You have finally built your dream Yoga Studio, and even better you actually have clients! This is when you start to realize that there is more to running your Yoga start-up then downward dog and sunrise salutations. You need help so you can add extra sessions, or maybe just to cover some time off for yourself after all of your hard work. No problem- you have plenty of instructor friends in your network that can cover a class or two.
If only it was that simple, but there is one key decision in the process that cannot be overlooked. Will you classify your workers as Independent Contractors or Employees? There are pros and cons to each format, and there can also be legal and tax consequences if you incorrectly classify.
Let’s take a closer look at how these two classifications function and what they may mean for your Studio.
Independent Contractor (1099)
An Independent Contractor is a freelancer that works for themselves and you “contract” them to perform services for your business (think of it like hiring a plumber). The pros of this kind of relationship are: flexibility, cost savings, and no training investment. The cons can be: no company loyalty, may not always be available due to other projects, and little control over the way they complete their work.
An Employee is someone that works directly for you and you have full control of how and when they perform their job. The pros of this kind of relationship are: full company investment, full control over training, control over how the work is executed. The cons are: benefits will be expected, payroll taxes, overhead and ongoing expenses, unemployment and workers’ comp coverage.
Still confused? No worries, an Attorney that specializes in small businesses can help you steer your Yoga Studio in the right direction so you can get back to running your business. Reach out today for help.
In the process of setting up your business, you may have consulted with an accountant, an insurance agent and possibly even a business consultant. The million-dollar question, however, is… have you consulted with a business lawyer? While you may not need legal advice on a daily basis, developing a relationship with a skilled business lawyer can be useful so you have that important resource when you need it. Waiting until the need arises can often lead to making snap decisions, when hiring a lawyer, just to have a “warm body” on the job.
Below you will find several tasks that a small business lawyer can help you with right away!
Deciding how to structure your business is a big decision that affects your exposure to personal liability, tax obligations, setup fees, ongoing expenses, as well as how you can legally acquire funding. An experienced business lawyer can help you make the right decision and create/file the correct documents.
Are the people who work for you regular employees or independent contractors? A good business lawyer is familiar with the laws surrounding this question and can help you stay out of trouble with the IRS. You also want to avoid any possible discrimination issues when designing your hiring practices. A good small business lawyer can advise you how to avoid and potential issues in this regard.
Contracts are unavoidable when starting a new business. A good business lawyer can draft and review contracts to ensure you are making wise and informed decisions that can keep your business out of jeopardy.
Negotiating the Sale of Your Existing Business or Purchasing a New One:
A good business lawyer understands how to value a business, write purchase agreements, complete due diligence, and apply for permits and licenses. Likewise, when you sell a business, an attorney can help you get the most value out of your business and negotiate the best possible deal.
A good business lawyer is your small business best friend. Let us know how we can help you today!
Why Should My Business Have a Shareholder Agreement?
Your business with your partner is up and running and everything is going great! You are most likely focusing on marketing, hiring and, of course, growth. So, what comes next? I think it is fairly safe to say that a Shareholder Agreement did not come to mind in the course of your planning, but maybe it should have. Here are a few reasons why putting a Shareholder Agreement in place, earlier rather than later, is critical for those with business partners.
A Shareholder Agreement is Your Roadmap to Solving and/or Avoiding Disagreements
As much as we hate to think about it, conflict between owners can come into play. In fact one study estimates that a staggering 62% of startups fail due to shareholder conflict. One way to ensure that there is an equitable and transparent way of dealing with conflict is to have your attorney draft a specifically worded shareholder agreement.
Require Unanimous Approval on Key Items
If ownership percentages are uneven, situations can arise where the majority shareholder partner(s) can override votes of the minority shareholder partner(s). To avoid any abuse of power, a shareholder agreement can set everyone on equal footing by giving minority shareholders a voice on important issues. An experienced attorney can help you draft a Shareholder Agreement that lays out the terms for requiring unanimous approval for various items including entering into loans, election of directors and cash contributions, just to name a few.
