small business – Page 2 – Eiss-Proctor Law, PLLC

October 5, 2012

Starting a Business on the Side – Do Tell?

This economy has a lot of people thinking about starting a side business. Starting a new company, freelancing, and contracting are all great ways to bring in some extra money while reducing your costs. If you do it the right way you can see if the new business idea is really going to work while maintaining stability at your current gig.

Over the next four weeks I will talk about the various things you need to consider before launching a start-up side business or taking on a second job.

First: To Share or Not to Share

One of the first things you will need to decide is whether or not you are going to tell your employer about what you are doing. If you decide to go the stealth route keep in mind that you probably want to keep it mum from the entire office. Co-workers tend to talk and word will probably get back to your boss at some point unless you tell absolutely no one.

Remember to Check your Contract!

Before deciding to ‘fess up, you should also take a look at your employment contract (if you have one). Many employment contracts limit an employee’s ability to get a second job. Sometimes contracts require employees to jump through hoops like such as getting the employer’s written permission before taking on any other employment. If you don’t follow the rules you expose yourself to being fired for cause.

If your contract seems limiting but you are still interested in working at a second gig and your contract discourages this you can always approach your employer and negotiate with him or her.

Once you know where you stand and how up front you are going to be, you are ready to consider the type of work you will be doing and how that work product may affect your employer. Stay tuned for next week’s post on this issue and how to navigate it.

September 25, 2012

What’s Up With Delaware?

Over the past few years I have worked with a lot of people who want to start LLCs, not-for-profits and incorporations. Even before we meet, I can guarantee that one of the first things I hear will be: “My friend/relative/acquaintance told me I should file in Delaware because it will be cheaper because of taxes.”

I don’t know who this person is that is spreading these rumors, but I wish he or she would stop.

The truth is that for most businesses filing in Delaware does not save any money. Instead, you should form your business (and file the appropriate papers) in the state where you will actually be running your business. Before you buy in to the Delaware hype, consider where your offices will be, where you will be opening your shop or where the majority of your clients will be based.

Why?

Your home state (you know, the one where you will actually be operating your business from) will want to see documentation that you are registered to do business THERE . If you are doing business in New York (for example), meaning opening a bank account, interacting with customers, signing a lease or seeking a license, the State of New York wants you to be registered there (and other states feel similarly).

Only now that you have formed your business in Delaware (and paid Delaware all the filing fees) you now have to register as a “foreign corporation” in order to operate in your home state. To register as a foreign corporation you will often have to pay the EXACT same amount of money as if you had just formed the company in your home state. So essentially your business ends up paying the State of Delaware AND your home state.

So how can start-ups save money?

Believe it or not, the most cost-effective choice for most small start-ups is to register their company where they will be doing business.

The idea that you can save money by registering in Delaware is a MYTH! In short, get all the facts before you jump on the Delaware bandwagon.

I hope you find this useful and that it saves you money. I know a lot of people who wish they would have known about this before registering (and paying in Delaware AND then again in their home state).

August 29, 2012September 15, 2012

Working from Home in New York City

Did anyone catch the article in the Real Estate Section of the New York Times this past Sunday about the plethora of New Yorkers who are running micro and small businesses out of their homes? If not, definitely check it out. Here is a link: http://www.nytimes.com/2012/08/26/realestate/running-a-home-business-in-new-york.html?emc=eta1

The article describes people around the city who are running all kinds of businesses out of their homes, from personal trainers to bakers to retailers of children’s clothes. As the article suggests, not all of these businesses are done above board and on the books. But there are a surprising number of ways to compromise with your neighbors. Working out of your home is a great way to save money as you start the business and can be convenient too. If you are already running a business out of your home, or thinking about starting one, I would love to hear about how it is going and what challenges and successes you are encountering. Do you find a way to hide it from the neighbors or get them involved? Either way it is important to recognize and acknowledge the challenges early on rather than wait for them to grow into something more serious. I really enjoyed the article and was heartened and inspired by the the incredible entrepreneurial spirit that so many New Yorkers have.

January 16, 2012September 15, 2012

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.