Five Reasons Why Payroll Outsourcing Is Necessary for Your Company

With expanding businesses, the complexities that are required to run your business keep on increasing. These complexities can be in terms of multiple layers of your company, be it administrative, financial, or marketing.

 

One such issue is payroll management. Even the most experienced businesses find themselves in a nightmare-like situation when handling payroll.

 

However, as problems arise, solutions are born alongside as well. For this case, the quick and easy way out is outsourcing payroll.

payroll outsourcing

But what are payroll outsourcing services? Why should you use them? Who should you hire? These are some of the questions that might pop up in your head.

 

Don’t worry! Dave’s Bookkeeping Services has got you covered! Read on to learn about the five reasons you should get outsourced payroll services for your business.

 

Let’s get started.

 

What is payroll outsourcing?

To explain it in layman’s terms, payroll refers to managing the payment of your employees.

 

By managing the payment profiles, calculating bonuses, filing taxes, working with complicated and expensive software, it’s no wonder that even the most experienced and skilled professionals will end up with a headache.

 

And what we mean by outsourcing payroll is that you hire a third part company or group that will take over your payroll-related responsibilities. This will help in issuing payments and listing all such finances easily.

 

Why do payroll outsourcing?

Many new businesses prefer to try to take a crack at payroll management themselves. However, that is very troublesome. There are plenty of reasons why you should get payroll outsourcing services for your business. Let’s look at some of them!

 

1.  Less time and money wasted

When you start your business, you’ll see that opting for in-house processing is actually pretty expensive and time-consuming. You have to hire a professional team, buy costly software, and deal with additional costs of printing, distributing, signing, etc.

benefits of payroll outsourcing

You also have to do this daily while preparing documents for taxes, gathering data, and figuring out who to send the files to.

 

And what does that mean? Yup, your focus is diverted away from the actual running and expansion of your business.

 

Now, you do not want that, do you? So the answer is simple-outsource payroll.

 

The cost to outsource payroll is actually lesser than this, and it will also help you save precious time and energy that you can invest in other spheres of your work.

 

You might also like to read: 4 payroll mistakes that could get your business into trouble

 

2.    Fewer mistakes

One out of three employees in the business has come across a mistake in their payment, either in amount or in the schedule.

 

It is not only a hassle to fix this issue, as you have to look into the system to check for errors, but it can also decrease the morale of your staff.

 

Sometimes, people come across errors in tax payment and recording, which causes huge issues for your business reputation and sales.

 

Outsource payroll providers like Dave’s bookkeeping will ensure that you do not have to worry about these matters with their highly skilled and efficient services.

 

With their support, you can work on your businesses without finding a minor error in the system that costs a huge loss.

 

3.   More security

A huge issue that businesses face is security. This can range from identity theft to embezzlement and changing payment profiles of employees in the records.

 

These security issues can occur even if you are paying for state-of-the-art security software or have the most trusted staff.

outsource payroll

This, as you can guess, means a loss on a huge scale that can amount to millions of dollars, depending on the scale of your business.

 

So, instead of regretting it later, why not get a trusted and foolproof way of ensuring that there is no tampering with the payment? 

 

Outsourced payroll is a tension-free way of doing that and is simple enough to get as well!

 

4.   Compliance with laws

It does not matter how small or large your company is; the fact is that you have to navigate each employee’s files.

 

This means that you also have to be careful to check their federal and local taxes, including multiple aspects of state-level amenities like security, medical care, credit protection, education, etc.

 

men exchanging money

Moreover, it’s difficult to remember all these names, let alone keep them in mind during the payment process. Any negligence here, and boom, you’ve got a state-level issue at your doorstep.

 

Outsourced payroll means that the employee information and payments can be processed and gathered much faster and with no mistakes in the overall process.

 

5.   Get Professional help

Reputation and image are very important for any business. Handle anything poorly, and you’re just asking for a drop in profits and morale.

 

But by payroll outsourcing, you can take a breather knowing that you have a solid backing for handling your company’s assets.

 

Payroll outsourcing means that you are now handing over a very complicated yet vital part of your company’s functions to a trusted entity.

 

Additionally, they are very immaculate in their dealings and professional in their behavior. So you can rest by being sure that they will be helpful and ensure that your work becomes easier to handle.

 

Conclusion

We all want our businesses to succeed. To do that, we need to be able to focus on the more important tasks and know that everything is working efficiently. 

 

By opting for payroll outsourcing, you’re doing just that.

 

We hope that this guide helped clear some of your confusion and encourages you to choose to outsource payroll instead of doing all the work yourself.

 

 So, what are you waiting for? Contact us here!

 

For more information on this topic, check out this blog and this link as well.

 

Best of luck with your business endeavors!

The U.S. Education System Isn’t Giving Students What Employers Need

The Covid-19 pandemic stripped millions of Americans of their jobs. As of April 2021, the economy was still down 4 million jobs compared to February 2020. At the same time, we are seeing unprecedented labor shortages, with 8.1 million jobs open and unfilled across the U.S. Markets that saw explosive growth due to the pandemic, such as cybersecurity and technology, are struggling to maintain the levels of innovation needed to continue that trend, because they can’t find the right talent.

How can this be the case when nearly 10 million people are currently unemployed and looking for a job?

It’s because the U.S. education system is not held accountable for ensuring that students are properly equipped with the skills and capabilities to prepare for a career where they can obtain financial stability. Additionally, employers continue to rely on a traditional four-year degree requirement as a primary means of determining job candidate employability. The disconnect here is obvious, and the result is nearly 15 million un- or under-employed individuals.

This archaic system simply no longer works in our modern world. The U.S. education system must be reevaluated to better prepare students with employable skills. And employers need to adjust how they evaluate candidates and job requirements. By facing this problem head on, the education industry can aid in the economic recovery from the pandemic and prevent similar hiring gaps in the future.

To start, we must focus on how our current education system is preparing students for employment. A recent Cengage survey (publication forthcoming) of Americans who graduated from a two-year/community or four-year college in the past five years found that nearly one in five (19%) reported that their college education experience did not provide them with the skills needed to perform their first post-degree job. Additionally, more than half (53%) of these college graduates have not applied to an entry-level job in their field because they felt unqualified, and nearly half (42%) felt unqualified because they did not have all the skills listed in the job description.

Insight Center Collection

Building Tomorrow’s Workforce

How the best companies identify and manage talent.

Since the beginning of the pandemic, job postings for entry-level positions that require a bachelor’s degree fell by 45% — pointing to the fact that employers simply want candidates who have more skills and experience in the real world. But if our system is failing to prepare students for a career, how can we expect education to be the building block of our economy and a tenet of talent recruitment?

There’s a direct disconnect between education and employability, where employers view universities and colleges as the gatekeepers of workforce talent, yet those same institutions aren’t prioritizing job skills and career readiness. This not only hurts employers, but also sets the average American worker up for failure before they’ve even begun their career, as new employees who have been hired based on their four-year educational background often lack the actual skills needed to perform in their role. To create change as an industry, we must provide greater credibility to alternate education paths that allow students to gain employable skills.

