With the new year, comes urgings to do new things! So, this month we are talking about things to think about when starting a business. Here are five things to think about if you are thinking of starting a business:
Do you have the dedication to work long hours? Starting a business takes time. Even if you are lucky enough to eventually make money only working a few hours a week, that will probably only happen years, if not decades, after starting your business. You need to be willing, and ready, to work 60 to 90 hour weeks for the first few years.
Have you found a business you are excited about? As said above, you are going to be working a ton of hours. Your business will require weekends, nights, and holidays. Make sure your business is something that you love because it will become your life.
Can you fund your business? Many people have an idea but they don’t have the funds to start a business. Starting a business takes time, effort, and most importantly money. Most businesses are not profitable the first year so you will need money to both fund the business and fund your own personal needs. Even if you are going to seek loans and investors, they will want you to have skin in the game.
Do you have good credit? Good credit is a must when you start a business. At some point you are going to want to get a business credit card, a line of credit, or a loan. Even if you don’t see needing these, you many want to take credit cards, rent equipment or a building, or lease a car. Your credit rating will affect what you can do and how much it will cost you to do it in the financial and business worlds.
Are you going to go into business by yourself or with others? If you are going into business with others, or thinking about, make sure to check back next week for the blog post things to think about when going into business with others. It is one of the most important decisions you can make – maybe even more so than who you marry!
Happy New Year from the Law Office of E.C. Lewis P.C.. Welcome to our first video post! We hope you enjoy it! If there are topics you would like to see addressed in the future, please make sure to leave a comment. As always, if you need specific help, please feel free to call me, your Denver business attorney, at 720-258-6647.
If you haven’t been to the home of your small business attorney recently, then you have probably noticed some big changes! As you can see, the website has been completely redone. You can now find the newest stories on the homepage. You can still find all the posts on the blog page. This year, each month will have a different theme with articles posted about top tips for you to have the best business year ever!
So make sure to check back to find out if there are new posts that will help you!
If you have comments about the new look, please let me know!
As an attorney that frequently speaks on social media, online law, and other techy legal issues, I get asked by employers what they can and can’t do as far as investigating applicants online. Unfortunately, the answer really varies on the specific circumstances. However, in most cases, employers should follow at least the following basic rules:
Don’t do anything online that you can’t do offline. For instance, do not use information you find online to discriminate against a potential new hire. If you cannot discriminate against someone due to having children offline, you can’t research whether they have children online.
You may be required to tell individuals where you get information about them during the interview process. If you are going to hire a company to research online sources to find out more about applicants, check with your attorney to determine if you must reveal this under the Fair Credit Reporting Act.
After hire, make sure you clearly state what you expect from employees both on and off the job regarding the use of social media. For instance, do you need to worry about complying with the FTC endorsement rules (i.e. if your employee says good things about you do the disclose the employment status)?
Depending on the number of employees you have and the type of business you have, you may need to have a policy on both using social media in the hiring process and after hire. If you are hiring employees, or have employees and haven’t thought about whether you need a policy before this, contact me, your Denver Small Business Lawyer today to find out if you need one today.
You’ve decided that you need another person in your business – you can’t hire someone as an independent contractor for various reasons (see last week’s blog post for more information) and have found outsourcing is too expensive. You are ready to join the thousands before you that have become employers. However, before hiring employees, there are several questions you should ask:
Do you need intellectual property agreements with clients?
What tax forms are you going to have to file?
Are you going to meet any thresholds for complying with other laws?
If your employees are going to be making anything for the business, such as software, pictures, manuals, or products, or are going to be exposed to any trade secrets of the business, such as customer lists, financial information, or marketing secrets, you are probably going to want employees to sign intellectual property agreements. These agreements vary in what they cover but in most cases state that anything created for the company during the term of employment is owned by the company and that any intellectual property owned by the company must remain confidential. Of course, IP agreements vary depending on the company so speak with your Denver business lawyer to determine what yours should have in it.
If you are an s-corporation, you are probably already filing most tax forms needed for having employees (and if you aren’t, speak with your accountant to see if you should be!). Hiring an employee probably won’t change much except the amounts owed with each form. However, if you aren’t an s-corporation and you are hiring your first employee, welcome to a new world of forms, fees, and taxes. Just some of the forms you will need to file are an IRS 941 quarterly, an IRS 940 yearly, Colorado Department of Revenue forms, unemployment insurance forms, possibly occupational privilege tax forms, worker’s compensation and depending on your jurisdiction miscellaneous other forms. If this is your first employee, your accountant or bookkeeper should be your first resource to make sure everything is filed correctly.
Depending on the number of employees you have, you may have to comply with different laws. All businesses, with only a few exceptions, have to comply with wage and hour laws and pay at least minimum wage. However, providing health care and complying with FMLA rules, ADA rules, and other laws vary on the size of the company. When hiring employees, you need to talk to your attorney to determine what rules you need to follow based on the number of employees you have.
While these questions are some of the questions you need to ask, when hiring an employee there are thousands of others. If you are thinking about hiring an employee, you can always sign up for my seminar at the Front Range SBDC on the basics of hiring employees or contact me for one-on-one help.
Many times when a business is first looking to expand, owners wonder whether they can hire someone as an independent contractor rather than an employee. Why? Hiring independent contractors is usually cheaper than employees. As we will discuss next week, hiring employees entails withholding taxes, paying the employer’s portion of FICA, purchasing worker’s compensation, paying unemployment insurance, complying with wage and hour laws, and the list goes on and on. However, when hiring an independent contractor, in most cases, someone only needs to pay the independent contractor and then file a 1099 with the IRS at the end of the year on what was paid to them.
The problem that arises when hiring independent contractors is that Colorado, the IRS, and the US Department of Labor may disagree with your conclusion that someone is an independent contractor and state that you have misclassified the person as an independent contractor and seek fines, penalties, and repayment of various amounts. For instance, if the Colorado Department of Labor determines that you have misclassified an employee as an independent contractor, you may be asked to repay all unemployment insurance premiums, fines, and penalties. If the IRS determines that you have misclassified someone, you may have to repay the employer portion of FICA.
So how do you determine whether you can hire someone as an independent contractor? Unfortunately, the IRS, the USDOL, and Colorado have three different standards. Typically, Colorado tends to be the strictest, finding more people are employees than either other entity. Colorado looks at two main factors:
Is the independent contractor free from the business’s control and direction over how the independent contractor’s service are performed?
Is the independent contractor customarily engaged in an independent trade, occupation, profession, or business related to the service he or she is performing for the business?
The CDLE In regards to the first, the CDLE looks at additional factors to determine whether someone is free from direction and control such as does the business or the independent contractor provide supplies? Who pays for mileage? Does the business train the independent contractor? In regards to the second question, the CDLE looks to see whether someone is truly running an independent business where they provide services to multiple companies or whether the person is more like an employee who only works for one company for a long time.
By looking at the whole picture, the CDLE is trying to figure out whether the relationship looks like an employee-employer relationship or one where the independent contractor is truly independent. If you are thinking about hiring independent contractors, make sure to speak with your accountant or attorney to go through the factors to determine that you are classifying the person correctly!
