Some simple answers to common problems. Starting a Business?

Starting a business?

Interested in starting a business but not quite sure how to begin?

You first might take a look at what your options are: sole proprietorship, partnership, limited partnership, limited liability company (LLC), C or S-corporation (for-profit), nonprofit corporation and cooperative.

If you are trying to decide between a LLC and a Corporation please note that an LLC often makes more sense for a small business due to its simplicity and flexibility and also because it might enable you to avoid taxes.

However if you expect to have multiple investors and/or raise money from the public, if you would like to provide fringe benefits to the owners or if you want to be able to offer stock options to some of your employees, an S or C corporation might be a better choice for your business.
In any case, issues exist pertaining to the type of entity you choose as well as tax considerations, legal requirements, filing requirements, etc.

A good place for information is the Small Business Administration (http://www.sba.gov) or Nolo Press (http://www.nolo.com), or you can see us for an initial consultation to get the information that you need to make that dream a success!

Independent contractor or employee?
What does an employer want?
How does the government see it?

When you hire someone new, they will either be an employee or an independent contractor. This status will define the legal obligations that you will have to satisfy with the government. The worker’s status does not only depend on what the employer and the employee agree on. That status will be defined by a series of factors related to their work schedule, environment, the tools they use for their work and other factors.

There are many factors used to define the difference between an independent contractor and an employee. The more regular their shift, the location of where they work for you, and the type of work they do, the more they are like an employee. But, there are other factors involved as well and sometimes the line between an employee and an independent contractor is not very clear.

The point is that independent contractor status tends to be more beneficial for your business and even if the status is in theory defined by objective facts within the work place, you might have an interest to orient your worker’s habits to meet the requirements for independent contractor status. Indeed, if a worker is an independent contractor, it will make you save money and reduce your payroll by at least 20%, as you will not have to pay for social security, state unemployment compensation insurance or worker’s compensation insurance. Working with independent contractors will also permit you to gain flexibility, hiring workers for a special task or project or just to increase your staff when you are facing a spontaneous increase of demand. Also, depending on the jurisdiction, independent contractors do not benefit from employment laws such as minimum wage, which will decrease the likelihood that you are sued by your staff for not meeting certain governmental requirements.

As this status works in some ways to your advantage, be prepared for the possibility of facing government audits. Indeed, as you have fewer legal obligations with an independent contractor than with an employee and as it also costs less to your company, federal agencies will tend to run audits with the goal of trying to classify as many workers as possible as employees. If you want to avoid audits, fines or taxes, make sure that your independent contractor is not in fact a hidden employee. To be sure that the classification you chose is respected, double-check that you are not treating your independent contractors the same way you treat your employees. For that matter, there are certain work habits that you should avoid like overly supervising their work; giving them an employee handbook, setting specific working hours, or giving them business cards with the name of your company on it, etc.

Last advice: make sure that you put your independent contractor agreement in writing and that you incorporate all of the essential terms.

Tips for employers about overtime, meals, rest breaks and breast feeding

When you own a business with employees, you want to make sure that you comply with all the requirements of California’s employment law and that you didn’t leave any important matter behind. The most current overlooked issues within the workplace seem to be breaks, lunch breaks and overtime.

Regarding overtime, most federal and state laws require employers to pay overtime, which usually represents an additional 50% of the employee’s hourly wage. That means that if the employee works one-hour overtime, she should be paid “one hour and a half”.

Unlike overtime, federal laws do not require meal breaks or rest breaks even if many employers do seem to satisfy this common practice. However, some states do require those breaks. In the state of California, a ½ hour meal break is required after 5 hours of work except when the workday will be completed in six hours or less and only if there is a mutual consent to waive this meal period. A second meal period of not less than thirty minutes is required if an employee works more than ten hours per day, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and employee only if the first meal period was not waived. If the employer requires the employee to remain at the work site or facility during the meal period, the meal period must be paid.

Employers of California employees covered by the rest period provisions of the Industrial Welfare Commission Wage Orders must authorize and permit a net 10-minute paid rest period for every four hours worked or major fraction thereof. Working through your rest period does not entitle you to leave work early or arrive late. Your employer can require that you stay on the premises during your rest break.

A rest period is not required for employees whose total daily work time is less than three and one-half hours. Pursuant to Labor Code Section 1030 every employer, including the state and any political subdivision, must provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for the employee’s infant child. The break time shall, if possible, run concurrently with any break time already provided to the employee. The employer shall make reasonable efforts to provide the employee with the use of a room or other location, other than a toilet stall, in close proximity to the employee’s work area, for the employee to express milk in private. The room or location may include the place where the employee normally works if it otherwise meets the requirements of this section. An employer is not required to provide an employee break time for purposes of lactating if to do so would seriously disrupt the operations of the employer.

In any case, once you made sure that you have fulfilled all of the employment break and meal requirements, you might want to create an employee handbook or document that explains all of your workplace policies and make sure that all the employees receive the same information.

Contact us if you would like further information or to set up an appointment!

Some simple answers to common problems. Starting A Business?

Starting a business?

Independent contractor or employee? What does an employer want? How does the government see it?

Tips for employers about overtime, meals, rest breaks and breast feeding

Independent contractor or employee?
What does an employer want?
How does the government see it?