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Setting Fees for Job Placement Services

October 18, 2000|KAREN E. KLEIN | SPECIAL TO THE TIMES

Q: I am working on establishing a job placement business, but I need to know what the industry typically charges for fees and commissions. I tried to call other agencies to get some information but they've refused to talk to me. Please help.

--Lynn Brown, Los Angeles

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A: A job placement agency typically charges its clients a fee that corresponds to between 25% and 35% of the annual salary of the employee that it has placed. The percentage varies depending on the level of the position and the time it takes to recruit and evaluate qualified candidates.

A position requiring candidates of a higher skill level--say, chief technology officer--would probably garner the 35% fee. Filling a lower-level position, where candidates would be easier to find, would probably earn the company closer to 25%.

You need to become very familiar with this industry if you are going to run a successful business. You can start reading up on job placement issues in the publications of industry associations, such as the American Staffing Assn. in Alexandria, Va. (http://www.staffingtoday.net) or the National Assn. of Executive Recruiters in Chicago (http://www.naer.org). Groups like these also sponsor educational sessions and industry conferences that are extremely helpful.

Private consulting agencies specializing in human relations and executive recruiting publish newsletters and trade journals that can educate you and keep you up to date on the industry. Try Kennedy Information (http://www.kennedypub.com) or The Fordyce Letter (http://www.fordyceletter.com) for more information.

--Patty DeDominic, president,

PDQ Careers, Los Angeles

Keeping Tabs on Taxes

Q: Where can I get information about what I should be keeping track of to use as exemptions for a sole proprietorship for taxation purposes?

--Greg James, Los Angeles

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A: Personal exemptions cannot be claimed on a Schedule C tax form, where sole proprietorship business activities are reported. You are probably asking about what kind of deductions you can take as a sole proprietorship.

You don't indicate whether you have a service business, or a product-based business. In a product-based business, your main deduction will typically be cost-of-goods-sold, which essentially is the inventory cost of the items you actually sell during the tax year. Other expenses of small businesses can include: advertising, commission and selling expenses, auto expenses, wages and employee benefits, insurance, rent, depreciation, repairs, supplies, travel, utilities and other "ordinary and necessary" business expenses.

A good starting point for you to obtain additional information is IRS Publication 334, the 1999 Tax Guide for Small Business, which can be obtained through the IRS' Web site (http://www.irs.gov, click on "Forms & Pubs" on the main page). Another resource is the 2000 Entrepreneur's Handbook, which can be found on our Web site, (http://www.dfco.com; click on "Publication Archives," then on "Business Operations.")

--Steve Kunkel, CPO/Certified

Financial Planner,

Duitch Franklin & Co., Los Angeles

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If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to kklein6349@aol.com. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.

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