Not sure what you want your business entity to be? Join me and CPA Jacob Cohen for tips and information about choosing between an LLC, S-Corp, Corporation or Sole Proprietorship in Pennsylvania.
This presentation is at the Transfer Station East in Manayunk.
When: January 29, 2014 at Noon
Where: 4120 Main Street, Manayunk
Free pizza and soda!
You must register in advance here.
This week I gave a lecture on what a small business needs to do to comply with the new Affordable Healthcare Act. If your business has under 50 employees, the surprising answer is....not much! A business with less than 50 employees is not required to provide health care coverage.
If the employer is covered by Fair Labor Standards Act, then one must provide notification to their employees about the new Health Insurance Marketplace; inform employees that they may be eligible for a premium tax credit if they purchase coverage through the Marketplace and advise employees that if they employee purchase a plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer. This notice must also provide to all new employees going forward. To get a copy of the notice you should send, go to the Department of Labor's website.
Many businesses start out on the fly. You start making a product, your family and friends love it, you decide to start selling it and boom! you have a business before you even know it. In an effort to save on some start up costs, you might delay incorporating or even getting insurance for your business. This is a bad idea and can expose you and your assets to claims.
What's a boot strapping new business owner to do? If your state has them, form an LLC! An LLC is a limited liability company and its purpose is to do just that, limit the owner's liability. Many people mistakenly think it's a corporation and there will be all kinds of complicated tax issues. Not so. Unless you elect otherwise, an LLC is taxed just like the owner, which means you just report your profits and losses on your personal income taxes. Eventually, if you are dealing with a large number of profits, you may want to elect to be taxed otherwise, but make sure you have a good accountant in place to help you make the switch.
In the meantime, any liability incurred by the LLC is assigned to the LLC, not the owner of the company. It's a win win for most small business owners. Does this mean you don't need liability insurance? No! You should still get the proper insurance, especially if you own a brick and mortar business. For example, if someone slips and falls and brings a lawsuit, your liability insurance will defend you, covering any claims and attorney's fees. Without the insurance, you'd be facing costly legal fees on your own.
In short, don't save money by not setting up the proper business entity and buying appropriate business insurance. Consult a small business lawyer for advice.
Our event, Obamacare and the Small Business Owner: What You Must Know Now, will now take place on Thursday, November 21st at 10:00am at the Transfer Station East in Manayunk. The Transfer Station East is located in the old Restoration Hardware space at 4120 Main Street. There is ample parking onsite and nearby. This event is free and includes coffee and pastries, but registration is limited and must be done in advance here.
If you own a small business and are confused about your health care obligations, please come to this event. See you on November 21st.
One area where many small business owners skimp on legal advice is with their commercial lease. If you're not careful and do not have a lawyer review your lease, you could be in for years of problems.
Most commercial leases are for a long term, typically three, five, ten years or more. One area to keep an eye on in your lease is the amount of rent. Sounds easy, right? You find a nice space that advertises itself for $1,000 per month. You get excited, run your numbers and decide your business can afford to pay $1,000 a month in rent. Not so fast. Look closely at the area that discusses the rent charges. Typically a lease will specify the amount of base rent to be paid and then there will be additional paragraphs that address additional rent. What is included in additional rent? A large number of things, depending on your landlord. Use and occupancy tax could be added, utilities, past due charges, many items might be specified, make sure you understand how much will really be added to the lease each month. If you aren't comfortable with the arrangement, negotiate!
Another area to closely watch is for any rent escalation clauses. As I pointed out above, a commercial lease is usually for a long period of time, several years or more. Do you think your landlord is okay with you paying the same amount of rent for five years or more? Think again. There is likely a rent escalation clause in the lease specifies what the base rent will be in years two, three, four and five. Make sure the exact amount is noted, along with the exact dates of when the new base rent rate applies.
I am an attorney that reviews commercial leases for a very reasonable rate. It's money well spent to make sure you are not placed in a bad position today or several years down the line when you are locked into an unfavorable lease. Drop me a line today about reviewing your commercial lease.