A Longstanding Stigma Around Vocational and Non-Traditional Education

The U.S. may be one of the only countries where a stigma around vocational and technical training still exists. In Europe, countries such as Germany, Austria, and Switzerland have long seen vocational education as a pathway to the middle class, and an effective system to provide students with the skills they’ll need to further their career. In America, two-thirds (65%) of all open jobs require a bachelor’s or associate’s degree, which eliminates career paths for millions of Americans and, quite frankly, is not necessary to succeed in many of today’s open jobs. Yet, businesses continue to penalize applicants who follow nontraditional education paths, as nearly two-thirds (61%) of business and HR leaders admit to tossing out resumes without four-year degrees, even if the applicant was qualified.

This means that businesses are losing out on millions of qualified candidates for whom a four-year education in America wasn’t attainable. And for many of these individuals, it’s because the cost of a four-year degree isn’t affordable. In 2019, the U.S. median household income was roughly $68,703 per year, while tuition and fees alone for higher education institutions reached $10,560 for in-state students at four-year public institutions in the 2020-21 academic year; $27,020 for out-of-state four-year public institutions; and $37,650 for four-year private institutions. (With room and board and other fees, many four-year college degrees can cost as much as $70,000 per year.) This cost is not sustainable for many families (arguably, most families), which is why opting for a skills-based vocational education can and should be a fruitful path to consider.

Evolving the Employer Mindset — Breaking Free of Traditional Paths

Some organizations are taking their own approach to providing valuable alternate education options. For example, IBM created their Pathways in Technology Early College High School (P-TECH) to help students gain employable digital skills, while Google recently announced new certificate programs and job search experiences aimed at finding roles that match candidates’ experience and education. At Cengage, we are also continuing to question the system, working with higher ed institutions to create equitable access to education and drive career readiness, while also rethinking our own hiring policies to expand beyond degree-only requirements. For example, within our technology organization, we have dropped bachelor’s degree requirements, recognizing that for a number of these jobs, the skill set required can be obtained through alternate pathways outside of a traditional degree, such as micro-credentials and certificate programs.

To build a strong workforce with the skills needed to find career success, we need to realize that both employers and higher education institutions have a role to play.

Hiring managers must consider traditional education paths may no longer be the standard:

    • Consider how many of your open roles truly require a traditional degree. Start by defining what skills are needed for open roles and determine if those skills can be developed through alternate pathways other than a traditional degree. What supplementary value does a degree bring to the role?
    • Make adjustments to current job requirements and descriptions where possible to cater to a variety of educational pathways. Consider having a third party review open job descriptions to ensure the language you’re using is not inhibiting candidates from nontraditional backgrounds from applying. Continuing to overlook prospective employees who have pursued a different learning path will prevent workforce diversity, equity, opportunity, and meaningful output.
  • Offer opportunities for training and certificate programs to help upskill employees.

Higher education institutions should collaborate with employers to align educational offerings with the skills needed to perform jobs in the real world:

    • Create a stronger dialogue between businesses and institutions, rather than the blind trust we see today, to establish a workforce where people are prepared for their careers.
    • Rather than focusing on the two- or four-year degree or credential as the output, help students identify and more easily demonstrate to employers what job-ready skills they’ve developed as part of their education and training.

Misalignment between success in enrollment and career readiness at educational institutions creates a difficult dichotomy for recruiters and HR teams, who must choose between hiring an employee with a required degree versus one with the skills needed for the job. The answer should be obvious — the employer attitude toward non-traditional education paths must change to open the talent pool and build a workforce that’s ready for the future. Now is the time for employers to increase credibility for skills-based hiring, to remove stigmas around vocational education, and to move forward to create equal opportunities for all students.

TOP 6 BENEFITS OF BOOKKEEPING SERVICES FOR SMALL BUSINESS IN 2021

Starting a business is not an easy piece of work. And once you set the sails, keeping everything up and running becomes more demanding than ever. Don’t you agree?

 

You see, there are finances to manage, checks to be cashed, and deposits to be made, which is just the tip of the iceberg. 

 

For small businesses, getting used to this world of commerce is no easy feat. However, there is always a solution if you look hard enough.

 

Is that why you stumbled upon this page? Does this resonate with your current situation? Are you looking for professional help to relieve some of your burdens?

 

Well, look no further because Dave’s Bookkeeping Services is here to help you navigate the endless waters of financial transactions. 

 

But before getting into the benefits of why you should hire bookkeeping services for your small business, let’s get you familiar with the concept of bookkeeping. 

WHAT IS BOOKKEEPING?

In basic terms, business is the flow of money into and out of the company. Every step of the way, there is a transaction taking place. With so many exchanges taking place, it becomes necessary to keep track of the money. 

 

Bookkeeping is a widely used approach to deal with this scenario. Essentially, it means a record (or book) of all the payments, transactions, and deposits taking place in the name of your business. No money is allowed out of sight without noting down where it is going.

 

This is also an essential step for the accounting process that takes place after it. Think of it like this; bookkeeping is for accounting what a recipe is for a dish. Everything is written down in one place for the accountants to cook up a delicious tax report.

 

Having read all this, you are probably wondering why you can’t just undertake this job yourself. After all, no one knows the ways of the business better than you.

 

That, however, is not the best way to handle the situation. Before making any overhasty decision, take a good look at these benefits of bookkeeping services for your small business in 2021.

BENEFITS OF BOOKKEEPING SERVICES FOR SMALL BUSINESSES

 

IN-DEPTH RECORDS

A professional bookkeeper will handle the workload and do so with care and attention to detail.

 

Having a business is an overwhelming job. It is very easy to overlook a minor detail when keeping a record. However, hiring a professional would ensure that no transaction goes unnoticed and everything is recorded to a tee. 

 

The book will also be kept updated on the latest dealings, which means you can refer to it whenever needed.

 

LESSEN YOUR RESPONSIBILITY

You have heard about how certain expenditures, even if they are expensive, are favorable investments. Well, this situation fits right in.

 

As a business owner, you have a considerable burden on your shoulders to get everything right. You are required to be on your toes every second of the day and get things done. All of this hustling can leave you swamped.

 

To take on the responsibility of bookkeeping, on top of everything, is putting yourself under tremendous pressure. It is in your best interest to hand over the financials of your business to a professional service so that you may focus your energy elsewhere.

 

FINANCIAL ADVICE

A professional bookkeeping service knows the best way to keep track of the financials and is also a knowledgeable guide for business. 

 

They are already familiar with how your business is doing and what goes in and out of the company. Hence, they can offer advice on better ways to spend the company money and where to invest.

 

Furthermore, they can create regular reports to let you know how the company profits are looking like to know where to direct the money to maximize these profits.

 

BIRDS EYE VIEW OF FINANCIAL SITUATION

Imagine you were handling the financials of your business alone. With so much going on at work, you are unable to keep the receipts, statements, and checks organized in one place. The financials are all over the place, with no place to start or end.

