The Foolproof Training Method to Expand Your Business

One of the most critical components to building a company, as opposed to a solo practice, or even a business where you are managing everyone and everything, is to learn to step into your full leadership.

A primary key to that leadership is your ability to train your team so that you can confidently delegate key tasks and responsibilities that will free you up and allow your business to grow.

As a business owner, management is not the highest and best use of your time, energy, and talents. Carefully selecting support staff and then training them using a business model that emphasized leadership over management is an effective place to begin.

Most business owners train their team members using a project management style of training. Specific tasks are given, followed by specific instructions on how to do those tasks. The next logical step is for the owner to then monitor whether the tasks were done to the proper specifications.

This is not leadership. It’s project management. Using this model, the people you’ve hired will be disempowered, and you will get stuck in the role of babysitter, rather than leader.

Steve Jobs, former CEO of Apple put it well when he said, “When you have really good people, you don’t have to baby them. By expecting them to do great things, you can get them to do great things. A-plus players like to work together, and they don’t like it if you tolerate B-grade work.”

Unless you want to be your company’s project manager, micro-managing details and always feeling stuck in the weeds, there’s an alternative methodology for training your team members that will establish your leadership and get the results you want, right from the start.

Outcome, Resources, Deadlines, and Check-Ins

When you are bringing on a new team member, instead of giving them specific tasks and specific ways to perform those tasks, and then holding them accountable to those tasks, give them outcomes, resources, deadlines, and check-ins.

Here’s how that looks:

First, identify the specific outcome the company needs.

For example, we need to publish a weekly article to our website and then send it out as a newsletter to our clients. Or, we need to send out a monthly newsletter to our clients each month. Or, we need to use this tracking software to ensure that everyone who calls our office gets a response weekly, monthly, quarterly, and annually.

Second, give the team member the specific company resources available to meet this outcome.

In our case, using the weekly article as an example, I would let the team member know where I’ve found or curated articles in the past. Or let the team member know to ask me for the article each week. I would then give the team member a login to our website and the service we use to send out the newsletter. I would also provide a document with standards for posting the weekly article and sending out the newsletter.

Third, give the team member a deadline.

Let your new team member know specifically when he or she is expected to have this outcome completely handled without any input from you. Then, let your team member begin, with you working in parallel, also completing the task yourself as a transition period, and set a  deadline date for the team member to take it over completely.

Finally, schedule periodic check-ins between the time that the outcome is given and the deadline date.

This allows the team member to communicate challenges  and identify any missing information.

This method allows your new team member to get in there and just start figuring it out, and make some mistakes (which is a key part of learning) while also having the support necessary to fill in any gaps in the training or resources.

Still not clear? Imagine you are trying to teach someone to tie their shoes. You could explain it for hours and hours. You could even show them how to do it. But until they get their hands on the laces,play around with them and make mistakes, they won’t ask for help – and they won’t learn to tie their shoes.

Make a shift today from the project management style of training and into the leadership style of training and watch your business expand. As your Business Attorney, we can help you to make decisions around your hiring process and ensure you are bringing A-level people to your team, to allowing this effective leadership style to be effortless.

This article is a service of Gratia P. Schoemakers, Business Attorney. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.

How to Achieve Sustainable Business Growth

You’ve put in the time to get your business off the ground and now you’re up and running. You have a product or service that’s selling well, team support to keep everyone happy and a proven income model.

Congratulations! You’ve overcome the biggest obstacle to business sustainability.

Surviving the startup phase is often the toughest obstacle. If you’ve made it through that, you’re ready to take the next logical step on the road to sustainability: growth.

There are many ways to expand your business, so read on to discover the next step that will be right for you.

Open Another Location. While this method isn’t a sure thing and should be carefully considered, proper planning and research can significantly increase your chance of raising your growth potential.

Consider franchising. Franchising is an excellent way to expand your business without having to put the same amount of time, money, and sweat equity you did when you first started. Franchising isn’t for everyone, though. You need a clean-running internal operating system (think scalability) and clear leadership vision to make franchising successful. Plus, franchises must follow very specific rules around disclosure and sale to franchisees. Contact us for support.

