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Want Ad Abuses

Most micro and small businesses do not have the resources for a full-time in house counsel.  This means the business owners need to be that much more vigilant to ensure that the actions the business takes comply with state and federal laws.  If your small business is planning on posting a want advertisement, there are a few points you should be aware of in regards to possible discrimination and job security.

The advertisement should be worded so that it does not appear to discriminate against any protected class.  At first this seems like something that can be done obviously, and in most cases it can, but some wording that suggests discrimination is still prevalent in advertisements today.  Protected classes include favoring: men over women (or vice versa); blacks over whites; or one age group over another.  The age group is one that is often forgotten about by many small businesses that operate without the advise of a lawyer.  To comply with the discrimination laws, an advertisement should not contain phrases such as “age 25 to 35 preferred,” “recent college graduate,” or “recent college graduate” as these phrases may suggest the business is discriminating against older persons.

Want ads can also inadvertently suggest the job is more secure than it is.  Many employers post ads that may give employees more rights by using phrases such as “long-term growth,” “permanent,” “secure,” or “career path.”  Phrases like these may create an inference that the employer is offering a job that cannot be terminated except for notice or cause even when the employer has no intention of giving workers added job security.

The best advise is to avoid copying and pasting a similar business’ advertisement until you know what all of the phrases and wording within the ad imply.

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Benefit Corporations

Happy New Year!

The New York State Legislature got 2012 off to a great start when they passed a new law at the end of 2011. On December 12, Governor Cuomo signed legislation which creates a new class of corporations in New York. These new corporations, called “benefit corporations,” will benefit companies who purpose is to create a benefit not just for shareholders, but also for the community at large. The general public benefit purpose is defined as a material, positive impact on society and the environment, as measured by a third-party standard, through activities that promote a combination of specific public benefits. You can read the precise language of the legislation here. In order for a company to become a benefit corporation it must apply through the state and publish an annual public report that shows its performance in social and environmental areas. This legislation clears the way for many social entrepreneurs already in existence to receive benefits for caring about both the company’s bottom line and society as a whole.

In short, I think this new law is a great way to begin 2012 and I am excited to see what the new companies that form under this legislation accomplish!

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Not-For-Profits and Lobbying

Many people who run not-for-profits think that not-for-profits are prohibited from lobbying.  This is not an accurate statement.  Not-for-profits are prohibited from engaging in political campaign activity and political activity will be taxed, but lobbying, within the limits provided by the IRS, is appropriate and can be necessary to carry out the nonprofit’s mission.

It is important to distinguish between “political campaign activity,” “political activity” and “lobbying.”  Political campaign activity deals with an individual who is a candidate for public office.  Not-for-profits are prohibited in participating in this activity.

Political activity, however, refers to influencing or attempting to influence the selection, nomination, election or appointment of any individual to any federal, state or local public office other than in the context of legislative confirmation.  If a not-for-profit chooses to undertake this type of action, the not-for-profit may be subject to a special tax.

Finally, lobbying refers to when a bill or draft bill is proposed in any legislative body (i.e. city council or state legislature) or any action with respect to direct actions of these bodies such as proposed constitutional amendments or referenda.  Not-for-profits CAN engage in lobbying as long as no “substantial part” of its activities consists of attempts to influence legislation.  If your organization’s mission is to help kids get a better education and you work with schools and teacher’s to provide after school activities to further this mission and you see a bill being introduced to lengthen the school day and want to support it, by all means, your organization should support it.  Not-for-profits should feel free to support causes that further its mission and long term goals through lobbying as long as that is not the main part of the organization’s role.

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What’s in a Name?

In the current economy, a lot of individuals have considered branching out and starting a business on their own.  Many people who start a business by themselves spend a lot of time planning how they will make money:  deciding what they will sell, how they will reach there customers, and how they will manage the day-to-day operations.  Another big business decision is what to call yourself.

Many people have the mistaken belief that if they do a google search and find a website address is available then they can use this as their business name.  If, however, you plan to operate a business under anything other than your own name, the law does have a say.  In New York State you must file a Certificate of Assumed Name with the government and tell them what name you will be using.  The form is only one page and the fee is low (only $50).  This step can be crucial, though.  If you enter into any contracts under the name of your new business (for renting space, hiring employees, or purchasing supplies and materials) and you have not filed the form, all of those contracts could be completely voided and/or unenforceable.  Unenforceable contracts means customers can demand refunds, landlords can change the terms of a lease, and suppliers can back out of promises.  Don’t get caught with a document that cannot be enforced.  The time and cost of the Certificate of Assumed Name is well worth the effort.

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Hindsight is 20/20 – How to Learn from Other’s Mistakes

I was reading through the news on LinkedIn the other day and I came across this great article about failure. Failure is usually considered a dirty word in the start-up business, but really it is just a way for entrepreneurs to learn and grow. The article, posted originally by LearnVest, is entitled “Entrepreneurship 101: What I Learned From My Failed Business.” Five entrepreneurs were asked what lessons they learned from their failures and the answers were enlightening. I will provide a summary here, but you should really check out the whole article at the link above.

Lesson #1: Put someone clearly in charge.
Lesson #2: Your founding team should represent varied skill sets.
Lesson #3: Make sure your business is self-sustaining.
Lesson #4: Protect yourself before your company.
Lesson #5: Make sure your personal life can accommodate your business.

These are all really good points to consider when you are starting a business. Oftentimes entrepreneurs get so excited about their amazing business idea and forget how important it is to plan long-term. Setting out a plan for who you see yourself working with, how the business might grow, and how it could be dissolved down the road is important. Entrepreneurs should never be afraid of failure, if one idea doesn’t work out, another will come along that could make you even more successful. Instead, it is important to plan for bumps so that if you do fail, you do it faster, recover more quickly, and move on to your next great idea.