend to boot, and it is only expected to grow.

 

Click here to read more articles from small business expert Steve Strauss.

 

As a leader amidst all this development, it is always wise to assess where your business can accept change and where things need to remain the same. The growth of the gig economy appears to be inevitable, so it might be best to place this one in the former category. If you can accept it, work around it and encourage honesty among your employees, it might not be so bad.

 

It could even be great.

                                                              

About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss.

 

Web www.theselfemployed.com or Twitter: @SteveStrauss

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

Whether you own an e-commerce website, a brick-and-mortar retail store or both, you’re undoubtedly dealing with more returns than usual this time of year. In fact, UPS dubbed January 5th “National Returns Day,” and estimated in the first full week of January, more than 5.8 million packages were returned using UPS alone. How can you make the return process easier for both your customers and your business? Here are my top tips:

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If you sell online:

Offer free returns. Let’s face it: You're competing with Amazon, Nordstrom, Zappos and other big companies that offer free returns. In today’s world, many online shoppers won’t even consider buying from you if they have to pay for returns. Build the cost of free returns into your product prices, even if that means charging a little more; you’ll make up for it in customer satisfaction, loyalty and future orders.

Provide return shipping labels. “Easy-to-print return labels” and “Return label in the box” are key factors for a seamless ecommerce return experience for your customers, according to the 2016 UPS Pulse of the Online Shopper study. Labels should include clear directions on how to return the product, such as what paperwork needs to be included in the box, whether it needs to be shipped by a specific carrier and where to drop it off.

Set customer expectations. Make sure return and exchange information is easy to find via a link at the top of your website. You can also include this information (or links to it) on individual product pages, as well as in follow-up emails sent after a product has been delivered.

Click here to read more General Business articles.

Allow in-store returns. If you have a physical store in addition to your e-commerce site, give customers the option to return online purchases in-store. Sixty percent of those in the UPS study prefer making in-store returns than returning by mail (plus, each visit to your store is an opportunity to make a new sale). Just be sure all store employees are well trained in handling online returns.

If you own a brick-and-mortar store:

Make it fast. Consumers in the UPS study say speed is a top factor in making in-store returns a positive experience. Consider setting up a special area for returns during high-volume times; this will shorten wait times and keep customers happy. Be sure signage clearly indicates which line is for returns. There’s nothing worse than waiting in a long line at checkout to return something, only to be told you have to start over again in the special return line.

Train all salespeople to handle returns. If salespeople always have to call a higher-ranking employee or manager over to finish a return, you’re slowing down the process unnecessarily. Post step-by-step directions for returns at the checkout so your salespeople can refer to them easily.

Related article: The Value of Customer Loyalty

Make returns a positive experience. Lots of us enjoy shopping, but no one likes returning things. It’s a hassle, and customers who are disappointed in a product are in a negative frame of mind to begin with. If your sales clerks sigh loudly, look irritated or roll their eyes, they make the problem worse. Train your employees to treat customers with returns cheerfully and professionally—it’s key to retaining their business.

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Communicate your return policy early and often. Have salespeople briefly explain the return policy during the transaction (“We accept returns any time within 90 days as long as you have your receipt.”). Print key return information, such as time limits, on receipts. Have your return policy clearly posted at checkout.

No matter what type of retailer you are:

Be willing to make exceptions. The way you handle a complicated return situation can make or break your relationship with the customer. Empower your salespeople to use their discretion and make exceptions when warranted.

Use returns as a learning tool. Both online and brick-and-mortar retailers should always ask the reason for return, either in person or on the return form. By tracking information about specific products and reasons, you’ll spot trends and problems. For instance, you might find that one supplier has started providing poor-quality merchandise, or that clothing is more likely to be returned if the description doesn't include fabric content.

Prevent future returns. E-commerce retailers will find that providing as much product information as possible—including multiple photos, videos, detailed size information, dimensions and materials—reduces returns because there are fewer surprises when the product is received. Letting customers write product reviews helps eliminate returns by alerting shoppers to issues, such as clothing that runs small.

Handle returns right, and they can actually increase customer satisfaction, build customer loyalty and give you insights into your product assortment.

About Rieva Lesonsky

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com.  A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

Web: www.growbizmedia.com or Twitter: @Rieva

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

I am in a fortunate position to receive a lot of requests – both from people I know and those I have never met – to “be their mentor.” While I am always flattered that someone wants to learn from me, the cold ask is not a method I advocate for finding the mentorship you need.

 

Instead, follow these five steps:

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1.     Know what you are looking for and when

 

Finding mentors is not supposed to be like collecting baseball cards. You don’t just go after every high-profile business person you meet. Instead, think about what kind of information, connections and assistance will be helpful for you right now. This will likely change during the course of your business – a great mentor for when you are starting out will likely be different than the one when you are thriving. So, be really clear on what you need to help you find the best fit.

 

2.     Shoot low

 

Yes, everyone would love Sheryl Sandberg, Richard Branson and Warren Buffett as a mentor. But not only are they not likely the best fit for what you need, they are really busy and most likely have no connection to you.