Begin licensing. Licensing can be a low-risk and low-cost way for service or branded product-based businesses to grow. But don’t jump in without consulting with a skilled creative business lawyer. Intellectual property rights are the key here; you have to protect your interests diligently in order to grow—and not compromise—your business. We can help.

Gain allies. Alliances can be mutually beneficial—if you are smart about whom you approach. Find someone in the industry that already has an impressive client base. And don’t be turned off by the prospect of paying commissions. Dramatically growing your clientele doesn’t happen overnight, but it can happen a lot quicker if you tap into that of another industry leader. Remember to document all of your agreements with allies, and don’t simply rely on handshake deals that could turn allies into enemies down the road.

Diversify. Diversification can increase your income streams and counteract slow periods in your fiscal year. It can also help you to reach a larger audience and increase your market presence, something that can work to your advantage when attracting major retailer allies.

Infiltrate new markets. Think outside your market. Are there other markets you can reach? Take your service or product where it hasn’t gone before—just make sure you are going into a market where there’s demand.

Welcome the government as your newest customer. Government contracts are hard to win—they take planning, patience, and compliance—but the U.S. government is the largest consumer in the world. And, once you secure a government bid, future submissions won’t be such a process.

Join forces. Merge with or acquire another business, so you can appropriate its client-base and resources.

Expand online. The internet can be your biggest ally in your path to growth. Tap into the unlimited exposure available online where your potential customers number in the millions. With so much potential for success comes potential for failure, too. You need to be targeted and strategic, or you will be lost in a sea of competitors. And, of course comply with all FTC rules and regulations. We can help here too.

Go global. You’ll need to expand online before you tackle this step, but when you do, you realize the immense potential of being a global brand. Two things are key here: make sure your marketing is culturally aware, and find a trusted international distributor. Nail these, and global expansion will be the last frontier for your business.

The key to smart business growth is planning. If you are ready to take the next step toward sustainable business growth, begin by sitting down with us as your Business Lawyer. We are here to help you face the many challenges of owning and growing a business. We are experienced in helping small business owners grow their business through calculated legal and financial moves. If you’re ready to get smart about growing your business, we can help you implement a robust legal, insurance, financial and tax system that will streamline business operations and minimize risks while you grow.

We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today at 832.408.0505 to schedule.

10 Legal Tips for Starting Your Own Business

Whether the result of the recent recession or the desire by baby boomers to embark on a new professional path, new business startups are growing fast.  Here are 10 legal tips for entrepreneurs who are striking out on their own for the first time:

Choose the right entity.  Decide if you will be operating your business as a sole proprietorship, partnership, LLC, C Corp or S Corp.  Each has its own advantages and disadvantages when it comes to business structure and asset protection; consult with a Creative Business Lawyer™ to determine the best fit for you.

If you give advice, get insurance.  Many professional who leave the corporate world to start their own consulting business may want to look into liability insurance to protect themselves from lawsuits based on claims of faulty advice.

Create good contracts.  Getting paid is often a problem for new startups; be sure to get agreements in writing and enforcements for failure to pay.

If you have a partner, get a buy-sell agreement.  A buy-sell agreement will spell out what happens in case a partner wants to exit or dies unexpectedly.

Know employment laws.  Many startups hire contractors to get up and running quickly; however, you need to be aware of legal definition of a contractor versus an employee so you don’t run afoul of the IRS.

Get the right documentation.  Legal documentation for startups is important to have in place as the company grows, and includes customer contracts, confidentiality agreements, offer letters and more.

Be aware of trademark issues.  You don’t want to be in business for a few years and find out the name of your company or your best product is already trademarked by someone else.  If a name is important to your company or product, protect it.

Put legal disclaimers on your website.  Make sure your business website has Privacy Policy and Terms of Use pages that detail the rights and responsibilities of each party.

Employment agreements.  Not every employee you hire will necessarily be with you for the long run.  Protect your business with employment or independent contractor agreements that include non-competes and other stipulations that govern the relationship.

