You're kidding right?

Alright this isn't going to be a progress report but instead more of a rant I suppose. You've been warned!

Now that we are closer to opening, more paperwork has to be filled out with the state in anticipation of hiring our first employee. That meant setting up our business with the Arkansas New Hire reporting site, downloading forms like I-9 and W4 forms and printing off documents that must be displayed somewhere in the store for employees detailing their rights, the current minimum wage, and also workers compensation information.

Workers Compensation, not all businesses are required to carry this insurance. For instance, if you employ less than three workers you may be exempt. Each state may be different and you can look up the requirements for your state at this site which has general information as well as links to each state including phone numbers for the worker's compensation department in your state.

So I went to download all the required forms and documents etc. For some reason, I was under the impression that workers comp. insurance was like unemployment insurance, meaning that I believed it was a payment I made to the state monthly, quarterly, etc. based on the employee payroll. NOPE! It was insurance I had to take out from my insurance provider just like my liability insurance. Ok, no problem. Tiffany called our insurance provider and they quoted her a price and told us they needed the whole year's premium up front since we hadn't been doing business with them for at least two years! Give us $1200 please.  Uh...pardon me?

This was not the first time I'd been blindsided by unexpected expenses. It’s basically happened at every turn. For instance, when we were negotiating the lease, our new landlord asked for two months rent up front, which is not unreasonable, it simply wasn't something I thought of beforehand and included in the start up expenses. So a large chunk of startup money went to that. Then we went to get the utilities turned on. Entergy is great and I’m aware there is a deposit for utilities, but for business accounts they wanted roughly $1000! Are you kidding me?

So I shopped around for workers comp. insurance that I could pay out monthly and got a much lower quote and on a monthly payment plan. Thank you! As for the Entergy deposit, I asked nicely what my alternatives would be to the $1000 deposit. She tells me we can get a Surety bond from our bank or insurance provider in lieu of the deposit. Sounds good, what’s that? Basically, it’s a promise by the bank or insurance agency to pay the deposit amount if we fail to pay our bills etc.

We contacted the bank first. Sure they do Surety bonds, but here’s the rub, they want us to deposit the $1000 into an account that we can’t touch, and in return, they will charge us a monthly fee for the bond. REALLY?!?!  Hmm…exactly why would I do that? It would be cheaper to just pay the dang deposit right? So next, the insurance company, bingo, finally what we were looking for. A monthly bill for the bond that they take out at the same time as our liability insurance, SOLD.

I just hate not knowing these things in advance. These surprise expenses are killing me but I guess the point is; that in many cases, you can work something out if you shop around, and hopefully, if you have read this blog before starting your business, you won’t be as naïve as I was…am about the true startup costs.

M