Category Archives: Small Business

SUMMARY OF 10 TIPS FOR SMALL BUSINESSES

I hope everyone has enjoyed my monthly tips over the last year for those who own, or want to own, a small business .  I thought as a closing for this series that I would summarize the tips in a one-page document that you can take with you and refer back to when you need a reminder.

First Tip: Create your corporate shield to “shield” you as an individual from liability by creating a corporation or a limited liability company for your business.

Second Tip: Get appropriate business insurance (worker’s compensation, unemployment, business liability, professional liability, health, etc.) and pay taxes.   

Third Tip: Do not misclassify your employees as independent contractors; do an analysis of the type of work, supervision, tools/equipment, control, etc. of your “independent contractors” to ensure they have not been misclassified.

Fourth Tip: Know the employment laws that affect your business such as Title VII, Equal Pay Act, Age Discrimination in Employment Act (ADEA), Americans with Disabilities Act (ADA), Family and Medical Leave Act (FMLA), worker’s compensation standards and Arizona state laws.

Fifth Tip: Set written employment policies in an employment handbook, consistently follow your own policies, and train your supervisors on how to implement your company policies.

Sixth Tip: Make sure you are promoting your employee benefits to your company’s advantage and do not forget the benefits that you can offer that do not cost you anything.

Seventh Tip: Make sure you have written contracts that lay out the true terms of the contract and avoid “handshake deals” which can create serious problems for your business if you end up in court.  

Eighth Tip: Integrate written social media policies into your workplace such as prohibiting employees’ use of social media at work, employees posting your company’s confidential material, trade secrets, or proprietary information, etc. 

Ninth Tip: Determine if you need a trademark or service mark for your business and if so, register your trademark or service mark with the United States Patent and Trademark Office (USPTO) to obtain exclusive nationwide ownership of the trademark and the presumption that the trademark is valid over others. 

Tenth Tip: Beware of personal guarantees because if you do sign a personal guarantee, you have to be willing to pay on the debt if the main borrower, whether it’s your business or your child, fails to pay. 

The information contained herein is general information not legal advice, and does NOT establish an attorney-client relationship with Lori Brown.

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NINTH TIP: TRADEMARKS

The next tip for those who own, or want to own, a small business: DETERMINE IF YOU NEED A TRADEMARK OR SERVICE MARK FOR YOUR BUSINESS.

Business owners routinely ask questions about the names, logos and phrases they use to sell, advertise, and promote their goods and services.  This brings up the issue of what is a trademark/service mark and what can be trademarked.

A name, word, phrase, logo, symbol, design, image, or any combination thereof that a business associates with its goods and/or services can be projected as a trademark.  By way of example, McDonald’s, Inc. uses several trademarks that we are all familiar with.  The “golden arches” is a trademarked logo that is known worldwide.  The phrase “i’m lovin’ it”TM is also world-famous.

Trademarks perform a dual role for a business.  Trademarks add value to the business through branding, but they also protect the goodwill associated with the business.  Trademarks increase brand recognition by distinguishing the products or services of a business from those of its competitors and make it easier for customers to identify the source of the products or services.  Furthermore, trademarks and service marks are enforceable against competitors that try to encroach on the goodwill of the business and confuse customers by selling a competing product of lesser quality under the same brand name. If a business obtains a federal trademark with the United States Patent and Trademark Office (USPTO), then the owner of that mark has the exclusive nationwide ownership of the trademark and the presumption that the trademark is valid over others.  Once a trademark is registered, that mark will appear in trademark search reports which should discourage others from proceeding with the trademark registration of the same or similar trademark and the USPTO will refuse trademark registration to any trademark it deems confusingly similar to an already registetred trademark.

The information contained herein is a business advertisement with general information not legal advice, and does NOT establish an attorney-client relationship with Hymson Goldstein & Pantiliat, PLLC or Lori N. Brown.

EIGHTH TIP; SOCIAL MEDIA AND THE WORKPLACE

The next tip for those who own, or want to own, a small business: integrate social media policies into your workplace.  

