When you have a small business there are so many things to do, so many laws to follow, so many documents to submit and keep. It is impossible to remember everything and do it all right, but there are some things you may be doing now that are costing you money or could cost you a significant amount of money in the near future.

 At Attaché we see so many mistakes that are made because small business owners either don’t know or don’t think things apply to them. Here are five common mistakes.

Mistake #1 – Not Contesting Unemployment Claims

I see this one all the time. Many small business owners assume when a person resigns they can file unemployment, but they won’t get it because they resigned. Well, unemployment is more complicated than that. First, most employees know or quickly learn if they say they were “laid off” instead of saying they quit, they may be eligible for unemployment benefits. 

If you don’t contest their unemployment claim, they will more than likely receive unemployment. You may think that because you pay unemployment taxes you are covered, and you are; but unemployment is more like an insurance. The more it is used the higher your rates will be. 

Check out our video on Responding to Unemployment Claims.

Mistake #2 – Creating Loose Engagements with Independent Contractors 

Independent contractors are a whole topic unto themselves: from selecting, to hiring, to integrating, to paying, to ensuring their status, and more; however, the three things that generally end up costing the companies money are:

1) Not creating a clear contract with a clear scope of work and final deliverables

When you don’t have a contract that includes the scope of the work and clear deliverables, you have no way of knowing if you and your contractor are on the same page. You may expect more what the contractor believes they are offering or you may actually have a completely different understanding. Now having a clear contract is a recipe for disappointment.


2) Paying based on an hourly rate instead of a project based rate (this one can be a bit tricky and may not be practical for your business)

Although an hourly pay rate is the standard in many businesses, paying for a deliverable is the best way to go for both of you if the project is priced appropriately. Do you really care how long it takes if you are getting the product and quality you want? If you have an expert, they should be able to charge the right amount for the work they produce rather than charging you by the hour. Project based pricing isn’t always possible, but it is definitely worth requesting.


3) Not getting a W-9 upfront

You are required to produce a 1099 and file it with the IRS for any work done for you by contractors that is $600 or more per year. Unfortunately, if you don’t get a W-9 at the start of the engagement, getting one from the contractor after the engagement at the time the 1099 is due is based on a wing and a prayer. They have no incentive to give you the information after they have been paid. If you don’t file a 1099, they don’t have to report it on their taxes. If you are audited, you could be fined for not filing the 1099.


Grab a copy of our Independent Contractor Engagement Checklist


Mistake #3 – Not Getting the Right Types of Insurance

Let me start by saying, I am not an insurance agent, so my recommendations are strictly from the standpoint of experience in business and advising small business owners. The following three types of insurance are often not proposed by your broker, yet they are important when it comes to protecting your business.


General and Professional Liability Insurance
Generally when a small business opens, before having a building or employees, most sole proprietors don’t get insurance beyond their homeowners, which in many cases is fine. However, if you have a business in which others rely on your services for their financial, physical or mental health, you will seriously want to consider getting General and Professional Liability Insurance. For some reason many brokers don’t always make the suggestion that you get this coverage, and it often has a high deductible; but having the insurance may mean the difference between a significant inconvenience, and bankruptcy. 


Employment Practices Insurance
Once you hire employees, I recommend getting Employment Practices Insurance. This insurance protects you in the event an employee, former employee, or even an applicant sues alleging discrimination (based on a protected class), wrongful termination, harassment, and other employment-related issues. You may think, “That’s not a problem for me.” In truth, you never know. Former employees make all kinds of claims. It is better to be protected and not need it, than to need it and not be protected. 


