Business Law, Legal

So You Want to Start a Business?

Do the following tasks either before launch or during the early days of your startup.

1. Determine viability

Be brutally honest.  Your startup needs to be something you can make a profit doing or delivering.  Ask yourself: would you buy it? Run the numbers: will customers pay enough so that you can cover costs and make a profit?   Here is a list of 29 more questions to ask, attributed to noted investor Paul Graham.

2.  Create a business plan

It’s easy to convince yourself that you don’t need a business plan, but creating a business plan with financial projections forces you to think through details. Keep your plan a living breathing thing that you revisit and adapt regularly.

3.  Figure out the money

Most startups take a lot more time to get off the ground than you expect. Know where your living expenses for the first year will come from (savings, a job, spouse’s income, etc.).  If you need financing for the business start investigating as soon as possible.

4. Get family behind you

Spend time to make sure your spouse and other close family ‘buy into’ your startup.  You’ll have enough challenges without resistance from family.

5. Choose a business name

You want a name that will stick in your target audience’s heads. And it shouldn’t already be taken by another company. Do Google searches and use a corporate name search tool to see if the name you have in mind is unique. Check at the state and Federal level.

6. Register a domain name

Get a matching domain to your business name.  An AOL email address or a website with free hosting and a name like mysite.wordpress.com makes it seem like either (a) you are not running a real business or (b) you don’t plan to be around long.

7. Incorporate / figure out legal structure

Incorporating your startup can protect your personal assets. Talk over structure (corporation, LLC, sole proprietorship) with your attorney and accountant.


8. Apply for an EIN

An Employer Identification Number (EIN) helps you separate yourself from your business. You’ll need it if you plan to incorporate your business or open a business bank account.  Plus, with it you can avoid giving out your social security number (an opening  to identity theft). EIN numbers are free; apply online.


9. Investigate and apply for business licenses



You may need one, if not several, business licenses for your startup, depending on your industry and where you are located.  Most licenses are at the state or local level.  Here in the United States, the SBA has a helpful business license and permits tool.

10. Set up a website

Get your website up and running as soon as possible. Today, it’s necessary for credibility.  Even if your product is not yet built, you can start with company information.

11. Register social media profiles

Getting set up on the major social media channels (Facebook, LinkedIn, and Twitter, to start) will make marketing on them later easier. Also, it’s important to reserve your brand as a profile name. Try Knowem.com to reserve the names.

12. Start your revenue stream

Start generating revenue as soon as possible.  At the early stages of a startup there is never enough money – resist the temptation to wait until things are “perfect.” Oh, and get your lawyer to create any customer contract forms necessary.


13. Rent retail or office space

If you’ve got a brick-and-mortar business, you’ll need to sort this out early. If you plan to run a retail business, pay attention to foot traffic, accessibility, and other factors that will affect the number of people who will walk in your store. EXCEPTION: If you don’t have a brick and mortar or retail business, then hold off renting an office as long as possible to avoid saddling your startup with lease payments.

14. Order business cards

As a startup founder, you’ll be doing a lot of networking, so order plenty of business cards. They are inexpensive enough that you can reorder them later if things change. Without cards you lack credibility.

15. Open a business bank account

It’s all too easy to use your personal bank account to pay for business expenses, but it becomes a gnarl to untangle later.

16. Set up your accounting system

Once you have your bank account set up, choose an accounting program. Start as you intend to go. Few things will doom your business faster than books that are a mess.

17. Assign responsibilities to co-founders

If you have one or more founders, it’s imperative that you decide who will do what up front. Put it in writing.  Co-founder disagreements can destroy your business.

What You Can Do A Bit Later

While you don’t want to put off these tasks too long, they don’t need to be checked off your list before you launch.

18. Upgrade your smartphone and choose apps

As an entrepreneur you are going to be on the go – a lot. I can’t emphasize enough how useful a good phone with good business apps can be, in running your startup. Get a credit card swipe device to accept payments, too.

19. Find free advice

Your local SBA office, SCORE, and other small business resources can provide you with free advice, access to business templates, and other tools.

