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Important Legal Tips For Every Small Business

Every entrepreneur has a dream…

Independence – both financial and personal…

Providing a good life for their family…

Grabbing their little piece of the American Dream…

With the head in the clouds dreaming, it’s easy to forget some simple legal steps you can take to get your business off to a good start and provide a firm foundation for the business as it grows.

When you’re starting your business, keep these five tips in mind:

  1. Don’t Mingle Personal and Business Funds

When you start your business, file the appropriate paperwork to cement your corporate structure.  Form a limited liability company, a partnership or corporation to avoid personal liability and keep your personal assets from being at risk for corporate actions.  Apply for a Federal tax identification number for the business once the corporate paperwork is filed.

At the same time, open a separate bank account for your business.  Any payments made to you by the business should be made as a paycheck written on the business account and deposited to your personal account.  Just like an employer was paying you.  Never take cash out of the business account for personal expenses.         

  1. Take the Time to Register Your Company Trademark

Before your head starts spinning with ways to handle this problem, make sure it’s a real problem.  Confirm that this supervisor is truly making less than the people who report to him.  If it’s a real problem and you can’t find a legitimate (business) reason for it, you need to remedy the situation and fix the problem as soon as possible. 

Now, having said that, if the supervisor’s reports work on commission and they’ve legitimately earned commission payments that increased their salary, make sure the supervisor understands that.  That’s a legitimate reason for the inequity in pay.

“If I Don’t Get A Raise, I May Have To Find Another Job”

Is this an employee that you would really like to keep?  If so, ask specifically what it will take to keep them on your payroll.  It may not be something totally out of the question.  If it is, try to work out a compromise that keeps the employee happy and doesn’t blow your payroll budget.  A combination of a pay increase with some non-monetary improvements like flex time or work share may be a good solution.

Above All, Don’t Panic

If you find yourself facing some of these conversations, recognize that it’s an uncomfortable place to be but you don’t have to fix the problem immediately.  Let the employee know that you understand their situation but you need to check a few things out and you’ll get back to them.  Set a specific time frame for your response and stick with it. 

And, if it comes down to dismissing the employee, talk to your legal advisor to make sure you’ve dotted all your “I’s” and crossed all your “T’s” and you’ve done what you need to do to stay out of court with a disgruntled employee.

Human resources issues are some of the trickiest problems you face as a small business owner.  Especially when they involve proper compensation for your employees.  Call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  As your personal legal advisors we can help you avoid employment issues before they happen. Normally, this session is $1250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.