Cyber Liability Insurance

Any company that gathers and holds personal information of their customers on a computer or in the cloud, will benefit from having cyber security insurance. Let’s say you have the name, address, age, phone number, and other personal information about your client stored and organized nicely on google drive. Your computer is hacked and the hacker accesses your google account because you automatically login without having to enter your password every time. The hacker goes in and lifts the names, addresses, and personal information of your customers. You are liable for this. This is not Google’s fault because their system wasn’t hacked, yours was. The more personal information you have on your clients, the more you need to protect your business, yourself, and your client. Depending on the coverage you get, cyber liability insurance can cover: legal fees and expenses, notifications in the event of a breach, the cost to monitor the information of anyone impacted for a specified period, costs incurred in the recovery of compromised data, costs for repair of damaged computer systems.

Mistake #4 – Not Filing Small Injuries with Your Workers’ Compensation Carrier

Did you know that in the United States, workers’ compensation is regulated on a state level? If you are a small business owner and you have employees, you likely have workers’ compensation insurance. If you don’t this is probably the #1 insurance you need to get.

Each state has its own regulations. Some states have severe penalties for not carrying workers’ compensation insurance. With the most severe penalties being in California, New York, Illinois, and Pennsylvania. In Ohio, North Dakota, Wyoming and Washington it is required to purchase workers’ compensation insurance through the government program. The Insureon website is a great resource for finding the laws or your specific state.


This is a little tricky. If you have an employee who is injured, whether it is a minor trip and fall to a severe injury. If they are on the job, it is your responsibility to make sure they are given (or at least offered) medical attention. If the injury is very small, a papercut or even a first degree burn, you can do nothing to have them go to an urgent care or their doctor to receive “first aid.”. If an employee is injured on the job, and an injury can be anything from a minor cut to an injury resulting in death, you want to gather the information and conduct an investigation and report. The Form 5020 – Employer’s Report of Occupational Injury or Illness – must be submitted for each employee for any incident that results in lost time beyond the date of injury or illness or which requires medical treatment beyond first aid*. Each state has a requirement as to how quickly the form must be filed.  (State requirements and insurers may differ on whether or not “first aid’ situations need to be reported to the insurer). 


Oh yeah, and now that more people are working from home, you run the risk of injuries in the home office during the workday.


Some injuries, as small as a papercut can become infected and require additional attention. If you have not documented what you did when it was reported, the insurance carrier might have the ability to deny the claim, your insurance renewal, or both.


Mistake #5 – Not Having an Organized Way of Retrieving Key Documents and Important Websites 

There are so many documents and websites that the small business owner needs to have and use. Not having an organized system for keeping them wastes time and money and can result in late fees and fines. Let’s look at each of these individually. 


There are some websites that you only use once in a while yet you know you need to keep the subscription or at least the web address. Adding a bookmark is great if you are super organized and have all of your bookmarks categorized well.  



There are documents that you frequently access and others that you may never need after you collect them, but by law, you have to keep them. There are document retention regulations that require small businesses to retain many documents for years. That’s why large companies had basements or storage units filled with boxes with files. There are document retention requirements for everything from applications to tax documents, to entity documents, to employee documents. 


Get a copy of our list of over 100 documents you must legally keep for more than 1 year. Some documents must be kept for the life of the company. Other documents you may think you’d

never need again, like an application by a person you didn’t hire, must be kept a minimum of three to four years depending on your state.


If you lose these documents it could be costly to retrieve them or costly because you don’t have the evidence you need to prove you did or didn’t do something. At a minimum, you waste hours of your time or the time or an assistant’s time looking for the documents. 

According to a study by Wakefield Research, 54% of US office professionals surveyed agreed that they spend more time searching for documents and files they need than responding to emails and messages. 


A TechRepublic article highlights the time spent searching for documents during the workday is wasting time and reducing employee productivity. They say, “Companies need to figure out content management (and fast) if they want to keep employees productive and win in the work-from-home world.”


Having a well structured virtual document storage and retention system is key to saving time and money for the small business owner. One of the many ways Attaché helps small business owners save time and money is with our document management system and location for frequently accessed website links.


Get our list of over 100 documents that are legally required to be maintained for at least 1 year