20. Consult your insurance agent and secure coverage

Depending on the type of business you’re starting, you may need insurance of one kind or another, like liability, workers’ comp, or health insurance, especially if you hire full-time staff.

21. Hire your first employee

Depending on the type of business you have, you may need staff from day one (retail) or you may be able to outsource to  freelancers, interns, and third-party vendors for a while (service and tech businesses).   Just remember, trying to do everything yourself  takes you away from growing the business.

22. Line up suppliers and service providers

Finding a good source of inventory is crucial, especially in certain types of businesses (retail, manufacturing). Beyond inventory, line up good reliable suppliers and service providers so you don’t have to sweat the details.

23. File for trademarks and patents

The best thing to do is consult an attorney early about the need for patents, especially.  Get the advice early. Then you may be able to defer filing for a while, depending on the nature of your business.

24. Work your  network

Reach out to former co-workers and colleagues, as well as friends and family. Don’t pressure them to buy your products or services.  Instead, tap into them for introductions and help with other things on this startup checklist.

25. Don’t waste time on “partnerships” 

Be careful about wasting time on “business partnership” discussions. Your business won’t be attractive to potential partners unless and until you start making headway. Focus your precious time to make sales and get customers.

26. Refine your pitch

You need a good elevator pitch for many reasons: potential investors, customers, prospective new hires, bankers.  If you can’t persuasively and clearly pitch your business, how can you expect key stakeholders to buy in?

27. Refine your product, and marketing and sales approach

As you go along you will learn more about the marketplace.  Use customer feedback to refine your product and service offerings, and your go-to-market approach.

28. Secure your IT 

Whether you’re running a tech company or not, you likely have sensitive data on computers and devices that you want protected. Protect it from intrusions and disasters.  Back it up!  IT problems can derail a fledgling company.

29. Get a salesperson or sales team in place

In many startups the business owner starts out as the chief sales person. But to grow you need a dedicated sales function, so you can focus on activities other than day-to-day sales.

30.  Get a mentor

It’s all tooneasy to work “in” your business rather than “on” it.  As Michael Gerber tells us in The E-Myth, we need to be working “on” our businesses if we want them to grow and flourish. A mentor who has succeeded in your industry can provide you with priceless advice and serve as a sounding board.

Your checklist might be longer than this, but organizing what needs to be done before you launch and what you can take care of down the road makes it easier to prioritize your tasks.

Business Law, employment law, Legal

Minimum Wage in California

State Minimum Wage Requirements

The state minimum wage will reach $15 per hour in 2022. The schedule of increases depends on the size of your business. Large businesses with 26 or more employees will reach $15 per hour in 2022. Small businesses with 25 or fewer employees will have until 2023 to reach the $15 per hour rate.

Dates
Employers With 26 or More Employees
Employers With 25 or Fewer Employees

1/1/18

$11/hour

$10.50/hour

1/1/19

$12/hour

$11/hour

1/1/20

$13/hour

$12/hour

1/1/21

$14/hour

$13/hour

1/1/22

$15/hour

$14/hour

1/1/23

$15/hour*

$15/hour*

 

*Once the minimum wage reaches $15 per hour for all businesses, wages could then be increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation as measured by the national Consumer Price Index.

Until the minimum wage reaches $15 per hour, the governor has the authority to suspend increases based on current economic conditions. These “offramps” are discretionary and would come into play only if there are declining state revenues from sales tax; there is a decline in the labor market; or there is a budget deficit (this offramp is permitted to occur only twice).

Employers should be mindful of the effect of future state minimum wage increase on exempt/nonexempt classifications and ensure that employees meet the salary basis test for the particular exemption claimed.

In 2018, employers with 26 or more employees must pay all work that qualifies for overtime at $16.50 per hour (time and one-half) or $22.00 per hour (double-time).

Employers with 25 or fewer employees must pay $15.75 per hour (time and one-half) or $21 per hour (double-time).