Share Transfer Restrictions
It is very important for small businesses to balance growth. Starting small means that removing or adding a team member can have a huge impact on the entire company. Without a specific provision in a Shareholder Agreement, the law allows for a shareholder to transfer their shares freely to anyone they choose. This scenario has the potential be an unwelcome surprise for other shareholders but can be avoided by imposing restrictions for these types of transfers in a Shareholder Agreement.
The best thing about a Shareholder Agreement is that they can be tailored to your business and can include or exclude any terms you choose. This will most likely strike up some important conversations amongst you and your partner(s) and/or team members as you discuss the key topics.
When dealing with something as important as your business, which is also your livelihood, it is always best to be safe rather than sorry. Do yourself a favor and sit down with an experienced attorney to draft a Shareholder Agreement early on in your business planning or startup to avoid potential, future surprises and problems.
Contact our office to discuss our flat fee Shareholder Agreement packages.
In the digital world we live in, it can be tempting to forgo hiring a lawyer and simply Google a template for your business contracts, “going it alone.” Contracts are one area, however, where this may not be the best strategy.
It is always wise to hire a lawyer to write your business contracts. Without a lawyer involved, contracts can have serious consequences including exposing your business to unnecessary risks including lawsuits.
Here are four reasons you're better off hiring a lawyer to draft your contract:
Good legal advice can be crucial to small business success. Contact us today to see how we can help you navigate the world of contracts.
This is a question we get frequently. You have made your dreams a reality so getting your business up and running is now your top priority! With that in mind, you know that you do not have an unlimited budget for startup and legal fees. So, does your startup really need a business startup lawyer? The answer is, YES!
It is so important to be mindful of the legal implications of your business decisions. Consulting a business startup lawyer, sooner rather than later, can go along way in helping you avoid possible legal consequences down the road. Below you will find some key ways an experienced startup lawyer can help with.
Protecting Your Ideas
The basis of most startups is putting an innovative idea to work. This is the heart of your business and it is essential to protect it. If your idea involves an invention, an intellectual property (IP) lawyer can help you navigate and file relevant patent applications. Because of patentability limitations and competition, you will want to get it done fast and get it right the first time!
Protecting Your Brand’s Identity
After having spent an enormous amount of time and energy, not to mention money, into gaining brand recognition, you definitely want to protect it. A great way to protect your brand name or logo is by registering it as a trademark. A distinctive word, phrase, symbol or design qualifies a trademark that you can register with the U.S. Patent and Trademark Office (USPTO). An experienced startup lawyer can help you navigate this process smoothly.
Depending on the nature of your startup, there are a number of regulations that may affect your business. It is important to understand the FDA, environmental, zoning, and pharmaceutical regulations that may affect your businesses. An experienced startup lawyer can advise you on which regulations you need to comply with and how you can avoid non-compliance.
Data Privacy Issues
These are just a few of the many ways that a startup lawyer can assist you in setting up your business. Contact us today for a consultation to see how we can help you protect your new business.
By 2020, it's estimated that the workforce will be comprised of over 40% freelancers. That's a staggering number and totally revolutionary for the economy.
Gone are the days when people can work decades at the same company in exchange for the security of a retirement pension.
Instead, workers contend with constant turnover, company mergers, union-busting and self-funded 401ks that never seem to have enough funds to actually stop working.
What does one do about this bleak future as an employee?
If you're like me and many of my clients, you make the ultimate leap and gamble of a lifetime and you go out on your own.
The PROS? Freedom, flexibility, no boss and the ability to really design your ideal life and business.
CONS? No steady paycheck, freedom is somewhat of an illusion, the never-ending hamster wheel of marketing and serving and managing employee and client drama.
Would I ever go back to being an employee? NO. My only regret is that I didn't do it sooner.
If you're thinking about making the leap, careful planning is in order.
Jump on a strategy call with us to discuss your leap to freelance and set yourself up for success.
Can't Get Away From Your Business This Summer? Then Your People, Your Process or Your Profits Are Out of Whack!