 

With a bookkeeping service, your company’s financial situation is already mapped out for you. Just a glance away, you can refer to it whenever you please, and all you have to do is make a decision without wasting any time. 

 

You will always be one step ahead of your plans, and in the business world, that can make all the difference.

 

TAXES ARE NO LONGER TAXING

For anyone who does their taxes, it is nothing less than a nightmare. Doing taxes is the equivalent of cutting onions; it makes you cry every time.

 

Provided that doing taxes is the work of accountants. Still, a massive portion of that work involves having organized and up-to-date records of transactions over the year. 

 

With a professional bookkeeping service already doing that part for you, it would come as a huge relief at the end of the year when you file for taxes. 

 

Bookkeepers are aware of the changing laws about taxes and can keep track accordingly so that you don’t have to worry about it.

 

PROBLEM DETECTOR

When a system is appropriately laid out, and everything is crystal clear, you can easily spot the problems and deficiencies. The same goes for bookkeeping.

 

When the bookkeeping service sorts out your transactions and keeps orderly evidence of everything, it will become easier for you to track where your problems lie. Instead of piling it up in the end, you can work on the issues as they come.

 

In this manner, you will end up saving a lot of money, on top of which your business will be more secure than ever before. 

 

This means that you will have a higher chance of expanding and will achieve more milestones than you thought were possible.

 

CONCLUSION

It is expected of a small business to encounter difficulties and hurdles in the initial days of operation. A lot of matters need looking after, and even then, things take time to settle down. In situations like these, it is not a sign of defeat to ask for professional help or admit that you might not know everything as you assumed. 

Investing in service as helpful as bookkeeping might not sound appealing to you or your budget at this time. Still, some decisions need to be taken considering the best interest of your business in mind. 

Hopefully, this article has encouraged you to cut yourself some slack and hire a bookkeeping service that will help you create the business of your dreams!

 

If you are looking for online bookkeeping services, visit this link. You can also learn more about the benefits of professional bookkeeping services here.

Should You Go Back to the Office?

A taste of remote work has left some workers hesitant to head back to the office.

PHOTO: GETTY IMAGES
By

After months of experimenting with remote work, your company is calling you back to the office.

Should you go?

“It’s been weighing on me,” Christina Marcellino, a 34-year-old business development manager for a law firm, says of the back-to-work question. It’s all her working-mom friends in Charlotte, N.C., can talk about. “What is it going to look like? What are we going to do?”

The calculus is complicated, even if you’re comfortable with your employer’s plans for Covid safety. Some companies will, at least ostensibly, give workers a choice; others will ratchet up the pressure or dole out ultimatums. How much do you push back? How do you decode corporate statements to tell you what you really want to know: Will it kill my career if I stay home?

The other variables to analyze feel infinite, the stuff of life: that workout you can now sneak in each morning, the leisurely walk to the bus stop with your kid, the exodus of $15 sad desk salads from your lunch routine. But also, wasn’t the chatter and camaraderie at the office the thing that made work feel…almost fun? Who can even remember at this point?

The good news—and the bad news, for the indecisive among us—is that we’re in a unique moment.

“There’s never going to be a better time to make the pitch to your company,” says Ed Voelsing, founder of the Rivet Group, an executive recruiting and talent-consulting firm in the Charlotte area. “ ‘Allow me to work remotely.’ ”

Workers, dreading back-to-office orders, have approached Mr. Voelsing in search of permanent telecommuting jobs. One client moved to Ohio during the pandemic and doesn’t want to give up his new life: cheaper, closer to family.

Mr. Voelsing recommends that employees tread lightly if they’re early in their careers. The office is where you learn by osmosis, tout your work and occasionally get pulled into a random meeting with higher-ups.

“You get to state your opinion in front of a whole bunch of executives who now know who you are,” he says.

Consider how much leverage you have: How rare and revenue-generating is your skill set, and how hard would it be to replace you right now? Are you open to taking a pay cut if it means you can stay remote? How would you feel if your career stagnated a bit down the line because you couldn’t ascend away from headquarters?

Some 43% of 1,046 remote workers surveyed by insurer Prudential in March said they’d be nervous about their job security if they stayed home while others returned to in-person. Yet the data indicates many of us really don’t want to go back, at least not every day. Nearly nine out of 10 workers in the same survey said they want to work from home at least once a week after the pandemic subsides; one in three said they wouldn’t work for a company that forced them to be on-site full-time.

Bethany Goldszer quit her previous job, with a nonprofit in Queens, N.Y., after leaders called everyone back to work last June. Now conversations are bubbling up at her new employer, a charter school where she’s been working remotely, about returning to five days in-person come fall. Ms. Goldszer made a pro and con list about what staying home would mean: no frantic mornings trying to find parking on city streets, no daily tolls—but also the possibility of “people even forgetting that I exist.”

The sticking point was the prospect of having to make her commute a high priority as she begins house-hunting on Long Island.

“I’m tired of making decisions like that,” she says. “I don’t want where I work to factor in.” She floated her remote-work pitch by a board member, who she hopes can advocate for her when it’s time to make a formal request.

Then again, is having no commute the answer? Harvard Business School professor Ashley Whillans says preserving some sort of physical transition between work and home helps us set boundaries. During the pandemic, many filled the time gained from killing their commutes with more work.

“People feel like they have to be chained to their desks all the time,” Dr. Whillans says. Evaluate your remote work experience: Are you capable of maintaining separation and avoiding burnout? Or have you spent the past year logged on at all hours, stressed and miserable?

Gaetan DeSimone, a graphic designer and animator in Easton, Conn., kept a journal chronicling how he was adjusting to remote work and using his extra time. There was the bonus hour with his toddler daughter in the mornings, the ability to pop out to his new garage studio when inspiration struck at 2 a.m., and then head out for a bike ride the next day when he couldn’t focus. His company left it up to him to decide whether to start coming into the Manhattan office. Still, “there’s that looming concern of, what if one day they change their tune?” he says.

 

Gaetan DeSimone has been working from his garage studio during the pandemic.

PHOTO: GAETAN DESIMONE  

He asked his manager if staying remote would affect his future opportunities. When he said no, Mr. DeSimone’s decision was made.

How you’ve adjusted to remote work is only one piece of the puzzle. How did the people around you do with remote work?

“Was your boss extra hypervigilant, calling you every five seconds?” asks Joyel Crawford, a Philadelphia-area executive coach. Maybe showing up at the office will boost trust and actually buy you some more autonomy.

Ethan Tyler, pictured with his daughter, Rebecca, and wife, Margaret Tyler, is looking forward to returning to his office in Anchorage, Alaska.

PHOTO: ETHAN TYLER  

If you’re the manager, consider whether it’s easier for you to lead meetings and rally the troops over Zoom, or in a conference room. Over the past month, Ethan Tyler, a corporate affairs director in Girdwood, Alaska, started to notice that some tasks were falling through the cracks on his remote team.

“I’ve just felt this kind of a disconnect,” he says.

When the group met up at a local restaurant recently, they were able to swiftly outline projects and divvy up work. Conversation felt less awkward.

