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Which Employment Laws Apply to Your Business? There’s an E-Tool for That!

By Caron_Beesley, Contributor
Published: October 10, 2012

Hiring your first employee or building your business team opens whole new areas for compliance in employment and labor law. Laws are broad and far reaching and cover a broad range: preventing discrimination and harassment in the workplace, workplace poster requirements, wage and hour laws, workers compensation regulations, and more.

For small business owners short on time and resources, getting their arms around these laws can be tricky. The good news is that there are many online tools from both the SBA and the U.S. Department of Labor (DOL) to help you understand which laws apply to you and what you need to do to comply.

For example, SBA’s 10 Steps to Hiring your First Employee explains the tax, legal and regulatory steps you need to follow when you hire your first and even subsequent employees. SBA’s Business Law Advisor blog is also a useful reference point for all manner of small business law related topics.

Interact with an Online Employment Law Advisor

If you need to dig deeper into specific employment and labor laws, be sure to bookmark DOL’s elaws Advisors. These interactive e-tools give you easy-to-understand information about a number of federal employment laws such as wage laws, hiring foreign workers, workplace safety and health, as well as laws that apply to specific groups such as young employees, veterans and businesses that sell to the federal government.

Each Advisor simulates the interaction you might have with an employment law expert (based on typical questions you and your employees might have). Your employees can also refer to the tool for information about their rights.

Find Out Which Employment Laws Apply to Your Business

Which aspects of employment law apply to you? Do you know which workplace posters you must display or which health and safety regulations you need to comply with? Avoid navigating countless employment law guides by zoning in on exactly what applies to your business with DOL’s FirstStep Employment Law Advisor. The Advisor will ask you a series of questions about your business and then provide simple information about employment laws that impact you. You can print out the results or refer back to the elaws Advisors tools for a deeper dive.

Additional Resources

Related Blogs

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Laid Off and Want to Start a Business? Self-Employment Assistance Programs May Help

By Caron_Beesley, Contributor
Published: October 3, 2012 Updated: September 20, 2016

Despite signs of economic recovery, countless Americans are still dealing with layoffs and unemployment. As often happens when the economy slows, many Americans respond by using unemployment as a springboard to business ownership.

But unemployed workers face a fundamental challenge when it comes to starting a business – how do you start a business if you risk losing your unemployment benefits simply because you aren’t actively looking for a career-job?

In an effort to address this issue, the Middle Class Tax Relief and Job Act signed into law by the President in February 2012, made available $35 million to encourage states to enhance and promote Self-Employment Assistance (SEA) programs. SEA entitles unemployed individuals to claim jobless benefits while getting access to small business development assistance.

What is Self-Employment Assistance?

According to The White House Blog (May 24, 2012) the idea of SEA is simple:

Some laid-off workers have the skills, experience, and entrepreneurial ambition to launch a successful business, but they are locked into an inflexible system.  If they stop looking for traditional work full-time, they will lose their unemployment benefits. Instead, SEA allows an entrepreneur with a viable business plan to receive those same unemployment benefits, as long as they are working full-time to get a new company off the ground.”

SEA isn’t a new concept. Five states – Delaware, Maine, New Jersey, New York, and Oregon – already have SEA programs in place.

How Self-Employment Assistance Works

Under this program unemployed entrepreneurs get financial aid equal to their Unemployment Insurance benefits for a maximum of 26 weeks, while they receive entrepreneurial training and other resources to help them launch a business. SEA benefits (taken from Oregon’s SEA program as an example), include:

  • Weekly unemployment benefits while engaging in self-employment activities
  • Waiver of the actively seeking work requirement while participating in the program
  • Counseling and technical assistance on developing a market feasibility study and a business plan

The Department of Labor is driving efforts to help states become aware of the funding available to help them implement SEA programs, and has issued guidelines on how states can deploy this provision. Through its local offices, the SBA as well as SCORE and Small Business Development Centers across the country are also getting involved to connect entrepreneurs with the business development and mentoring services that they provide.