Some cities and counties in California have adopted their own local minimum wage rates that are separate from the state rate. This is part of a growing trend. Eligibility rules may vary from city to city. If a local ordinance provides for a higher minimum wage rate than the current state rate, the local rate must be paid.

Effective July 1, 2018, the minimum wage for Los Angeles is $12 per hour for employers with 25 or fewer employees working in the City. Future increases are as follows:

Effective Date
City of Los Angeles Minimum Wage (Per Hour)

7/1/2019

$13.25

7/1/2020

$14.25

7/1/2021

$15

7/1/2022

Increases tied to the Regional Consumer Price Index

Business Law, employment law, Legal

What You Need to Know About Travel Time Pay in California

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TRAVEL TIME VS COMMUTING TIME: WHAT IS THE DIFFERENCE?

But before we delve into the topic, let’s make sure that you understand the difference between commuting time and travel time. The former refers to an employee’s personal time spent to commute back and forth from work to home, while travel time is time spent traveling by an employee for work-related activities.

Under California employment laws, travel time should be paid, and can be either local trips or travel away from home.

ARE YOU ELIGIBLE FOR TRAVEL TIME PAY?

You are eligible to receive pay for local travel time only if you are a non-exempt employee (meaning: you are employed on an hourly basis). Exempt employees, who are paid based on their performance and expertise, are not entitled to travel time pay.

For non-exempt employees, travel time – as well as education and training time – are classified as “working hours,” which means their employers are legally required to pay them for it.

If you are asked by your employer or supervisor to drive to a store to pick up some items during normal work hours, you should be paid for your travel time.

TIME SPENT TRAVELING AWAY FROM HOME

An employer in Los Angeles and elsewhere in California is required to compensate his employees for any time spent traveling away from home. Let’s say, for example, that your employer directs you to attend a two-day event in New York City. Since you will have to spend time traveling from Los Angeles to New York City, your employer should pay travel time.

HOW TO CALCULATE TRAVEL TIME PAY?

Calculating travel time pay for salaried employees, who get paid bi-weekly or monthly, is not a problem, since they get paid regardless of the number of hours worked.

Hourly employees, meanwhile, should be paid on an hourly basis, which means travel time may not be as easy to calculate. It is highly advised to speak to an employment law attorney to find out whether or not travel time pay was calculated properly in your particular situation.

IS ONE-DAY OR OVERNIGHT STAY PAID?

If you have not been for a one-day or overnight stay, seek immediately legal advice of a lawyer. While hourly employees in Los Angeles and elsewhere in California are generally required to receive travel time pay in these situations, there are certain exceptions. That is why you should speak to an attorney to learn more.

SHOULD YOUR EMPLOYER COMPENSATE FOR TRAVEL EXPENSES?

Definitely. Travel time itself is not the only thing that an employer pays for. Travel expenses should be compensated by your employer, as employees can generally deduct unreimbursed travel expenses. In case you are traveling for both work-related activities and personal travel, you will have to keep separate checks for business-related expenses.

 

Business Law, Legal

4 Common Partnership Mistakes

Partnerships can be a useful strategy, especially when one is trying to start a small business, and there is a need for varying skills and money. Partnerships can bring complementary skills and capital into a business to make it grow and prosper faster. The odds of conflict and financial risk, however, can increase when two or more people get together to run a business.

Lack of Written Agreement
Like any other business arrangement, a written contract solidifies and clarifies the parameters of a partnership. Written agreements cover issues such as the extent of each partner’s tasks and responsibilities, the division of net income, and the rules around changes to the partnership structure. Partnerships that start without a written contract run the very real risk of serious partner disputes ending in legal action or even the dissolution of the partnership. When two or more people choose to go into business together, they should map out their shared understanding of the arrangement, and hire an experienced business lawyer to draw up the contract.

Incompatible Long-Term Outlooks
In the beginning of a business venture, partners are often optimistic of the chances of success and ignore some of the more mundane details, such as where each owner sees the business going and how he or she would handle situations along the road.  Ultimately, this can gridlock a business if partners cannot agree on a plan of action to take the company forward.