Hire a good Creative Business Lawyer™.  At some point in your new business life, you will need good legal advice.  Because we stay proactive in your business (not just reacting to problems when they come up, but helping you to structure your business smart right from the beginning),   a Creative Business Lawyer™ can be the most important advisor you have on your team.

Whether you’re starting or already running a business, the best time to hire a lawyer is before you need one. Having a business attorney that understands the individual needs and unique circumstances of your company is key to helping your business thrive and prosper. If you are interested in learning more about legal protection strategies for your business and how we work with you as a partner in protecting your company, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.

 

How to Choose the Right Ownership Structure for Your Business

Many Americans are starting their own businesses these days, and may be confused about exactly what the best ownership structure is for their business.  The answer is, it depends on the type of business, how many owners are involved, and the financial situation for each owner.

Here are some considerations when deciding which structure to choose for your business:

Risk.  If your business involves some degree of risk to the products or services you provide, then a business structure that protects owners from personal liability for business debts and claims – a corporation or a limited liability company (LLC) — may be a good choice.

Taxes.  What the IRS calls “pass-through” entities – LLCs, sole proprietorships, and partnerships – require business owners to report business profits and losses on their personal tax returns and pay taxes on net profits.  Corporation owners do not report corporate profits (their share) on their personal returns; the corporation itself pays taxes, at corporate tax rates, on retained earnings.  Although having a corporation may add more tax reporting paperwork, it can also benefit some businesses since corporate tax rates are usually lower than the individual rate.

Complexity.  LLCs and corporations are more complex entities than sole proprietorships or partnerships, generally requiring more time and money to create and maintain.  LLCs and corporations also require meticulous record keeping and the performance of other duties not required by sole proprietorships or partnerships.

Whether you’re starting or already running a business, the best time to hire a lawyer is before you need one. Having a business attorney that understands the individual needs and unique circumstances of your company is key to helping your business thrive and prosper. If you are interested in learning more about legal protection strategies for your business and how we work with you as a partner in protecting your company, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.

 

Helping Employees Access Health Care While Easing the Burden on Small Businesses

In December 2016, former President Obama signed an important health care act that will help alleviate the burden of employee health insurance on small businesses.

The 21st Century Cures Act will allow, among other things, small businesses to reimburse their employees for individual health insurance if they do not offer a group plan. For small companies with less than 50 full-time equivalent (FTE) employees, managing a company-wide group health insurance plan can be a complicated endeavor that saps valuable time and resources. To counteract this, the 21st Century Cures Act will help small businesses contribute to their employees’ health insurance premiums with relative ease.

Businesses don’t have to pay payroll taxes on the reimbursement and can escape the administrative headache of maintaining a group plan. And employees don’t have to pay taxes on their employer’s premium contribution. This can help small businesses attract employees who want health care coverage without taking on the responsibility of managing a group care plan. Businesses must offer the reimbursement on the same terms to all employees but can adjust the amount based on the employee’s age and family size.

Many small businesses that offered employee insurance coverage through group plans under the Affordable Care Act have struggled with the resources required to manage them. Under the 21st Century Cures Act, however, the costs are more manageable, and the administrative responsibilities significantly reduced. The new act also reduces employer liability when it comes to maintaining coverage.

Helping your employees access health care can make you a more competitive employer to those on the job market. But as a small business, you may also be concerned about the benefits and responsibilities that come with offering premium reimbursements. For example, there are caps on premium contributions, rules on small business health care credits and regulations in place that can make switching from a group plan to a reimbursement model complicated for any small business. With so many rules and regulations to consider, professional guidance is highly recommended.

If you need help with employee health care, start by sitting down with us. As your Creative Business Lawyer®, we can help you contribute to your employees’ health insurance premiums while minimizing your costs and administrative burden.

Developing a trusting relationship with a Creative Business Lawyer® will ensure your business can meet the needs of your employees while still protecting your best interests.