 

Look to people in your network that have the relevant information you are seeking. You might find it is a peer who has walked that path before, or an immediate boss that’s most likely to add value to your professional development. 

 

3.     Keep it informal

 

True long-term mentoring comes out of growing a long-term relationship. So keep your sights on someone you know or have met. Then, instead of asking someone to “be your mentor,” which sounds very formal and possibly like a big obligation, make a more reasonable ask: “Do you have time to answer a few questions or grab coffee?”

 

Most people advocate dating before you get married. The same goes for mentors. As the relationship grows, it may resemble a mentor-mentee relationship, or you might just get a few valuable nuggets and move on.

 

4.     Check in and update

 

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Don’t expect someone who “mentors” you to chase you down. If someone provides you great information, connections or advice, keep them posted on your progress from time to time as you advance. Then, if it seems appropriate, you can seek additional counsel.

 

5.     Seek five-minute mentors

 

I personally have never had a permanent mentor that has guided or shaped my career. Rather, I have learned from a series of individuals of whom I asked questions or made connections along the way.

 

Don’t pressure yourself to just find that mythical one person who will take you under their wing and make you a billionaire. That’s on you. However, there are plenty of daily learning opportunities from people who have been successful (and have failed). Take the initiative to identify those learnings and build upon them.

 

About Carol Roth: Carol Roth is the creator of the Future File™ legacy planning system, “recovering” investment banker, billion-dollar dealmaker, investor, entrepreneur, national media personality and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett-produced technology competition show, America’s Greatest Makers and TV host and contributor, including host of Microsoft’s Office Small Business Academy. She is also an advisor to companies ranging from startups to major multi-national corporations and has an action figure made in her own likeness. 

 

Web: www.CarolRoth.com or Twitter: @CarolJSRoth

 

Bank of America, N.A. engages with Carol Roth to provide informational materials for your discussion or review purposes only. Carol Roth is a registered trademark, used pursuant to license. The third parties within articles are used under license from Carol Roth. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

Change is in the air, is it not? With the weather cooling, plants going dormant, and the presidential campaign over, it’s clear that new seasons are upon us.

 

If we trust the cyclical nature of both weather and democracy, now is the perfect time for us to make some positive changes, especially as we head into the new year. Indeed, polishing our productivity program (if not perfecting it) might be the perfect way to prepare for the new year.

Here then are six effective, simple productivity hacks that can make a big difference next year:

 

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1. Make your bed in the morning: I know that might sound silly, especially to start such a list, but according to both Business Insider and Psychology Today, the simple task of making your bed in the morning can do a lot of good for your productivity.

 

As it turns out, starting your day by immediately checking something off your to-do list gives you a baseline level of momentum that can snowball throughout the rest of your day. Typically, that domino effect does not start until after you arrive at work, and even then, maybe not until you’ve had a cup of coffee or two.

 

Extra bonus – your bed is made!

 

2. Get the easy tasks done first: Along the same lines, productivity experts suggest that tackling small tasks first thing in the day – things like paperwork and email – makes you more effective because they have a much more finite and predictable timespan than working on a big, important presentation or writing up a proposal.

 

Of course it is great to be enthusiastic about your challenging assignments, but doing the busy work first will ultimately free up the rest of your day for you to work on the more important things, and that is also better to do once you are revved up and in a rhythm.

 

3. Avoid the perfection trap: Yes, of course you want to do a great job, and you should, but just remember that sometimes it behooves you to just get stuff done instead of getting stuff done perfectly.  This is especially true when that extra time and effort won’t make a big difference.

 

Click here to read more articles from small business expert Steve Strauss.

 

4. Turn off phone notifications: It’s a good idea for many reasons to power down and put away your mobile devices altogether every now and then. That said, it’s not always possible, and in that case, it can be just as effective to simply go to your settings and turn off notifications for the things that distract the most, such as email, texts, Twitter, Facebook, etc.

 

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Forgetting about your phone for a while is one of the very best things you can do to save time and boost your productivity.

 

5. Take breaks: Your brain is an organ that needs rest, just as much as your heart does after a workout. If we never refill our tanks, we will inevitably run out of gas. So go ahead, break up your day and spend some time refreshing yourself in whatever way works best for you. Self-care is just as important as hard work, especially with winter on the horizon.

 

And yes, the new trend towards mindfulness is hot for a reason – because it works.

 

6. Exercise: As you likely know, the body and the mind have a direct, symbiotic relationship; you will notice an instant difference in your clarity of mind, memory, energy level and productivity if you make fitness a part of your routine. Making a concerted effort to exercise is a defining feature of some of the most successful people, such as Richard Branson, President Obama, Bill Gates, and Mark Cuban.

 

So go ahead, make some of these easy changes and I guarantee your 2017 will be more productive. 

 

About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss. You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

SBC Team

A Guide to the Gig Economy

Posted by SBC Team Jan 4, 2017

Header Image.jpgNEARLY A CENTURY AFTER JAZZ MUSICIANS of the 1920s coined the term "gig" to describe a temporary engagement at a club or concert hall, it has reentered the workforce lexicon. In today's booming "gig economy," millions of people, empowered by advances in digital technology and often motivated by difficulty finding full-time work, are relying on temporary engagements to earn a living.