Different Customer Service Protocols
In almost all long-term businesses, one of the hallmarks of success is that customers are happy with their interactions with the business. One measure of satisfaction is that the customer feels he or she is being interacted with the same way every time. The same goes for business partners. If business partners both interact with customers and have vastly different ways of doing so, it can lead customers to avoid the business because they do not know what to expect when they call or come in.

Lack of Exit Strategy
When you first go into business with a partner, the last thing on your mind is leaving it. Everyone eventually turns over their businesses. It may be either through sale, passing it to family or through death. If a partnership turns sour, understanding the rules around leaving the business becomes even more urgent. Written partnership agreements – signed before you open the doors for the first time – should contain rules around how and under what circumstances each partner can leave the business. For example, there may be restrictions around who you can sell your partnership interest to or what happens to your share if you are medically incapacitated or die. Like most business disputes, it can be difficult to agree on these issues as they happen if there is no provision in the agreement for them upfront.

 

Business Law, Legal

Reasons Why a Small Business Should Incorporate

Many small business owners launch their companies as sole proprietorship in which they and their businesses are essentially the same. However, changing the format of a small business to a corporation or a Limited Liability Company (LLC) can offer a range of advantages for entrepreneurs.  Most notable is that a corporation or LLC protects entrepreneurs’ personal assets in case debts or legal judgments are claimed against the business.

The advantages of incorporating a small business include:

No. 1: Personal asset protection. Both corporations and LLCs allow owners to separate and protect their personal assets. In a properly structured and managed corporation or LLC, owners should have limited liability for business debts and obligations. Corporations generally have more corporate formalities than an LLC that must be observed to obtain personal asset protection.

No. 2: Additional credibility and name protection. Adding “Inc.” or “LLC” after your business name can add instant legitimacy and authority. Consumers, vendors, and partners frequently prefer to do business with an incorporated company. In most states, other businesses may not form an entity or use a trade name that is the same as your corporate name. This benefits the business legally and helps in brand-building and marketing.

No. 3: Perpetual existence. Corporations and LLCs can continue to exist even if ownership or management changes. Sole proprietorship and partnerships just end if an owner dies or leaves the business.

No. 4: Tax flexibility. A LLC is taxed at the same rate as a sole proprietorship while providing limited exposure to personal liability. Though profit and loss typically pass through a LLC and get reported on the personal income tax returns of owners, a LLC can also elect to be taxed as a corporation. When an entrepreneur sets up a corporation, he or she is taxed on both the individual and corporate levels. However, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S tax status.

No. 5: Deductible expenses. Both corporations and LLCs may deduct normal business expenses, including salaries, before they allocate income to owners.

Should My Business Incorporate or Form a LLC?

I am often asked this question.  It is important to consider the following:

1. Corporations and LLCs are both separate legal entities (business structures) that enjoy certain protections under the law and important benefits. Most people form a legal business structure to safeguard their personal assets.

2. Incorporating or forming a LLC allows you to conduct your business without worrying that you might lose your home, car, or personal savings because of a business liability.

Business Law, Legal

Remember UBER/LYFT Cheaper than a DUI: Legal Reasons #76

DUI Checkpoints

DUI checkpoints are used throughout California to find and arrest drunk drivers. These checkpoints are commonly found on the highways or surface streets. If the symptoms of a DUI are noticed, the driver will be requested to step out of the vehicle and perform field sobriety tests at the scene.

The United States Supreme Court found in the case of The Department of State Police v. Sitz, 496 U.S., 444 (190) that DUI checkpoints do not violate the Fourth Amendment’s prohibition against unreasonable searches and seizures and sobriety checkpoints outweighed the constitutional rights of the individual citizen. It was ruled that interests of government in identifying DUI drivers, reducing the fatalities overturned, the intrusion of human privacy rights, and sobriety checkpoints, were acceptable.

This weekend, be smart and don’t drive if you plan on drinking. The cost of a using a car service is still much, much cheaper than a defending a DUI

Here are some planned checkpoints for Orange County and LA County