This article is a service of Gratia P. Schoemakers, Creative Business Lawyer®. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Foundation Audit for an ongoing business, which includes a review of all the legal, financial and tax systems you need for your business. Call us today to schedule.

Partnerships and LLCs, Take Heed of New Tax Law

Beginning with tax year 2018, all partnerships and limited liability companies (LLCs) taxed as partnerships will be affected by a new federal tax audit law. In 2015, the Bipartisan Budget Act repealed the earlier audit system, known as TEFRA, and replaced it with entirely new taxation audit provisions. It is important for those affected by this change to address certain issues under the new system by taking affirmative action now.

Who Will the Law Affect?

The new law will affect many small business owners, particularly those who are in a partnership or are members in an LLC that is taxed as a partnership.

What Will the Law Require?

Several provisions are similar to the old law, but there are at least two major differences which will impact many small businesses.

The first big change relates to how tax deficiencies are treated. Under the old system, necessary adjustments due to tax deficiencies flowed through to the partners themselves. Under the new law, tax deficiencies will be imposed on the partnership or LLC. As a result of this new provision, partners or LLC members could be responsible for tax deficiencies in prior years, even if they did not own any interest in the company during the tax year in question.

The IRS will allow some small partnerships—defined as those with fewer than 101 partners of certain types— to opt out of the new law. General taxpayer audit laws will apply to those who opt out, provided the election is made every year.

The second major change deals with the IRS’s contact requirements for partnerships and LLCs. Under the old law, partnerships were required to designate a partner to deal with tax matters. The new law provides that partnerships must instead designate a partnership representative, who need not be a partner at all. If the partnership fails to designate a representative, the IRS has the power to appoint one.

The partnership representative’s role is to serve as the main point of contact in audit matters. The representative must have the power to bind the partnership, as well as the individual partners, in an audit.

How Can I Be Ready?

Partnerships and LLC members must act quickly to protect their own interests, as well as those of their businesses. This complicated new law could significantly impact the personal liability of partners or members who do not restructure their business agreements to account for its provisions. Contact us for support if you are set up as either an LLC or a partnership. We can help.

This article is a service of Gratia P. Schoemakers, Creative Business Lawyer® One of our primary services is a LIFT Start-Up Session,™ in which we guide you through the right choice of business entity, location of business entity, start up agreements, intellectual property protection, employment structuring, insurance, financial and tax systems you need to start your next business and succeed right out of the gate.  Call us today to schedule a time to get started!

 

 

 

 

Important Deadline March 15 re Your Business Entity That Could Save Thousands on Next Year’s Taxes

If you have a newly incorporated LLC or Corporation, you only have until March 15 to elect S-Corporation status for the 2016 tax year, using IRS Form 2553.

This is important because there could be significant tax consequences to you if you do not elect for S-Corporation status.

As the owner of an LLC interest, not taxed as an S-Corporation, you will report your share of LLC income on your personal tax return as if you were a sole proprietor or a partner of the business. That means you will pay self-employment taxes on your full share of the LLC income for the year.

In contrast, if you set your business entity up to be taxed as an S-Corporation and pay yourself a reasonable, but small salary, you will only pay self-employment tax on your salary and the rest of the business income can be paid to you in the form of distributions that are not subject to self-employment tax.

This one decision can save you thousands or even tens of thousands of dollars on your taxes next year.

This decision is only one of many decisions that significantly impacts how much money you keep in your bank account when it comes to your business.

If we can help you with this decision, or any other decisions when it comes to the legal, insurance, financial and tax parts of your business, give us a call.

This article is a service of Gratia P. Schoemakers, Creative Business Lawyer.® We offer a complete spectrum of legal services for businesses and can help you with your business tax issues. We also offer a LIFT Start-Up Session,™ which includes employment structuring, financial, and tax systems you need for your business. Call our office to schedule your appointment and ensure your business is set up for success.

How Do I Keep Track of All These Tax Deadlines?

If you own a business, particularly if it is a new business, you are probably concerned about how to track tax deadlines.  Fortunately, the Internal Revenue Service has developed several methods to help with this very problem.  First, though, you must know which taxes you are required to pay.