Join Philly Small Business Lawyer Sarah E. Holmes on Tuesday November 12, 2013 from 10:00-11:30 am for a discussion of what every small business owner must know about the new Affordable Care Act.
Many people mistakenly believe that "Obamacare" has been repealed. This is not true, but there is so much confusion about the current state of the law and what a small business owner is required to do.
Join me at the Transfer Station East in Manayunk (old Restoration Hardware). This event is free, but advance registration is required.
"Obamacare," or the Affordable Care Act as it's really called, has a myriad of confusing provisions and if you are a small business owner, you may be confused as to your obligations and deadlines.
The requirements vary depending on how many employees a business has. We found a great resource at the SBA website for those with fewer than 25 employees. The site lays out requirements for small businesses with fewer than 25 and those with over 50 employees. A major upcoming deadline is the Oct. 1 deadline to provide employees with the required notice of the new Health Insurance Marketplace. Any employer covered by the Fair Labor Standards Act (FLSA) must provide this notice to employees. Two sample notices can be found on the SBA website, depending on whether the employer offers health insurance coverage or not.
I will soon be hosting an informational breakfast in Manayunk for small business owners and their obligations under the Act. Watch this site for details!
While many people in America could probably not recite most of the rights enumerated in the first ten amendments to the Constitution, most people do know that in the event of an arrest, they have the right to remain silent. While this is generally good advice in a criminal matter, a civil dispute may turn on speaking up and asserting your own position and doing it in a timely manner.
In a legal dispute, don't bury your head in the sand. If you receive papers in the mail, ignoring them will not make them go away. Court filings have tight deadlines and missing them can make it very difficult to defend a case. Make sure to consult with an attorney right away so you don't lose any of your legal rights.
Portlandia- Put a Bird On It
In the above episode of Portlandia, the characters mock the phenomena of putting a bird on something and calling it art. If you make products for sale using images that you did not create, there are copyright implications to consider.
Go to a craft show or browse crafty websites and you will find many products for sale using images not created by the seller. If you find a drawing, image, illustration or other picture you'd like to use on products for sale, you need to research the copyright. For example, say you found a drawing of a bird in a recent book. You like the drawing and photocopy it to use on a tote bag that you intend to sell to others. In most instances, unless you can make a "fair use" argument that you are using the copied bird for comment, criticism, news reporting, teaching, scholarship, or research, you may have committed copyright infringement.
Many non-lawyers will tell you that instead of copying the bird, if you simply cut the image out of the book and use it directly on an object to sell, it is acceptable under the "first sale" doctrine. That is not necessarily true. The original copyright owner also has rights to any "derivative" works using the image. Courts have split under different fact scenarios as to what is a derivative work and when a new work is protected by first sale. Ultimately, it is up to a court to determine what is "fair use" and what is not if a dispute occurs and there are no bright line rules. In considering whether to use images created by someone else in your products for sale, carefully evaluate the copyright considerations and seek legal counsel.
I often hear people refer to their business as their "baby." They view the business start-up process and subsequent growth period as similar to birthing and raising a child. While sometimes there are similarities, viewing your business as your baby is a huge mistake.
Your business is just that, a business. The only point of having a business is to make a profit. Yes, you hope it will be fulfilling, etc., etc., but if it's not profitable and making money for you, it's just a hobby. This can be a hard pill for some people to swallow.
The first step is you must emotionally detach yourself from your business. Viewing it as a baby will cloud your judgment when it becomes time to make some difficult decisions. For example, you may be totally overwhelmed and desperately need help running certain aspects of your business. You might hold yourself back from hiring much needed help because it's "your baby" and no one else could possibly understand your vision or do things right. You may hire people but dismiss them when they fail to do things exactly as you would do. Or worse, you may fail to fire people that are taking advantage of you because your employees are like family. Save the strong emotional relationships for your family and friends, not your business and employees.
While being a small business owner definitely takes passion, cooler heads prevail when it's time to make important decisions. Take a step back, cut the cord, and make decisions that are good for your business.
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. When you're looking for a business lawyer near you, we offer several convenient locations.