Mr. Tyler was excited to hear his company was bringing everyone back at least three days a week starting in June. He can’t wait to get in his car and make the hourlong trip to his Anchorage office.

Will staying home hurt your chances for promotion? Will leaders reverse course in a year, ordering you back? Tips on reading the risk, from professor Ashley Whillans:
 
Office downsizing: If your company is shedding real estate, that could be a sign that it’s committed to a flexible model of working.

Hiring from afar: Are new employees from around the country onboarding into fully remote roles? Or has the company been focusing on recruiting local talent in the past several months? If it’s the latter, executives might be switching gears.

Signals from the boss: Pay attention to what leaders are doing, not saying. “Do you see your bosses Zooming in from their offices?” Dr. Whillans asks.

Subtle perks: Is your company offering things like free lunch to those who come back? That’s a sign they want you there.

How Midsize Companies Can Maximize Growth and Efficiency

How Midsize Companies Can Maximize Growth and Efficiency

 

by 

 and 

 

A few months into 2021, middle-market companies are eager for growth and sense unique opportunities, including the chance to profit from pent-up demand and the momentum of a rebounding economy — and, for some, to take share from or acquire a weakened rival. The International Monetary Fund is forecasting U.S. economic growth at 6.4% this year; companies would be foolish not to position themselves to catch that kind of tailwind.

 

But how can they fund the growth they seek? Even in normal times, middle-market companies are reluctant to dilute equity and anxious about getting out over their skis by taking on debt. Today, almost half of middle-market executives say that coping with Covid-19 has made them more risk averse than before. Many drew on lines of credit last year or got federal Payroll Protection Plan support; they would prefer not to call on their banks again. But without capital, they risk missing out on a historic growth opportunity.

 

Many of these companies have the solution at hand but don’t know it. Data and research from the thousands of members of AchieveNEXT’s CFO Alliance show that middle-market companies can fund much of their growth through efficiency. Indeed, increasing productivity and efficiency, our 2021 Sentiment Study shows, is the number-two strategic priority for middle-market CFOs, just after growth. The trick is to make them work together, rather than have the pursuit of one handicap the other. Ours and members’ experience shows that growth and efficiency can be allies, not antagonists. Properly managed, the push for efficiency can free up capital and direct it to where it will create revenue, generate strategic growth options, and increase enterprise value.

 

One of our CFO Alliance members faced that challenge from their position overseeing finance for a midsize trucking company with a fleet of more than 500 tractors and upwards of 1,500 trailers. As an essential business with broad diversification of customers across industries, it grew moderately in 2020 and entered 2021 with ambitious plans, supported by strong demand. The company had enough capital, but not enough human capital thanks to a shortage of drivers — a problem which affects the whole industry and has been intensified by increased regulation and the introduction of the Drug and Alcohol Clearinghouse. But the impact and imperative are the same: The company cannot reach its growth goals without big gains in productivity and efficiency. Every dollar lost to inefficiency is a dollar that could be used for growth.

 

Often, however, companies look for efficiency by cutting costs in ways that actually defund growth and leave an enterprise anemic and stressed. This member’s experience has revealed three approaches that feed efficiency and growth at the same time.

 

Attack all the variables in the productivity equation.

 

In many companies, the search for productivity growth becomes a cost-cutting exercise. But productivity is simply outputs divided by inputs. And inputs aren’t just labor inputs, but also capital equipment, inventory, technology investments, materials, and more. Looking at the complete productivity equation encourages leaders to discover opportunities to maximize outputs, as well as reduce inputs, and to get more from all their assets, not just the workforce.

 

One way the trucking company gets more from less is to focus on profitable customers. Marginal customers syphon off a surprisingly large amount of time, energy, and assets and deliver less to the top line. The company now separates customers into “strategic” and “transactional” groups and makes sure the former gets first call on its resources. By linking sophisticated load-planning software with its ledger of customer commitments, the company is able to ensure that customer service teams don’t inadvertently tie up capacity that could create more value if it were used for a different opportunity.

 

Raise your working capital game.

 

The cheapest capital you can get is money that’s tied up in bills you pay too soon, receivables you collect too slowly, and inventory you don’t need. Middle-market companies underestimate how much working capital they use. Data for publicly held middle-market companies reveals a four-times performance difference between the 25th and 75th percentiles in payables, receivables, and inventories. For example, a $100-million-in-revenue materials company that moves from the median to the 75th percentile would free up more than $17 million in capital every year — interest-free money to use for expansion or any other purpose.

 

Mismanaged working capital can starve a company. We know one company that decided to pay its bills in 25 days instead of its usual 40 as a favor to pandemic-stressed suppliers. They soon discovered that they were running out of cash. Middle-market executives often fear that they’re at the mercy of trading partners — forced to accept discounts in return for timely payment from big-company customers, for example. In fact, middle market companies have more leverage than they think, especially if they’re providing critical components or raw materials.

 

Understanding how these levers work may stretch the skills and knowledge of CFOs and their teams. It’s no wonder CFOs in the AchieveNEXT 2021 Sentiment Study told us that financial planning and analysis is their number-two skills gap in their departments, just after critical thinking. Global enterprises often have teams of hundreds doing this kind of analysis; in the middle market, the job might fall to the CFO and an overtaxed analyst or two. In addition, if the finance team lacks the right capabilities and tools, it can spend a significant amount of time on fixing data issues, creating reports, undertaking strategic planning, and explaining variances after the fact instead of driving real-time analytics for stronger insights and more informed business decisions.

 

Seize the moment to get creative about costs.

 

This year offers three unique cost-management opportunities. First, take a look at all the improvisation and adaptation the pandemic provoked (“pivoting,” in the jargon du jour) to see what to keep, what to toss, and what to clean up. (Does anybody know how many Zoom accounts your company has?) Sales teams chafed at pandemic travel restrictions, but many have adapted brilliantly to virtual selling and new modes of lead generation, realizing both sales gains and reduced customer acquisition costs. Among clients of Delancey Street Partners, an investment bank focused on the middle market, many CFOs are having serious discussions with sales and marketing departments to determine if these new practices can be retained or expanded in an attempt to capture a meaningful portion of these savings permanently.

 

Second, rethink real estate needs and act fast on what you learn. According to the McKinsey Global Institute, in the third quarter of 2020, office vacancy rates in New York were 32% higher than they had been a year before; they were 23% higher in Chicago and 12% higher in Los Angeles. Now is the time to negotiate lower rents, but, more important, it’s a chance to examine long-term real estate needs — before the market rebounds in landlords’ favor and your employees settle into a less-than-productive “old normal.”

 

Third, get more strategic about digitalization. Many middle-market companies are stuck in what we call “first-generation digitalization,” such as automating routine work. But there are at least two other stages. One is digital integration across functions, allowing companies to optimize operations, HR, logistics, marketing, and other systems as a whole. For example, by tying together IT stacks that once were separate, the trucking company is now able to coordinate customer commitments, load planning, and route optimization — and even buy commodity hedges on fuel costs. Optimizing the whole system generates productivity gains far above what can be attained by improving each element alone. Not long ago, tools like these were out of reach for middle-market companies; today, one out of seven middle-market CFOs see cross-functional IT integration as the biggest challenge and opportunity they face.

