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What's in a Name? What it Really Means to be an Independent Contractor.

admin — Fri, 21 Aug 2009 14:47:18 +0000

Many business owners insist on referring to their workers as “independent contractors” as if the name alone will somehow magically save them from having to pay employment taxes, workers compensation premiums and other costs associated with having employees. The true test, however, is in the actions and not in the words.

To determine whether a worker is an employee or an independent contractor, the IRS has developed a three-part series of factors to be reveiwed.

Behavioral Control: Facts that show whether the business has a right to direct and control how the worker does the task for which the worker is hired, including such factors as when and where to do the work, what tools or equipment to use, and the amount of instruction given for individual tasks.
Financial Control: Facts that show whether the business has a right to control the business aspects of the worker’s job, including the extent to which the worker has unreimbursed business expenses and the extent of the worker’s investment in the facilities or equipment used by the worker in performing the services.
Type of Relationship: Facts that show the parties’ type of relationship include any written contracts describing the relationship the parties intended to create, whether the business provides the worker with employee-type benefits, and whether the relationship will continue indefinitely rather than for a specific project or period of time.

There are many other factors to be considered and each situation must be reviewed on an individual basis. A simple rule of thumb is this: look at what the worker is actually doing, and if they look and act like an employee then they probably are.

For a free half hour consultation regarding employment law issues, please contact Attorney Chris Ratté.

NOTICE: The information and articles posted on this website are for informational purposes only and are not intended as legal advice. Contact me to discuss your particular situation or consult a licensed attorney in your state.

FAILING TO PLAN IS A PLAN FOR FAILURE: How to build a better business from the ground up.

admin — Thu, 09 Apr 2009 20:37:17 +0000

Building a business is like building a house. You need to do it one step at a time. When you build a house, you don’t start with the roof, do you? You don’t even start with the foundation. You start with a plan. Where do you want to build? How big will the house be? Will you expand it after a few years? These are issues you have to think about BEFORE you start to build the house. Once you have the right plan, then you can build the proper foundation for your dream house.

If you want to build your dream business, then you need to start with a good plan too. While most people think a business plan is just something you show to potential investors or lending institutions, the real value to the business owner is in the process of creating the plan itself. Creating a business plan will force you to analyze every aspect of your proposed business before you jump to the really cool product or service that inspired you to start the business in the first place. After all, your house could have the greatest home theater ever created, but if you didn’t plan the electrical system correctly, then you’ll never enjoy the benefits of what you’ve built. The business plan will require you to research your product, the market, and your competitors to see what it takes to be successful. It will also require you to evaluate your own strengths and weaknesses; a critical analysis that most people avoid doing.

Every good business plan should include at a minimum the following:

Description of the company, including your mission statement, goals and objectives, and company philosophy;
Description of the products and services you will offer;
Marketing plan, including an analysis of your competition and how you will set yourself apart (this is probably the single most important part of the plan);
Operational plan of how you will actually run the business on a daily basis;
Management and organizational chart of who will run your business;
Personal financial statement of each owner to show to potential lenders;
Start-up budget with itemized expenses and capital requirements;
Financial plan with yearly projected profit and loss statements showing expected income, expenses and cash flow.

If this sounds like a big job, it is. Creating the first draft of your business plan should take several weeks of hard work. Once you’ve created your draft, take it to your professional advisers. Each plan contains numerous legal, financial and tax issues. An experienced business attorney and accountant will be able to spot potential problems for you so that you can revise the plan accordingly. All of this hard work will pay off in the end. As a wise man once said, “Failing to plan is a plan for failure.”

For a free half hour consultation to learn more about business planning, contact Attorney Chris Ratté.

BAILOUTS FOR THE REST OF US: What Washington is doing to help small businesses weather the economic storm.

admin — Wed, 18 Mar 2009 20:30:22 +0000

Everyday we hear about the latest government bailout to Wall Street and the big banks and insurance companies; billions of dollars going to the very same people who helped to create this economic crisis. While at the same time, small business owners and entrepreneurs who had nothing to do with it are suffering with no hope in sight.

Despite the way things seem, however, you have not been abandoned by your government. Although it has not garnered the same headlines as the massive Wall Street bailouts, the Obama Administration has earmarked billions of dollars to specifically help small business owners. Most of the money will be for the U.S. Small Business Administration to increase credit and financing available to small businesses. Here are some of the programs being offered by the SBA under the economic stimulus plan:

Temporarily eliminating fees – ranging between 2% and 3.7% – on SBA-backed loans
Raising SBA’s guarantee percentage on some loans from 75% to 90%
Creating new loan programs to help small businesses meet existing debt payments
Expanding SBA’s Microloan program for loans under $35,000

Additionally, according to Forbes.com, $15 Billion will be used to purchase securities backed by the SBA-guaranteed loans in an attempt to jump-start the secondary credit market for small businesses. Banks that offer SBA-guaranteed loans have hit a lending wall in recent months, as the secondary market is frozen, so banks can’t get the old loans off their balance sheets to free up capital for new loans. The buyout of the old loans will free up more credit to be available to small business owners who need the money now.

For a free half hour consultation to learn more about financing for small businesses, contact Attorney Chris Ratté.