 

While estimates vary, a recent study by prominent labor economists Lawrence F. Katz and Alan B. Krueger reported that 16% of American workers are involved in gig-type "alternative work arrangements," up by half from just a decade earlier.

 

The prototype could be the ride-share driver, a contract employee who's primed to pick up passengers at the buzz of a smartphone. There's also the recent graduate getting a foot in the door by doing project work at a company. Or a woman easing back into the workforce after raising her family. They're all joining mid-career professionals looking for a more flexible lifestyle, aspiring entrepreneurs, moonlighters and retirees whose talents remain in demand.

 

Pullquote0 PM.jpg"Many retirees aren't quite ready to stop working, so they've created gigs to stay busy and enhance their finances," says Karin Kimbrough, head of Macro and Economic Policy at Bank of America Merrill Lynch.

 

How to Succeed in the Gig Economy
Thriving in the gig economy takes a combination of skills, hustle, good luck and sound advice. Here are three people who are making it work for them.

 

Just starting out. Matthew Daray, 25, of Palatine, Illinois, studied journalism and creative writing in college and is currently on a six-month contract as a medical writer for a large pharmaceutical firm. "It's not a bad gig—for now," he says. "But full time is definitely the goal."

 

Daray is making his present situation work by living with his parents and staying on their health-care plan for as long as he's eligible. Meanwhile, he's talking with his family's Merrill Lynch Financial Advisor, Randi Merel, about ways to boost his savings so he'll be prepared for emergencies—not to mention long-term goals such as buying his own home. To bring greater discipline to Daray's savings strategy, "we've set up a regular transfer from his check-ing account to a savings account. We can then withdraw those dollars to invest," Merel says. "That way, he doesn't really miss the money."

 

Not ready to retire. Another of Merel's clients, 59-year-old Ric Noreen, joined the gig economy at a different stage of his career. Five years ago, he took an early-retirement offer from his job as a senior marketing and strategy executive. "It was an opportune time to start what I call a virtual consulting business," he says.

 

Thanks to technology, his new Chicago-area business, Waypoint Strategic Solutions, is able to serve a wide variety of clients across the country. And Noreen is loving the challenge. "One of the surprises to me is how transferable my skills are across industries," he says.

 

Noreen and his wife and business partner, Sarah, are empty nesters; their health insurance is covered by a provision in his early-retirement agreement. Still, with concerns about the uncertainty of their future income, the Noreens have worked with Merel to remove some of the risk from their portfolio. Says Noreen, "When the steady paycheck goes away, asset preservation becomes a bigger part of the strategy."

 

Jumping back into the job pool. After 15 years devoted to raising four children, Jane MacKeen of Sudbury, Massachusetts, was ready to return to the workforce, but not to her previous career in media sales. Instead, she earned a masters degree in dietetics. Starting in 2014, the former college swimmer began her current gig teaching corporate employees and private clients about wellness.

 

"Jane and her husband, Mike, did all the right things when she was younger—opening an IRA, putting money in a 401(k), starting to save for her kids' college," says Mary Mullin, MacKeen's Merrill Lynch Financial Advisor. Combining experience in sales with her love of wellness, gig work "has afforded me the opportunity to explore a new field, while still having time with my family as I transition back into the workforce," MacKeen says. And using her gig work as a bridge, she recently landed a full-time position at a company that uses wellness programs to help employers improve the well-being of their employees while reducing health-care costs.

 

Working Without a Net
Whether you're making the move by necessity or choice, supporting yourself without such traditional benefits as paid vacations and employer-sponsored health-care and retirement plans requires careful planning and a clear sense of what's ahead. Here are some basics to consider if you're contemplating diving into the gig economy.

 

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The health-care puzzle. Rising health-care costs are especially challenging for self-employed people if there's no employer chipping in. For some, the answer may be joining the plan from a spouse's job. Others may find coverage through HealthCare.gov, or through professional organizations that offer plans for freelancers. "You can also try to negotiate health care with some of your gig employers, perhaps in exchange for a lower salary," Mullin suggests.

 

An emergency fund. Keep in mind that in the gig economy your main client can cut payments, extend payout periods or even go out of business with little notice. "You'll need an emergency fund to be able to withstand those unexpected gaps between gigs and checks," says Thomas Carter, vice president of Personal Retirement Strategy & Solutions at Merrill Lynch. Finally, don't underestimate your regular expenses. Most of them, from your computer to your business car to tech support, will now fall on your shoulders.

 

Attention to taxes. "When you're working gigs, there's no automatic withholding," notes Carter. Instead, you'll likely be paying quarterly estimated taxes. This requires a greater degree of control over your spending, so that you have enough to cover taxes when they're due. Work with a tax professional who can help you set a strategy for paying taxes, taking advantage of any appropriate deductions.

 

Equally important advice, once you've gotten all your financial ducks in a row, is to enjoy being your own boss. As Ric Noreen puts it, "I am working harder, making more, and am more satisfied than I ever was. And my pedal is still to the metal—maybe even with a little bit more resolve."

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