I just got back from a vacation. My business didn't implode while I was away. There were a few days where I didn't even check email. I didn't take any calls. For the most part, I felt mentally at peace with being away.
Truth: I didn't take a vacation for the first three years I was in business. I worked every weekend and just about every holiday as well. It was awful, I was totally fried, and my family got way too used to doing things without me. When I finally did starting taking vacations again, they were "working" vacations, where I found myself crouched outside the hotel room door every morning frantically making calls so I still had revenue the next month. This was no way to take a vacation! It took five years, but I finally figured it out.
I didn't start a business so I could never be around or get away, in fact, I'd started a business so I could have more flexibility to have the kind of life I wanted. How did things get so screwed up and how did I fix them? It came down to three simple things that MUST be in alignment: people, process and profits.
1) People: You need to have quality support. It's absolutely critical if you ever expect to go away. You don't need a huge staff toiling away in an office while you're gone, in fact, that can create more problems. What you do need are quality, trustworthy, dependable people that know how to handle things in your absence. If you're a control freak that needs to have a hand in everything, this won't go well for you and you need a major mindset shift. You have to be able to delegate critical tasks that will keep your business running while you're gone. Make sure to have people to cover phones, new business inquiries and existing client inquiries.
2) Process: Do you have processes in place for handling prospects? For client work flow? For meeting deadlines? If you have processes in place, it makes it easy for everyone to know what is expected of them and when. If everything you do is reactionary, it makes it impossible to stick to a process. Do you let calls interrupt you all day long? Then you lack a process. Get control of your day, institute processes and getting away will be a piece of cake because you'll be clear about the critical areas that need to be covered on a daily basis to keep your business goingg.
3) Profits: This might go without saying, but if your business is not profitable, you probably don't feel good about taking a vacation. If you are not hitting revenue goals, take a look at why. Is something off in your marketing? Are you spending too much time on project delivery? Maybe you need to get out there and hustle up some new business. When's the last time you raised your prices? Have you cut some expenses? There are infinite ways to get more profits in the door. If you need ideas, talk to your business advisor, lawyer, accountant or business coach. Don't have any of these? Well, that's a huge problem right there!
In short, taking a vacation does not have to mean your business is on fire while you're gone. With well thought out strategies around people, process and profits, you can go away worry free and when you come back, feel refreshed and even plan your next vacation!
Do You Wish There Was a Clear, Simple Formula to Starting A Business That Made It Easy to Get Profitable and Protect Your Assets? Take the Stress Out of Start-Up With My 3 Simple Steps.
I started my first business in my kitchen 8 years ago. It seemed like there was just so much information out there, plus the well-meaning advice of family and friends, that I just had no idea what to do first. Did I start an LLC? Did I need to get a bank loan? Should I hire people to help me? Would I lose my house if I failed? Everyone and their brother had a different opinion.
I know how frustrating starting a business can be. After owning several businesses over the last 8 years, and now having helped hundreds of entrepreneurs through my business law practice, I’ve developed a clear, simple, 3 step framework to give new business owners the best chance at a profitable business that protects their assets.
Today, I'm launching a free training that will reveal the three simple steps I walk my start up clients through that makes sense of all the start-up noise. If you'd like to grab a spot on this exclusive training, you can register HERE.
I help a lot of corporate refugees who are type A, super go-getter people that have been very successful in a career job working for someone else. Despite their success, they still feel like something is missing and over time, become resentful that their skills, talents and some of the best years of their life are spent making someone else rich. They yearn to build something of value for themselves and have flexibility to spend time with their family and cultivate hobbies. One day, the light bulb goes off and they decide to start their own business.
Because they've been super successful in their job, they are excellent at what they do. They assume this will translate to being a successful business owner. Often, they are lacking three critical skills that would lead to business success. Without these skills, they are doomed to fail. What are these skills?