This past year I learned how to use Facebook for business.  I had a personal Facebook page for several years but was not an avid user.  I heard people talk about using social media for business, but I didn’t understand what that meant.  About six months ago, I went to a basic social media class and started a Facebook business page.  I learned how to post, use pictures, tag, schedule future posts, use hashtags, etc.  Now I post legal tips everyday to my Facebook page and I am slowly building an audience.  The idea of a Facebook business page might be old news to some of you and new news to others.  The fact of the matter is that a growing business needs to use every avenue available to market and social media seems to be “the” tool to use at the present moment.  Social media is also being used to investigate potential employees.  It is not uncommon for companies to choose not to hire a potential employee after viewing information posted by or about the employee on social media outlets.  And, I am seeing more and more stories about employees being fired due to items posted via social media.  Think about what you would do if your employee was posting negative comments about your business while he was at work.  Being proactive and adopting and integrating social media polices in your workplace is one way to avoid social media problems.   

A lot of workplace rules about social media really are common sense, but they still should be put in writing and reviewed with your employees regularly.  Some possible policy considerations include:

  • Prohibiting employees’ use of social media at work
  • Prohibiting employees from posting messages or material that could damage your company’s image or  reputation
  • Prohibiting employees from posting your company’s confidential material, trade secrets, or proprietary information
  • Prohibiting employees from posting messages that defame or slander management and co-workers
  • Prohibiting employees from posting messages that disparage your company or another company

My rule of thumb is everything that is posted on the internet is public.  I tell employees and employers alike not to rely on “privacy” settings because those seem to change regularly.  One of the main reasons social media is used is to expand your “reach”.  You get your word out by posting and hoping that others “like” and “share” your posts.  But, that “reach” could quickly become your enemy if something is posted about your business that is less than favorable.  The old school version would be hitting the send button in an email and the next instant realizing that you sent the email to the wrong person, or worse, hit “reply all” when you wanted to only reply to the sender.  So go out and use social media to its fullest advantage.  But, you also need to keep a close eye on what you and others are posting about your business. And, of course, I invite you to check out and “like” my business page: https://www.facebook.com/BusinessLawyerLoriBrown and I hope the information you find there will be educational and entertaining. 

The information contained herein is a business advertisement with general information not legal advice, and does NOT establish an attorney-client relationship with Hymson Goldstein & Pantiliat, PLLC or Lori N. Brown.

SEVENTH TIP: THE IMPORTANCE OF WRITTEN CONTRACTS

The next tip for those who own, or want to own, a small business: make sure you have written contracts WITH CLEAR TERMS

I had a case a few years back where my client sold her home health business to a “friend”.  The two friends decided not to get a lawyer and instead used a form contract for the sale of the business.  Of course, a dispute arose after the contract was signed.  The buyer had made a down payment on the purchase of the business and then was supposed to make installment payments to pay off the balance.  But, after running the business for a short time, the buyer decided that she had not received what she expected and therefore she stopped making payments.  The dispute ended up in a lawsuit and the case went to arbitration.  The arbitrator ultimately decided that no one won the case because there was a “mutual mistake” involved, meaning the parties never really agreed on the terms of the agreement.  This was a very rare result because usually in a lawsuit someone wins.  In the end, both sides lost out, the seller never got her money, and the buyer did not get the business she expected.   

The above situation illustrates the importance of having written contracts that lay out the true terms of the contract.  When a contract ends up in court, the judge will look to the “four corners” of the contract, meaning only what it says in the contract, not some verbal side deal that was never written down.  The purpose of a contract is to deal with all potential issues that could arise.  You want to make sure that your written contracts “say what you mean”.  DO NOT just sign a business contract, read it carefully (or have an attorney review it for you).

And, the days of a “handshake deal” do not exist anymore.  I was doing legal research recently and read a quote from a case that I thought summed up this issue well and all business owners would be wise to remember:

“An agreement that is based on trust and is not documented is fine as long as there is plenty of money and as long as there are no problems. The purpose of legal agreements is to define, in advance, who has superior rights when there are not enough assets to go around.”[1]

The information contained herein is general information not legal advice, and does NOT establish an attorney-client relationship with Lori Brown or Hymson Goldstein & Pantiliat.


[1] In re Moye, Case No: 07-37770 (Bankr. S.D. Tex., 2008). 