Does Self-Employment Assistance Help Spur Business Creation?

According to the White House, this model works. In multiple studies, SEA has been shown to increase the success of entrepreneurs and their earnings from self-employment. The White House cites several examples of SEA at work, including:

Adam Lowry and Michael Richardson, two software developers in Portland, Oregon whose employer went out of business in 2009.  Self-employment assistance allowed them to pursue their entrepreneurial ambitions and launch Urban Airship, an innovative mobile advertising company that now employs 75 workers, and promises to keep on growing.”

Who is Eligible for SEA support?

If your state has an existing SEA program, you have to meet several requirements to qualify for the program, including but not limited to the following:

  • You must be eligible for and be receiving unemployment benefits.
  • You are unlikely to return to your previous employment.
  • You must have a viable business idea, be willing to work full time in developing your business, and have the finances you need to start and sustain your business until it becomes self-supporting.

Entrepreneurs can take advantage of business development via seminars at community colleges, educational institutions or individual counseling sessions at a Small Business Development Center. You may also be required to complete a market feasibility study and write a business plan.

How to Apply for SEA

If you live in a state with an existing SEA program, check your state’s website for more specifics on how to apply. All U.S. states have until June 30, 2013, to apply for grant funds to implement SEA programs. Contact your local SBA office or state employment or labor office for more information about what your state is doing to establish a program.

Related Resources

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

How Powerful is the Online Presence of the Franchise Opportunity You’re Investigating?

By FranchiseKing, Guest Blogger
Published: October 2, 2012 Updated: September 26, 2016

Due diligence, the research part of buying a franchise, includes several different things. If you’ve never worked through the process of researching one before, there’s a pretty good chance that you’ll miss something.

And, it all starts by knowing what to ask.

Franchise research encompasses a lot of different things. Some of the obvious ones include:

·        Learning about the operation

·        Contacting existing franchisees

·        Figuring out the financials

·        Checking out the competition

·        Visiting franchise headquarters*

But, there’s another thing that you need to do, and it’s something that you can’t afford to miss. You need to find out if the franchise concepts you’re investigating have a robust online footprint. It’s not that difficult to do. Here’s how:

1.      Do a search on Google or Bing of the category the franchise concept is in.

For example, if the franchise you’re looking into is a food franchise that specializes in burgers, type “burger franchises.” See what comes up first. (Actually, see what comes up on the search engine’s first page.) Is “your” franchise listed?

2.      Website

How does their consumer website look? Is it easy to use? Would a consumer feel that it was professional looking? Does it represent the brand correctly?    

3.      Social media accounts

Does the franchisor have a LinkedIn Company Page* set up? Do they have a Facebook Page-with daily activity? How about Twitter-are they set up there, too?

4.      Reputation

Check out local review sites like Yelp and Local.com. What are customers saying about the franchise business you’re thinking of owning? Even if there’s no location near you, you can still find reviews from other areas of the country.

5.       Press releases

You need to find out if the franchise marketing department submits a steady stream of news to the major press release and media websites. It’s an important thing to do for two reasons:

·        Press releases are a great way to attract the attention of local and national media. They can open the door for franchisees to get some needed ink in local publications, which is always welcome because it can bring in new customers.

·        Press releases also attract the attention of search engines. Search engine spiders are scouring the web for new content and stories, 24/7. Frequent, well-written press releases can significantly benefit the online presence of a franchisor.

What should you do with this newfound information?

Share your findings with the person you’re working with at franchise headquarters. If there’s anything that jumps out at you about their online presence, point it out.

For example, if there seem to be a lot of negative reviews of the franchisor’s product or service, find out why? Maybe they’re isolated incidents?

If the franchisor’s website was hard to find when you did your internet searches, you need to share that with the franchisor. If you had difficulty finding their website, your potential customers will, too. Find out what the marketing team is doing to improve the website’s visibility.

If the franchisor doesn’t seem to be very active in social media, find out why. Social media marketing isn’t new anymore.

