One thing about the horse business is that it always attracts people who are more interested in horses than in business. You can be the most knowledgeable person at the track when it comes to bloodlines, breeding, training, equine fitness, and race strategy and still end up broke if you haven’t invested just as much time into learning business management.
Let’s begin with managing employees. You’ll find that it quickly becomes impossible to do everything yourself, so you’ll have to hire help – but that’s not as easy as finding a willing worker and agreeing upon a rate of pay. First, make sure you’re familiar with your state’s minimum wage laws. Sometimes they vary by county or city. Failing to pay minimum wage sets you up for a Labor Board claim with expensive penalties. Second, don’t assume that your groom or hotwalker can be paid as an independent contractor. The guidelines have tightened up in many states, and most workers must be paid as W-2 employees. If your worker lives on-site, if he has certain hours a day that he must work, if he’s using your tools like your wheelbarrow and your manure fork — he’s probably an employee, not an independent contractor. That means doing things by the book, paying taxes and social security, and ensuring you carry Workers’ Compensation insurance.
Speaking of insurance, as you already know, working with horses can be dangerous, and not just for the jockeys but for anybody who works close to these spirited animals. Workers’ Compensation is a must, but you’ll also want to carry liability insurance to protect those who don’t work for you, like visitors and delivery people, who could get bitten or kicked while in the barn area. Finally, given the danger level, you can further safeguard yourself and your valuable employees if you consider purchasing no medical exam term life insurance policies. Policies like these ensure that the individual’s family will be financially provided for in the event of a freak accident. They take a lot of the stress out of working in a dangerous job, and since no medical exam is required, everybody qualifies even if they have a pre-existing condition.
Now let’s move on to record-keeping and cash flow suggestions. If you can afford an accountant, that’s great, and they can advise you as to whether you should form an LLC or a corporation. A corporate entity of some sort is a must to protect you personally from litigation that may ensue due to business losses and partnerships that go bad. You can further protect yourself by keeping very accurate financial records. If you can’t afford an accountant, a program like QuickBooks and a receipt scanner will help you stay on top of where the money is going and ensure that any financial partners – or the taxman – can quickly be provided with a status report. Avoid the temptation to pay with cash. You won’t remember what you spent and won’t have proof you made payments. Credit cards, checks, or electronic bank transfers using a service like Zelle are much easier to track.
Another way to avoid business disasters is to get a professional background check on anyone you are contemplating hiring. These are easily obtained online for around $50 and will help you avoid those with a criminal history. In addition, make sure that any new employee completes a W-4 and I-9 and provides you with proof of their legal status and ability to work in the U.S. These days, the U.S. government holds you, the employer, legally responsible if you hire an undocumented employee. The fines and penalties can be substantial. Most start-ups in the horse racing business can’t afford to have this kind of problem, so take the time to ensure your potential employee is one won’t create it.
Set yourself up for success, and we’ll see you in the winner’s circle in more ways than one!