Even bigger productivity gains can be found by imagining how digitalization can transform your business model and balance sheet as well as your income statement — for example, by offloading assets like warehouses and fleets, IT servers, and swing production capacity.

 

Each of these approaches to productivity improvement can feed and fund growth more easily than mere cost cutting. They have an additional advantage: They significantly enhance enterprise value, which will put your company in a better position if you choose to fund expansion with outside capital, or if you choose to enter the M&A market as a buyer or seller. Capturing productivity gains, working capital management efficiencies, and other operational improvements are best done well in advance of approaching the capital markets. In Delancey Street Partners’ experience, clients that are able to show several quarters of enhanced profitability due to material changes in productivity, working capital efficiencies, etc., are more likely to get credit for these improvements during a sales process or capital raise. The ability to evidence two to three quarters of improvement gives potential investors and buyers confidence that these efficiencies are sustainable and not short-term practices put in place as transaction-related window dressing.

 

None of these things can be done in a vacuum or by functional leaders acting by themselves. Whether managing working capital, reshaping cost structures, or driving digitalization, CEOs and CFOs from middle-market enterprises must overcome misalignment among leadership, build buy-in across their organizations, and organize this effort for growth by focusing on change management. Achieving buy-in is not a one-time exercise for them, either. They must communicate to all stakeholders the growth strategy, the value drivers of change, the phases of the digital journey, and the expected outcomes. They must clearly demonstrate and communicate success through validation points along this productivity journey. The long-term and ongoing culture change activities and interventions that will come will help shape a culture that celebrates cost management and growth simultaneously.

4 Payroll Mistakes That Could Get Your Business into Trouble

 

If you run a small business and have employees, you know the importance of payroll. You may also know how much time and effort it takes to get things right. Instead of focusing all of your energy on payroll, however, what if you used services and resources from trusted professionals like Daves Bookkeeping & Tax Services to eliminate the stress and guesswork? 

 

Interested in learning more? Then you can start with these tips for avoiding payroll mistakes. 

 

Using a Personal Bank Account 

 

For those who are just getting started in business, it may seem convenient to pay employees out of a traditional bank account. This could be a huge mistake with major consequences for your business, however, if you decide to use your personal account rather than a business bank account. Here are some reasons why: 

 

        Without a business account, you’ll need to track expenses on your own. 

        You open your personal finances up to liability in the case of mishaps. 
  •         You’ll miss out on essential business bank account features you need like payroll integration, cash flow projections, instant deposits and high-yield interest rates. 
  •  

Failing to Protect Payroll Systems 

 

Right now, there are criminals lurking online looking to hack into your payroll. According to the FBI, attacks on payroll resulted in losses of “$8.3 million dollars” from 2018-2019 alone. Otherwise known as payroll diversion schemes, these attacks target your employees and employee email systems to gain access to sensitive information and steal from your accounts. 

 

So what can you do to protect your payroll systems? You can start by conducting routine security audits and securing your company’s email. Properly educating employees can also help, but payroll services can take the risk out of processing your payroll to begin with. 

 

Forgetting to Take Out Taxes 

 

Another frequent payroll slip up for small businesses is withholding too little or too much from employees’ paychecks on a regular basis. Failing to do so could land your business with penalties and fines, while making tax preparation a nightmare for your staff members. 

 

It’s also critical to choose the right classification for everyone who works for your small business. This may sound pretty straightforward, but the IRS rules for contract vs. regular employees are pretty complex. You don’t want to get it wrong. 

 

Failing to Pay Employees Overtime

 

Do you know whether your state requires businesses to pay overtime to employees? Most states legally mandate that overtime be paid when a regular employee works over 40 hours in a single week, although some states have no requirements. Unpaid overtime in these states could result in severe penalties for your small business.

 

Even if your state doesn’t require it, paying overtime and adhering to other payroll principles is important for protecting your reputation as a business owner. The last thing you want is for your business to become known for unfair wages and labor practices. So if you’re not aware of current labor and payroll guidance in your state, educate yourself or look into payroll services. 

 

Your employees count on you to get payroll right. They rely on their paychecks to cover rent, bills and other living expenses. The long-term success and stability of your small business can also be impacted by whether you put the time and effort into avoiding some of the most common payroll issues and mistakes. 

 

Instead of leaving your payroll up to chance, save yourself time, worry and stress by working with Dave’s Bookkeeping & Tax Services to handle your payroll, accounting, expense tracking and other routine accounting operations. 

 

Photo Credit: Rawpixel

 

Thanks in advance for considering!
Lisa
lisa_walker@jobdreamteam.com 

 

Improve Your Law Office Productivity With QuickBooks

When it comes to accounting, QuickBooks is recognized as the number one business financial software out there today. That’s why so many law firms use QuickBooks for Law Firms. It takes the complexity out of your financial accounting process and makes life easier for you, your clients, and your vendors.

 

The program was designed specifically with the needs of legal practices in mind so it can handle all the financial management needs of your firm. And, when you combine Quickbooks with your case management technology, your firm can have a powerful, all-in-one law firm solution.

 

Here are some of the ways QuickBooks for Law Firms can make your law office more productive and efficient.

 

 

    Tracks, records, and invoices for legal services rendered, which are often based on varying hourly rates. Records hours worked and then passes the time through to client invoice.
  • Provides one-way synch of accounting data into QuickBooks that eliminates manual data entry, uploads and downloads.
  • Eliminates opportunity for errors and ensures consistency throughout your financials.
  • Automatically generates invoices, sends them directly to your clients, and makes the corresponding entries in the general ledger.
  • Enables customization of existing invoice templates so that your invoices better represent your law firm.
  • Simplifies the complicated record keeping involved with handling of client monies held in trust. If you use an IOLTA (Interest on Lawyer’s Trust Accounts) you can set up a few QuickBooks accounts to track the transactions.
  • Handles client trust activity and the firm’s accounting in one central location.
  • Documents payments to third parties, reimbursing the law firm on behalf of the client.
  • Provides new customer data synch that eases new customer setup.
  • Supports both cash and accrual accounting
  • Allows access to financials anytime from anywhere.

With all these benefits, more law firms every day are beginning to realize the benefits that QuickBooks for Law Firms offers. Even more beneficial is the option of integrating QuickBooks for Law Firms directly into your law practice management software, as MyCase does–offering the convenience of an automated, financial software package – including training and support. Learn more about the integration here.

 

So why not get started today? Improve your productivity and simplify your financial management process with Quickbooks. Practice more and manage less.

Should Your Business Be an LLC or an S Corp?

Here’s how to decide whether to incorporate your business as a limited liability corporation or an S corporation.

You’ve finally decided to start a business of your own. Or maybe you have been running one as a sole proprietor, even moonlighting on the side, and have decided you need to protect your personal assets from those involved with your growing business. You might even decide that there could be a tax break in it for you. Whatever your reasoning, you’re likely contemplating a choice that many entrepreneurs face: Should your enterprise be structured as a limited liability corporation (LLC) or an S corporation (S corp), which is named after subsection S of Chapter 1 of the Internal Revenue Code?