1) Ability to Always See the Big Picture. Folks coming from a corporate job tend to be relentlessly focused on details. While the ability to focus on details is certainly necessary for a successful business, often people can't see the forest through the trees. They get so wrapped in minutiae of EVERYTHING, from their business name, to logo colors, to the font on their proposals, that they fail to focus on the important parts of starting a business, mainly, STARTING. Their drive for perfection paralyzes and prevents them from taking the most important actions to getting the ball rolling, namely just getting out there and making sales.
2) Delegate. This is a tough lesson for many to learn. Those that have achieved success in other areas of their life want to control every detail. They've been burned by inept team members in the past. Used to playing office politics and living under an imposed corporate hierarchy, they don't trust others to complete what they themselves think they can do better. As a business owner, this behavior is most likely to lead to failure, if not just a painful life as a business owner. Any successful business will eventually require help from others to run. The owner needs to be able to delegate tasks to others. Beyond just delegating the tasks, the owner needs to trust others to complete the tasks well, and realize that just because someone does something a bit differently than you might have done it, the important things is that it's done. This skill can be acquired with the proper training and systems in place, but many business owners are reluctant to delegate any tasks to begin with.
3) Mindset. I tell all of my clients being in business is all about mindset and managing your thoughts. It's a roller coaster of ups and downs and you have to be able to stay steady in the face of uncertainty. Many people focus so much on developing sales skills, marketing prowess and financial savvy, but they neglect mindset. Eventually, their emotions run amok and that can lead to bad decisions. Owners need to be able to keep a clear head and while listening to the gut can serve one well, it doesn't mean indulging every wild emotion that arises.
If you've ever thought about leaving your corporate life behind and striking out on your own, a successful career working for someone else doesn't always translate to being a successful business owner. With an open mind and a willingness to adapt, you'll have a much better shot at success.
For business owners looking to expand and grow their business, a critical component is hiring help. More than any other area we get inquiries about, this one is FULL of misinformation that can get a business owner in BIG trouble.
Here are the top mistakes we see business owners make in hiring employees:
1) I can't afford to put someone on payroll, so I'll just hire them as an independent contractor.
Total Red Flag! I can't even begin to explain to people how this can land someone in huge, deep, like depths of the deepest ocean legal trouble.
First, someone is not an independent contractor, or freelancer, just because you say they are. There are a number of government bodies interested in whether you are misclassifying a worker as an independent contractor just to avoid payroll taxes. This includes your state bureau of workers' compensation, unemployment, the IRS and state payroll authorities. All have different tests for whether someone is really an independent contractor or should be on payroll. There is no black and white rule or test for this, the government looks at a range of factors generally around how much you try to control them. The more you have to train someone, tell them what to do, provide them with tools, equipment, or a place to work, how to do something, etc., the more they should be a payroll employee, not an independent contractor.
But, I made them sign an agreement that says they're an independent contractor, so doesn't that make it so? NO. The government doesn't care what you had them sign. They care about what you actually do in practice. If it looks like a duck and quacks like a duck, even though it signed a contract saying it's a cow, it's still a duck.
2) Not using proper non compete, non disclosure and confidentiality agreements. So many business owners are either afraid to use these types of agreements at all for fear of upsetting their employees, or they use ones that are overbroad and not likely to stand up in court. Restricting your employee from working for any competitor in the entire country for the next five years is really broad. A proper non compete should be tailored to the situation.
Non disclosure and confidentiality agreements should make it clear that employees should take all measures to keep company trade secrets a secret. Being sloppy about trade secrets and their protection can come back to bite you big time. Make sure these documents have been vetted by an attorney.
3) Not having written policies and procedures. A lot of times a business owner will go it alone or depend on their payroll company for hiring and issue a flurry of generic documents to their new hires. A few months later, when they start having a problem with an employee, they call me and want to know how they can fire this person without getting sued. When I ask to see their policies and history of documenting the problem, they have nothing. Paper trails are critical in employment matters. Regular reviews and written feedback will help to fire a problem person and help you fight an unemployment claim if necessary down the line.
If you're a business owner looking to expand and hire or get your employment documents in line, reach out and set up a call to discuss.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way.