Which Taxes?

The tax and information returns you must file depend on your business structure.  There are four general types of business taxes: income, self-employment, employment, and excise.

Almost all businesses must file annual income tax returns.  Partnerships are a bit different because they must file information returns. Although you may never have thought about it, you pay your individual income taxes as you earn your money.  It is a pay-as-you-go system.  The same is true for businesses paying Federal income taxes.  Four times each year, businesses estimate the amount of taxes they owe and pay them. This is known as paying estimated taxes.

If your business is structured as a sole proprietorship, you must pay Social Security and Medicare tax.  The Social Security tax earns points for you in the Social Security system, which provides retirement, disability, and other benefits later in life.

If you have employees, you must make certain contributions on their behalf: Social Security, Medicare, Federal unemployment (FUTA), and income tax withholding.

Certain businesses must also pay a Federal excise tax.

When Must I Pay?

There are two types of employment tax due dates: information returns and deposit dates.  Tax deadlines generally fall on January 31, February 28, and March 31. Quarterly returns are due on January 31, April 30, July 31, and October 31.

The timing of deposits depends on the type of deposit and your deposit schedule.  FUTA deposits are due on the last day of the month following the end of the applicable quarter.  Your Federal income tax and employment taxes, however, are due either monthly or semiweekly, depending on the deposit schedule your business is required to use.

The Internal Revenue Service recognizes that Federal taxes are a quagmire for many people.  For this reason, it has developed several tools to ease compliance.

If all you need is a quick reference for taxes and due dates, you can view the IRS’s online calendar, which allows you to filter and sort events.  The calendar is also available for tablets and smartphones. Second, the IRS offers an RSS feed to send calendar reminders one or two weeks before relevant due dates.  Third, you may download the IRS desktop calendar, which allows you to access tax events on your computer.  This tool automatically updates new events when they are added by the IRS.  Finally, you may subscribe to the IRS’s small business calendar.  There, you can download tax events into your calendar. This option, however, does not allow you to edit the events manually.

This article is a service of Gratia P. Schoemakers, Creative Business Lawyer.® We offer a complete spectrum of legal services for businesses and can help you with your business tax issues. We also offer a LIFT Start-Up Session,™ which includes employment structuring, financial, and tax systems you need for your business. Call our office to schedule your appointment and ensure your business is set up for success.

Corporate Social Responsibility

As the Baby Boom generation moves on to retirement and Millennials increase their presence in the consuming world, more companies are including Corporate Social Responsibility (CSR) in their business plans. According to the World Business Council for Sustainable Development, CSR is “a continuing commitment of business to contribute to economic development while improving the quality of the workforce and their families as well as of the community and society at large.”

Social Responsibility Can Impact Your Bottom Line

Believe it or not, many of your customers consider sustainability and responsibility when deciding who they’ll do business with.

We live in a capitalist system, so the biggest driver of CSR initiatives is profitability. As much as 30 percent of a company’s stock value is based on goodwill–its reputation. With the growing purchasing power of Millennials, many of whom care deeply about social responsibility, it makes good business sense to demonstrate a social conscience.

Millennials may not have yet reached the upper tiers of the corporate world where they can imprint their belief systems, but they are an influential force in the world of consumption. And in many parts of the country, Millennials aren’t the only ones who consider corporate responsibility in deciding where to spend their money.

Examples of How Companies Are Socially Responsible

One example of CSR is the use of pollution-lowering Compressed Natural Gas powered trucks in the transportation industry. Like-minded companies are converting their fleets while working with natural gas suppliers to develop distribution outlets to make CNG vehicle use more feasible for others. In turn, CSR oriented businesses in need of transportation services patronize those “green” transportation companies.