SECOND TIP: INSURANCE AND TAXES

The next tip for those who own, or want to own, a small business: get appropriate business insurance and pay taxes.  Several small business owners have come to me recently with questions about whether they should pay their workers as employees or independent contractors.  This issue, employees versus independent contractors, is one I will address in a later letter.  To understand this issue, you have to first understand why a small business owner would not want to have employees: having employees means having to pay more taxes and for more insurance.

An employer with employees pays its share of employment taxes to the federal and state governments.  Additionally, all businesses need insurance, but businesses with employees need more insurance.  Some of the typical insurances that a small business should consider, some of which are mandatory, are:

• Worker’s Compensation Insurance

• Unemployment Insurance

• Business Liability Insurance

• Professional Liability /Errors and Omission Insurance

• Medical/Dental/Vision/Life/Disability Insurance

Failing to properly pay taxes or get insurance can lead to, among other things, the IRS coming after you for back taxes, interest and penalties or your business having to pay out of pocket for an employee’s work related injury.  You would not want to get in to a situation where you open a successful business and that business is brought to its knees due to unexpected liabilities or losses.  Protect your business investment and assets with the appropriate and necessary insurance and payments to Uncle Sam.

Sincerely,

Lori N. Brown

The information contained herein is a business advertisement with general information not legal advice, and does NOT establish an attorney-client relationship with Lori Brown or Hymson Goldstein & Pantiliat, PLLC.

FIRST TIP: CREATE YOUR CORPORATE SHIELD

As promised, we begin with our first tip for those who own, or want to own, a small business. My first tip is to create your corporate shield.

The purpose of creating your corporate shield is to “shield” you as an individual from liability. This means that if a lawsuit later develops against your company, the lawsuit would be against the company and not you as an individual. For example, I had a client once that simply picked a name for his company and began operating as that company. That client was later sued as himself because the company he was operating as was not a true legal entity. In this situation, for example, the client is sued as: “Joe Smith doing business as ABC Company”. The big problem here is if Joe Smith loses his lawsuit and gets a judgment entered against him for any amount of money, the creditor on that judgment can lien any property Joe Smith owns, garnish his wages, garnish his bank accounts, etc. Bottom line, you want to avoid being sued as an individual for issues related to your business.

The way to create your corporate shield is usually by creating a corporation or a limited liability company. This is very formal process which requires, among many other things, a filing with the Arizona Corporation Commission. You need to be sure that your corporation or limited liability company is created properly with the appropriate documentation such as bylaws, issuance of stock, stockholder agreements, operating agreements, etc. There are also tax implications involved in the choice of entity and perhaps, tax elections to be timely made.

If you, your family members or friends need help with creating a corporate shield, our team of knowledgeable attorneys are here to help.

INTRO TO 10 TIPS FOR SMALL BUSINESSES

Many of my clients are individuals who own small businesses or are starting a small business.  Some of my clients have been sued and need an attorney to defend them in an action.  Other clients need an attorney to file a lawsuit, usually to collect money they are owed.  But, the best case scenario for a client is when the client has the ability to call me before they get served with a lawsuit or get into a situation where they want to file a lawsuit.  The reason this is the “best case scenario” is because then the client can hopefully avoid a lawsuit altogether.  Lawsuits are costly endeavors, in both money and time.  Keeping this in mind, I decided to write a series of monthly letters for those individuals out there who want to do their best to stay out of court and save money in 2013!

Over the next year, I will be sending out my monthly letter which will include a business/legal tip for those who own, or want to own, a small business.  A small business owner understandably wants to “focus on business” and not have to deal with issues that are outside their area of expertise or what can be seen as administrative-type work.  But, I have seen too many small business owners who wait until there’s a serious problem before calling for legal help.  Maybe they don’t want to “waste time” or money having an attorney involved.   For example, most small businesses don’t have an employee handbook.  What happens when you want to fire a “problem” employee? Or what about a contract you signed – just so you could “get the job done”, but you never spent the time to read the contract until it was too late?

As anyone who has started a business knows, there is so much more to a business than just a “great idea”.  You need to have all the nuts and bolts to make your business successful.

Stay tuned!

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