These two organizational forms have similarities and differences–which can make choosing between them and others, like a C corporation (which includes publicly-held companies), confusing at best. Each state might also have different rules that come into play. That’s why you’ll want to get some input from a respected accountant and/or attorney to help you decide what might be the best fit for your business.

Defining the Benefits

A major advantage of organizing your business as an LLC or an S corp is that you can protect your personal assets from the creditors of your business. “Limited liability means you can’t be financially responsible for more than your investment in the company,” writes Greg McFarlane in his book, Control Your Cash: Making Money Make Sense. “If you put in $10,000, and incur $11,000 in debt, you’re only potentially liable for $10,000. Your creditors (check that, your LLC’s creditors) can’t ‘pierce the corporate veil,’ as the phrase goes.”

Another common aspect of LLCs and S corps is that they help you avoid paying both personal and corporate taxes. The difference is that in an S corp, owners pay themselves salaries plus receive dividends from any additional profits the corporation may earn, while an LLC is a “pass-through entity,” which means that all the income and expenses from the business get reported on the LLC operator’s personal income tax return, says Ebong Eka, a CPA who also pens his own blog about the world of entrepreneurship at MoneyMentoringMinutes.com.

Both LLCs and S corps can also deduct pre-tax expenses, such as travel, uniforms, computers, phone bills, advertising, promotion, gifts, car expenses, and health care premiums, McFarlane writes.

Note the Differences
 
Once you understand the benefits that come from LLCs and S corps, it’s time to explore some of the pros and cons of each approach. Here are some of the key differences, according to Eka:

LLC Pros:

The owner of a single member LLC doesn’t have to file a tax return for the LLC, as they only report the activity on their personal tax return.

Ease of setup: Most LLC forms are only a single page for single member LLCs.

Inexpensive to start: The cost of setting up an LLC is also inexpensive, usually just a couple hundred dollars.

Guidelines: The red tape involved in forming an LLC isn’t as stringent as that involved with S corps, which also leads to savings on accountant and attorney fees, among others.

LLC Cons:

  1. Self-employment tax: Single member LLC owners are required to pay self-employment tax on income generated in the LLC, which means making quarterly estimated payments to the IRS.
  2. Owners of LLCs must make sure they don’t pierce the “corporate veil,” meaning they have to operate the LLC separately from their personal affairs. “The LLC must not be a shell but an operating entity,” says Eka. “There have been cases where a business owner lost their protection because there was no distinct difference between the LLC and its owner.”

Dig DeeperWhat Is an LLC?

S Corp Pros:

  1. The key advantage of an S corp is that it offers tax benefits when it comes to excess profits, known as distributions. The S corp pays its employees a “reasonable” salary, which means it should be tied to industry norms, while also deducting payroll expenses like federal taxes and FICA. Then, any remaining profits from the company can be distributed to the owners as dividends, which are taxed at a lower rate than income.

S Corp Cons:

  1. S corps have more strict guidelines than LLCs. Per the tax code, Eka says, you must meet the following standards to create an S corp:
    • Must be a U.S. citizen or resident.
    • Cannot have more than 100 shareholders (a spouse is considered a separate shareholder for the purpose of this rule).
    • Corporation can only have one class of stock.
    • Profits and losses must be distributed to the shareholders in proportion to the shareholder’s interest. For example, you can’t have disproportionate distributions of dividends or losses. If a shareholder owns 10 percent of the S corp, he or she must receive 10 percent of the profits or losses.
  2. It costs more to form an S corp.
  3. Shareholders must adhere to the requirements at all times. If they don’t, they risk disallowing the S corp election, and the corporation would be treated as a C corp with its corresponding restrictions.
  4. Passive income limitation: You can’t have more than 25 percent of gross receipts from passive activities, such as real estate investment.
  5. There can be additional state taxes for S corps.
  6. Shareholders should pay attention to paying themselves a “reasonable” salary for the work they perform for the S corp, since the IRS is increasingly scrutinizing S corps for this.

Case Study: Why an LLC Might Be Best for Your Business

Given that it takes far less red tape to organize and is generally cheaper to administer, the LLC might be your best choice if you’re a new business owner or operate an internet business, says Eka.

There is also another key benefit of LLCs: You can elect to be taxed as an S corp while retaining the structure of an LLC. Consider the case of Mike Turner, founder of Front Street Brokers, a real estate agency in Boise, Idaho. When he started his business, which sells high-end homes and properties, he was advised to form it as an LLC, which he did. However, a couple years later, as the business began to earn more revenue, Turner was shocked by the amount of taxes he was paying the IRS.

It was then that his accountant told him how he could elect to be taxed like an S corp while keeping his LLC intact. Turner decided to make the switch. He began paying himself and his wife a modest salary, which he also pays fees on (such as FICA and unemployment insurance), and then paying himself a monthly dividend from the extra profits his company was earning.

“The rules are I must pay myself a realistic salary,” says Turner. “I can’t pay myself minimum wage, and do the rest in dividends. But in my industry, the average salary is not that high, so I can still take a hefty amount via the dividends.” The difference has been a savings of between $6,000 and $8,000 a year in federal taxes. “I feel I get the best of both worlds,” he says. “For my small business, I get all the legal benefits of running my small business through an LLC, but I can be taxed as an S corp, which saves me money at tax time.”

Case Study: Why an S Corp Might Be the Better Choice

While Turner’s story is a compelling one for a smaller, lifestyle business, the truth is that fast-growing businesses that plan to bring on investors or share the ownership of the company with employees may need to consider making the switch to an S corp sooner rather than later.

Consider the case of Vicky Phillips, the founder of GetEducated.com, which provides guides and ratings for college courses and programs offered online. Phillips originally started her business, which is based in Burlington, Vermont, as an LLC and has kept it that way for 10 years. But now that her business is established–it now earns $1 million in annual revenue–she’s ready to bring on investors to expand even faster.

In talking to her advisers, she came to realize that it was in her best interest to convert her company into an S corp, despite some of the disadvantages of doing so. “There’s much more paperwork required to substantiate everything,” she says, since running an S corp requires you to hold meetings, keep minutes, make resolutions, elect officers, and produce formal financial statements. “But the S corp structure creates more separation between me and the company, which is something that investors and bankers are more comfortable with.”

Phillips says that she spent about $6,000 on attorney and accountant fees making the switch over from an LLC, the assets of which were essentially bought by the new S corp, though she admits she could have spent less if she had been willing to do more of the paperwork herself. “I’m not a huge fan of more paperwork, which is one of the key reasons we held off on making the switch for as long as we did,” she says. 

Will Movie Theaters Survive When Audiences Can Stream New Releases?

Last month Warner Brothers announced that all of the movies it will release in 2021 will be available on Warner’s HBO Max subscription streaming service — on the same day they premiere in U.S. theaters. That includes such expected hits as Matrix 4DuneGodzilla vs. Kong, and The Suicide Squad.