Other companies that practice CSR actually go so far as to threaten their own existence. Waste Management, the refuse collection giant, for example, recognizes sustainability efforts will eventually mean that landfills will no longer be the “go to” destination for waste. As CSR grows, manufacturers and retail outlets will collaborate with their suppliers and customers to reduce or eliminate waste that would go to a landfill. Waste Management, therefore, is adjusting its

business model and is now consulting with businesses to help them advance their sustainability efforts. It is, in effect, meeting the broad inference of its company name–Waste Management.

The Business Advantage of CSR

Businesses that practice social responsibility have an ever more advantageous  leg up on their competitors. Socially conscious consumers will patronize them while avoiding businesses that do not practice CSR. And there is no offsetting converse effect.  Consumers who are ambivalent about CSR will still patronize the socially responsible businesses because it makes no difference to them.

So if you haven’t begun to do so already, now is the time to ask how can your business be more socially responsible?

This article is a service of Gratia P. Schoemakers, Creative Business Lawyer®.  We offer a complete spectrum of legal services for small businesses and can help you understand the attorney-client relationship. One of our primary services is a LIFT Start-Up Session,™ in which we guide you through the right choice of business entity, location, start up agreements, intellectual property protection, employment structuring, insurance, financial and tax systems you need to start your next business and succeed right out of the gate.

Taxes for the Self-Employed

Going into business for yourself means learning about a lot of things, and not all of them are necessarily fun.  Take taxes, for example.  Unless you’re an accountant, dealing with the tax issues that come with your business is probably not your favorite task.  But once you get the hang of it, it really isn’t so bad.

First Up: Are You Self-Employed?

The threshold issue you need to determine is whether you are considered self-employed and therefore subject to federal government self-employment taxes.  If you are in business for yourself to make money, even in a part-time venture, you are generally considered self-employed.  This is the case if you work as a sole proprietor, an independent contractor, or as a partner in a business.

Next: What Do You Have to Pay?

The biggest change for those of you who  are newly self-employed is that most of you have to begin paying self-employment taxes.  These taxes consist of Social Security and the Medicare tax.  Other taxes may apply, depending upon whether you have employees and the nature of your business.

If your net earnings are $400 or greater, you must file an income tax return.  To determine your net earnings, compare your income and expenses.  The result is reported on the first page of your individual tax return, either as part of your income or as a loss.

When you work as an employee for someone else, your employer has to pay these taxes for you.  When you go into business for yourself, you have to pick up the tab that would normally be paid for by your employer.

The good news is that contributing to Social Security earns you points in the Social Security system.  When you retire or if you become disabled, you will have contributed money to Social Security, from which you then can receive benefits.  You can check your Social Security contributions and estimate your benefits online.

Can You Pay Less?

One of the best parts of being self-employed is that you can structure your employment of yourself to be most tax-advantaged.

If you incorporate your business as an LLC taxed as an S-corporation (rather than as a sole proprietorship or a partnership), you will only pay the self-employment taxes on the salary you pay yourself as a W-2 employee of the business.

If you take distributions on top of your salary, you will only pay income tax and avoid the self-employment tax. So pay yourself the lowest salary you can and still have it be reasonable, as it must be reasonable, so you can minimize the self-employment taxes you pay. Take the rest out as distributions.

Be sure to contact us if you want more guidance on this because it can get complicated.

Finally: When Do You Put up the Dough?

The Federal tax system is a pay-as-you-go system.  That means that as you earn income, you must pay applicable tax on it.  When you are self-employed, you have no employer to pay your taxes for you, so you must submit them regularly yourself.

The Internal Revenue Service has long used a system of quarterly estimated tax payments to facilitate its pay-as-you-go system.  Under this system, you submit estimated tax payments four times each year, at the end of January, April, July, and October.

This article is a service Gratia P. Schoemakers, Creative Business Lawyer®. One of our primary services is a LIFT Start-Up Session,™ in which we guide you through the right choice of business entity, location of business entity, start up agreements, intellectual property protection, employment structuring, insurance, financial and tax systems you need to start your next business and succeed right out of the gate.  This session is normally $2,500, but if you are one of the first three people to mention this blog post and who schedule a meeting this month, we’ll take you through the entire LIFT Start-Up™ process for half that investment.