It’s perfectly okay to ask questions about their online presence. Most of your customers are going to find you on the internet. It’s up to you to make sure that everything possible is being done at the franchisor level to create and maintain a powerful online presence.

These days, if your business can’t be quickly and easily found online, you lose. 

 

*Non-US Government website

About the Author:

FranchiseKing
Joel Libava

Guest Blogger

The Franchise King®, Joel Libava, is the author of Become a Franchise Owner! and recently launched Franchise Business University.

6 Things You Need to Know About Starting a Business as a Minor

By Caron_Beesley, Contributor
Published: September 26, 2012 Updated: August 15, 2017

Are you, or do you know someone, under the age of 18 who is interested in starting a business? Whether you are building the latest web app or buying and selling on eBay, young entrepreneurs face the same opportunities and challenges as their adult counterparts.

But as you might expect, there are also some tax and legal considerations to bear in mind.

Here are answers to some FAQs about starting a business as a minor (the definition of which varies by state).

1. Can a Minor Form an LLC or Corporation?

Forming an corporation or LLC is something many businesses consider as a way to separate their personal assets from their business assets. Can a minor incorporate a business? Corporate laws vary by state, but all states require the principals of a company that incorporates to be 18 years or older.

One option is to have a parent to act as an authorized signer – but remember, the parent becomes liable if their dependent is negligent in performing the duties of the business. Another option, permissible in some states, is to have the minor become a shareholder in the business or serve on an advisory board. Shareholders can be of any age and in the case of minors, their share may be held in trust.

The bottom line: Be sure to consult a local attorney about incorporating a business as a minor.

2. Can a Minor Sign a Contract?

Contracts are an essential fact of life as a business owner, whether you are signing an agreement with customers, partners or suppliers. A minor can sign a contract, but in most states they are not considered legally competent to enter into a binding agreement, meaning they can disaffirm the contract – rendering it void.

3. Can a Minor Get a Business Loan?

The “disaffirm” condition mentioned above keeps many lenders from entering into a loan agreement with a minor. Likewise, insufficient or poor credit history may also make it difficult to find traditional financing.

Credit cards are also limited to individuals who are 18 or older, although minors can apply for a credit card under their parent or guardian’s account.  Again, the responsible adult party is liable.

There are other options for financing a start-up that don’t involve formal business loans; borrowing money from family or friends, for example, is a common option for minors. However, it’s important to structure these agreements to prevent conflict. This blog explains some key factors to consider: 6 Tips for Borrowing Startup Funds from Friends or Family.

4. What About Paying Taxes as a Young Entrepreneur?

If you have started a business and made a profit, then you may need to pay income tax and self-employment tax to the Internal Revenue Service (IRS), although some teen businesses such as lawn mowing and babysitting are exempt from self-employment taxes. If you have earned income from your business, you should file you own tax return instead of adding your income to your parent’s return.

The IRS offers tax guidance for young entrepreneurs, including resources to help you determine what taxes you need to pay. If you are selling products that qualify for sales tax, you should also consult your state revenue office to understand your obligations and obtain a sales tax permit.

It’s also extremely important to maintain good records of income and outgoings, as well as receipts. This will help you accurately track your finances and claim the right tax deductions against your expenses.

Check out SBA’s Guide to Small Business Taxes for information on all aspects of managing and paying your taxes.

5. Can a Minor Claim Copyright?

According to Copyright.gov, "minors may claim copyright, and the Copyright Office issues registrations to minors, but state laws may regulate the business dealings involving copyrights owned by minors." Copyright.gov advises that you consult a local attorney for specific guidance.

6. Can a Minor Register a Trademark?

It depends on your state’s law. According to the U.S. Patent and Trademark Office, if you can validly enter into binding legal obligations as a minor in your state, and may sue or be sued, then the application may be filed in your name as a minor. Otherwise, applications must be filed in the name of a parent or legal guardian, clearly stating his or her status as parent or legal guardian.