This announcement has had a seismic impact on the movie industry, for several reasons.

First, prior to this announcement almost all major Hollywood movies were given a three-month exclusive theatrical release before they were available on in-home channels. Indeed, theater owners had threatened to boycott any studio that violated the exclusive theatrical release window — a threat that AMC Theaters acted on in April of 2020, when, to punish NBCUniversal for releasing Trolls World Tour simultaneously in theaters and on digital channels, it announced a boycott of all of the studio’s movies.

Second, while several studios had released movies on digital channels while theaters were closed during COVID-19, Warner’s announcement covered its entire 2021 slate, including movies slated for release late in 2021 when most industry observers believe theaters will no longer be subject to COVID-19 restrictions. This made it appear to some that Warner wanted to make these temporary COVID accommodations permanent.

Theaters owners and other industry observers were quick to criticize Warner’s move. Chris Johnson, the CEO of Classic Cinemas, called Warner’s decision “ridiculous and short-sighted,” and Adam Aron, the CEO of AMC Theaters, argued that Warner would “sacrifice a considerable portion of the profitability” of movies that bypassed the traditional theatrical release. David Sims piled on in The Atlantic, saying of Warner’s decision, “Audiences will have little incentive to pay more to see these films in theaters.” His conclusion? “Theater chains are right to fear for their survival.”

These concerns reflect the conventional wisdom in the industry: that given the choice, many consumers will avoid the “big screen” theatrical experience in favor of the convenience of watching the same movie at home. If that’s true, it would obviously be ruinous for theaters.

But is it true? Will early digital releases significantly harm theatrical revenue? We analyzed that question in a recent research study, and what we found might surprise those who are concerned about digital platforms encroaching on the theater business.

In the study, we analyzed what happened to theatrical revenue in Korea from 2015 through 2018 — a period during which Hollywood studios significantly shortened the exclusive theatrical windows for their releases, from three months to only one month. We found that, after controlling for differences between movies with early digital releases versus traditional release windows, early releases had a statistically and economically insignificant impact on theater sales, equivalent to around a 0.8% drop in total theatrical revenue during the first eight weeks of the movie’s theatrical run in Korea. Most theatergoers, it turned out, remained loyal to the theatrical experience even when they had the option of watching the movie at home while the movie was still showing in theaters.

We should interpret this result with some caution, of course. U.S. consumers may behave differently than Korean consumers when it comes to early digital releases, and our study results only apply to movies that received an exclusive theatrical release for at least four weekends — a release window more similar to the 17-day exclusive theatrical window that AMC and NBCUniversal ultimately negotiated than to the “day-and-date” HBO Max availability proposed by Warner.

Nonetheless, our broad finding is consistent with what we’ve seen in other settings where many feared that new digital products would cannibalize existing markets. For example, our past research found that making books available on Amazon’s Kindle platform didn’t significantly cannibalize hardcover sales, unbundling digital singles from albums didn’t damage overall music revenue, and releasing movies on iTunes didn’t harm those movie’s DVD sales. In each case, the data showed that opening new digital channels wasn’t a zero-sum game. Rather, the new digital products appealed to new and previously untapped customers, and making them available to the market ultimately benefitted both consumers and sellers.

What we learned in our Korean study suggests that a similar effect may exist for movies, which in turn suggests that John Fithian, the president of the National Association of Theater Owners, was right when he argued that “theaters provide a beloved immersive, shared experience that cannot be replicated” — but that Jason Kilar, the CEO of WarnerMedia, was also right when said that early digital releases provided an opportunity to give customers a choice “whether that choice is to enjoy a great new movie out at the cinema, to open up HBO Max, or to do both.”

That’s an encouraging sign. Maybe, when it comes to how movies get released, studio executives and theater owners have more to agree on than they realize.

Pajamas Are the New Sweatpants—How to Wear Them Everywhere

Men and women are trading their sad WFH uniforms for snazzy sleepwear, spending every waking hour in snugly bliss. These expert tips will help you style PJs for almost any socially distant activity.

PAJAMAS ARE at least partially responsible for keeping Vincent “the Chin” Gigante out of jail for decades. Starting in the 1960s, the late Mr. Gigante, a notorious New York mob boss, feigned mental illness in a surprisingly successful scheme to convince authorities that he couldn’t possibly be the head of the Genovese crime family. To keep up appearances, he’d meander through his Greenwich Village neighborhood mumbling to himself while wearing slippers, sleepwear and a bathrobe. His pajama game helped him elude arrest until the 1990s, at which point he was locked up for racketeering and conspiring to murder his Mafioso rivals.

Need help organizing your books. We are here to help!

Today, the Chin’s ploy wouldn’t fool anyone. As the pandemic persists, pajamas have come to seem entirely sensible as all-day wear for social-distancing women and men. Whether you’re Zooming with the boss, running to the store or hosting your pod for cocktails and charades, sporting pajamas from morning ’til the next morning—a style strategy once reserved for degenerates and hung-over college students—no longer provokes censure. Today, in fact, if a man wanted to convince the world he was certifiable, he might have better luck striding down 6th Avenue in a pinstripe suit and a hat.

COZY NIGHT OUT Filmmaker Sofia Coppola wearing a silky sleepwear set on the 2013 Met Gala red carpet with designer Marc Jacobs.PHOTO: GETTY IMAGES

“People are looking for a different way to find comfort and fashion together,” said Roopal Patel, the fashion director of Saks Fifth Avenue. She noticed an uptick in the store’s sleepwear sales after the world hit pause last March. Ms. Patel observed that people are procuring extensive pajama wardrobes and assigning different styles to different isolation activities. “Everyone is experimenting with how to wear these pieces with their everyday looks, which they may not have done a year ago.” Indeed, if you pick the right pair, pajama dressing resolves the WFH-era dilemma of how to remain stylish at home. Emulate Sofia Coppola’s marvelous 2013 Met Gala look: metallic Marc Jacobs PJs, subtle sparkly jewelry and a mid-heel sandal. Do not mimic the Dude’s disheveled SoCal-stoner style in the supermarket scene of 1998’s “The Big Lebowski.” Tired, tattered bathrobes should be left in the closet, or the trash.

It might seem counterintuitive, but a sharp pair of PJs can look more put-together than the sad WFH uniform to which so many have succumbed: sweatpants, T-shirt and hoodie. The former is “crisp and happy,” said George Cortina; the latter, “sloppy and slovenly.” Mr. Cortina, 55, is a New York fashion editor (who contributes to WSJ.) and pajama evangelist who’s worn custom cotton pairs everywhere from tony Paris eateries to scene-y Los Angeles hangouts. “If you have a fresh set of pajamas,” he said, “there’s something beautiful in the choice you’ve made. If you’re wearing sweats, it’s gray and dreadful.” Mr. Cortina so strongly believes that PJs are the ultimate all-occasion ensemble that, this March, he’s launching a line of unisex poplin pairs with Savile Row tailor Anderson & Sheppard. They’ll come in un-dreadful “1960s Italian Riviera” hues like hot pink and lavender.

According to market research firm the NPD Group, as of November 2020, year-to-date pajama sales were up 5% nationwide—a margin expected to increase once holiday sales are factored in. Specialty sleepwear brands have enjoyed an even greater surge: The Great, a Los Angeles casual wear label, and 24-year-old Miami brand Eberjey both report that they saw pajama sales double last year and, after less than a year in business, Los Angeles loungewear upstart Leset sold out of almost every item on its website last spring.

Sleepwear as a comfy-on-the-job alternative to tired WFH sweatpants and sets playfully frolicking through the urban wilds.ILLUSTRATION: JACK RICHARDSON

It’s no surprise, then, that other brands are pivoting to snooze style. The new appetite for PJs led New York label Adam Selman Sport, known for flamboyant workout wear, to bump up the launch of its sleepwear line a full year, said its namesake designer. San Francisco lifestyle brand Athleta debuted its sleep range this month and Parisian fashion house Christian Dior just released its “Chez Moi” capsule, which includes such swank, snugly wares as toile-print pajamas with black piping.

“Our perception of these garments has shifted,” said Lorna Hall, the director of fashion intelligence at London trend forecasting firm WGSN. “We value them more now and many of us are prepared to spend more on them because we’re spending so much time in them.” With nowhere to go but the couch, many see standard apparel purchases as “a waste of money,” said Ms. Hall. Pajamas, on the other hand, seem a justifiable indulgence.

SLEEP-CHIC A guest pairs Valentino pajamas with a pair of pointy pumps outside the brand’s Paris fashion show in September 2019.PHOTO: GETTY IMAGES

Some have indulged more than others. Vanessa Chamberlin, 51, a Las Vegas author who was feeling glum after weeks of sheltering in place, giddily relayed that she’s bought 21 pairs of PJs. “I put on my pretty clothes a few times and walked around the house, but it didn’t make sense,” she recalled. “I thought, ‘How do I get my fashion back? How do I get my sense of feeling good, but also what’s going to be a useful thing to wear?’ And it was pajamas.” She mostly wears traditional, button-front separates, reserving four floral pairs exclusively for gardening.

Dianna Cohen, the New York founder of haircare brand Crown Affair, has procured three pairs of formal silk pajamas to wear on Zoom calls. In the before times, Ms. Cohen, 29, enjoyed teaming playful PJ tops with jeans for dinners out. Now, she sports full sets to the grocery store. “The combo of an oversize coat, a pajama and a clog is kind of the look these days,” she laughed. “I definitely wasn’t wearing that before the pandemic.”

Snooze-wear’s unparalleled ease makes it perfect for long days of sightseeing—provided you style it properly.PHOTO: JACK RICHARDSON

Steve Schwartzman, a 57-year-old Seattle attorney, has adopted a similar errand style—pajama bottoms by Burberry, Ralph Lauren or L.L.Bean mixed with T-shirts, Gucci loafers and a long coat for his morning coffee runs. “No one cares anymore,” he reasoned. “It’s just about being comfortable and getting through things.”

Pajamas’ newfound popularity comes as many re-examine their priorities and focus their lives around family, home and simply feeling good. Once the world reopens, designers, retailers and consumers agree that we’ll be unwilling to relinquish jammies’ cozy reassurance. Mr. Cortina contends that we won’t have to. “If [your pajamas] are great-looking, you can wear them anywhere,” he said. Perhaps, but only with proper styling.

Women should start at the bottom of their look with a kitten heel, like Prada’s pastel spring styles, or a favorite leather loafer. Saks’s Ms. Patel suggests mixing PJs with other closet staples, like a cashmere sweater for videoconferences or a tailored blazer for dinner at home. Mariela Rovito, the co-founder of Eberjey, advises women to accessorize with “a little bit of jewelry and a soft lip.” And Adam Selman, the New York designer, says to embellish with attitude. “If you pull it off with confidence, you can get away with murder.”

WAKING DREAMS Sublime men’s and women’s sleep sets for working, resting and entertaining. From left: For Fetching a Morning Latte, Men’s Pajama Set, $198, sleepyjones.com; For a Monday Zoom Meeting, Women’s Sleep Shirt, $275, intothebedroom.com; For Lounging Luxuriously, Women’s Skin Top, $68, Bottoms, $135, Cardigan, $250, goop.com.PHOTO: F. MARTIN RAMIN/THE WALL STREET JOURNAL (SLEEP SHIRT)

Other fans have reservations. “Don’t go into a boardroom with pajamas, but you can totally go to brunch,” said Ms. Cohen, who would also wear them to gallery openings and internal meetings. While Mr. Schwartzman will remain devoted to his pajamas on weekends, he thinks PJs in the workplace is a step too far. “I’ve got some fancy pajamas,” he said, noting he spent New Year’s Eve in a Sleepy Jones style, “but I don’t think I could carry that off in the office—it would be a little too much.” Or, more accurately, not enough.

Wherever you choose to venture in your PJs, Ms. Rovito offers this advice: Ensure you’re well groomed. “You can’t have pajamas and bedhead,” she scoffed. “That’s not a good combination.” Some might even say it’s criminal.

From left: For Sprinting to the Store, Men’s Top, $49, Bottoms, $49, Robe, $85, thewhitecompany.com; For the Laziest Days, Women’s Pajama Set, $84, lakepajamas.com; For Date Night In, Women’s Top, $1,850, Bottoms, $1,650, Dior Soho Pop-Up, 646-694-9701.
THE BIG-SCREEN SLEEP

Somehow, there’s still no Oscar for cinema’s most memorable pajamas, so we’ve taken it upon ourselves to dole out the honors. Here, 5 notable moments from movie history.

PHOTO: EVERETT COLLECTION
Least Cringe-y Twinning

Irene Dunne and Cary Grant, ‘Penny Serenade’ (1941)

Skip cheesy matching PJs and instead opt for subtly complementary sets, like those of this celluloid couple.

PHOTO: EVERETT COLLECTION
Best Oversize Fit

Claudette Colbert, ‘The Palm Beach Story’ (1942)

Whether fleeing your marriage via train (a la Ms. Colbert’s character) or lazing on a Sunday, you can’t go wrong with a few sizes up.

PHOTO: EVERETT COLLECTION
Best Monochrome Moment

Whoopi Goldberg, ‘Jumpin’ Jack Flash’ (1986)

As Terry Doolittle, Ms. Goldberg offers a lesson in layering with matching red pajamas, scarf and gloves—penguin slippers optional.

PHOTO: EVERETT COLLECTION
Most Likely To Repel a Date

Tom Hanks, ‘Big’ (1988)

Comic-book-themed flannel sets should only be worn for Pajama Day at your elementary school or on the most desperate of laundry days.

PHOTO: EVERETT COLLECTION
Coziest Cameo

Meg Ryan, ‘Sleepless in Seattle’ (1993)

What Ms. Ryan’s Annie Reed wears is everything loungewear should be: soft, gray, chic. Thick, ribbed socks are the cherry on top.—Sara Bosworth