Where to Find More Information

For more information about essential steps involved in starting a business, such as registering a business name and getting the right licenses or permits (even home-based businesses require permits), read these 10 Steps to Starting a Business. In addition, check out SBA’s Young Entrepreneur Guide for links, online training and other useful resources.

There are also organizations in the community dedicated to helping small businesses and entrepreneurs start up and succeed, such as local Small Business Development Centers and other community resources.

Related Resources

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Are You Facing A Business Plan Event?

By Tim Berry, Guest Blogger
Published: September 25, 2012 Updated: September 26, 2012

For years now I’ve thought of business planning in terms of the special case that I call a business plan event.

The business plan event is when you have to produce a business plan for some specific business hurdle or gateway. For example, a startup looking for either angel investors or venture capital needs a business plan to give to interested potential investors. And a business applying for commercial credit needs a business plan to present to the loan officer at the bank. Some other business plan events are the sale of a business, a divorce affecting ownership, and applying for a merchant account to be able to process credit cards.

The world of entrepreneurship and small business divides into two groups: those that need a business plan because they have the business plan event, and those that don’t need the plan for the event, but can still benefit from business planning as part of the normal management process.

Which are you?

If you have that business plan event coming up, I recommend you prepare the business plan to best address the specific needs. Here are some obvious cases:

  • A business plan for investors should include information on the management team, the opportunity, scalability, defensibility, market potential, growth potential, and exit strategy.
  • A business plan for commercial lenders should include information supporting the business’ ability to repay loans and cover interest. Evidence of stability is very important. Owners’ backgrounds and credit ratings usually matter a lot.

Furthermore, with business plan events, the form of the business plan depends on the nature of the event. When you’re developing the plan for some specific outsiders to process, the best thing to do is to ask them, specifically, what they are looking for.

  • In some cases, your outsider will want a document printed on paper and organized for easy reading, with a table of contents, executive summary, and appendices.
  • In other cases, your outsider will be perfectly happy with a business plan published on the web, password protected, but updated behind the scenes and available whenever the reader wants. 
  • In most of these cases, brevity is important. Make sure the formal plan is easy to read and organized well enough to make it easy to find the different kinds of information quickly.

And what if you don’t have that event? Theoretically, at least, in that case you don’t need a business plan. But you do still want a business plan to help manage your business. It may not be a document-it may not be polished and edited-but it should still summarize your strategy and what is supposed to happen. It’s for you, not for outsiders. It’s about optimizing management by setting goals, objectives and performance measurements and then tracking results, reviewing and revising. The plan becomes the first step in a business planning process, which includes staying flexible and reviewing and revising monthly.

And that plan, for you and your team only, can stay on the computer, not be polished, and help your business. 

About the Author:

Tim Berry
Tim Berry

Guest Blogger

Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging at timberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 46 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including his latest, 'Lean Business Planning,' 2015, Motivational Press. Contents of that book are available for web browsing free at leanplan.com .

Could You Finance Your Start-Up with a Microloan?

By Caron_Beesley, Contributor
Published: September 24, 2012 Updated: September 3, 2015

Not sure you have enough money to start a business? Before you raid your life savings or remortgage your home, you should know about some possible alternatives.

According to the Kauffmann Foundation, the average cost of starting a new business from scratch comes in at just over $30,000. Of course, the actual number depends on many factors, such as your industry, business model, and even the state where you’re located. To help you ascertain what it will cost you to start your new business, take a look at this earlier blog: How to Estimate the Cost of Starting a Business from Scratch.

If you determine that your start-up venture is going to cost you somewhere between $500 and $50,000, and your savings just aren’t enough, you might want to consider a microloan. Why? Many start-ups and new small businesses often find they may not qualify for a traditional small business bank loan.  Without a proven track-record of 3-5 years under your belt and/or established business credit, many banks simply won’t take the risk.

What is a Microloan?

So how is a microloan different? Microloans are typically offered to businesses with smaller start-up capital needs (usually less than $50,000). Unlike traditional bank business loans, funding is typically provided via community-based, nonprofit microfinance institutions.

Anyone can apply for a microloan, although these loans often favor people with low cash reserves or poor credit as well as those in rural or disadvantaged communities. However, many micro-financing institutions also offer specific micro-financing programs for women-owned businesses, environmentally responsible businesses, veterans and specific business-types.

How to Find Microloans

Microloans are available from a variety of institutions dedicated to helping entrepreneurs and start-ups, including:

o   Working capital

o   Buying inventory or supplies

o   Buying furniture or fixtures

o   Buying machinery or equipment

Local SBA Offices can provide more information about how to apply. Read more about the SBA Microloan Program and find out who’s lending.

Before You Apply for a Microloan

Don’t overlook the importance of a business plan when it comes to applying for any type of loan. Your lender will expect to see that you’ve done your research, understand your market, have a clear plan for success, and that you can demonstrate how and when you will repay the loan. SBA’s Writing a Business Plan guide can help.

You should also make sure you are aware of your credit score, and once you are up and running, take steps to establish your business credit score as soon as possible. For tips read: 6 Ways to Establish and Maintain a Healthy Credit Score for Your Startup or Small Biz.

Related Blogs

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Should I Apply For A Small Business Credit Card?

By Marco Carbajo, Guest Blogger
Published: September 20, 2012

A small business credit card should always be the credit card you use when making business purchases. Transactions such as paying for gas in a company car, buying office supplies or taking clients out for lunch are all acceptable ways to use a small business credit card.

When it comes to personal credit cards, you should not use them for business expenses. This can potentially jeopardize the protection of the corporate veil because you are co-mingling funds. Did you know corporate veil piercing is the top litigated issue in corporate law today?

That’s a scary thought because statistics show that of the 65% of small businesses using credit cards, only 50% of those cards are actually in the company’s name.

In addition, each type of small business credit card serves a unique purpose and offers its own array of features, perks and benefits.

A common mistake is applying for a card without first identifying the needs of the business. Will the card be used primarily for air travel, automotive or daily purchases? Do you prefer the option to pay off purchases each month or carry a balance? Will the company be issuing cards to employees or will there be a single cardholder?

These are important questions that give you an indication of the importance in defining purpose. Without purpose you can end up obtaining a small business credit card that costs more and benefits you less.

Some of the benefits of a small business credit card include:

  • Easy financing: Rather than waiting for an approval for a loan, lease, or line of credit, a business credit card lets you purchase items immediately. No explanations are required and there are no limitations on what you can purchase with your card. As long as you make the minimum payment each month and don’t exceed your limits, it’s a great option for quick cash.
  • Fast Access to Cash: If your company needs cash fast, then a small business credit card can be a life saver. Typically, the cash advance limit on a business credit card is lower than the spending limit, but the ability to access cash immediately is extremely convenient.
  • Track Expenses: Managing your company’s expenses becomes much easier when you completely separate your personal and business expenses. With a small business credit card, all your purchases are recorded, making it much easier for your bookkeeper during tax time. Also, most business credit cards will issue year-end statements that categorize your annual expenses into specific categories.
  • Control and Manage Employee Spending: Issuing small business credit cards to employees can offer many tax advantages. However, it is important to select a card that offers you the ability to control spending and set limits.
  • Business Perks: Business credit cards offer a variety of benefits for companies such as travel assistance, purchase protection, cash back rewards and insurance protection.

Many business owners have multiple cards with each one designated for certain purposes. For example, one card for employee expenses, another for business necessities, etc. Either way, it is helpful to have two or three small business credit cards available. Take the time to research, compare cards and reap all the benefits a business credit card has to offer.

About the author

Marco Carbajo is CEO of the Business Credit Insiders Circle (http://www.businesscreditblogger.com), a step-by-step business credit building system providing credit recovery, lines of credit, business credit cards, trade credit, and funding sources.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.

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