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When it comes to business and contracts, there are about as many different kinds as you could imagine. That’s because they are used for so many different things. Some are fairly straight forward and you can put them together yourself when you need them for your business.
On the other hand, others are somewhat more complex and are far more important to get absolutely correct. With such contracts, you may wish to enlist the services of an experienced business attorney who knows contract law and can make sure you are protected and that your contract is legally enforceable before it’s too late. Here are some great tips and helpful advice to make sure you are successfully using contracts as you should be. Tips on Negotiation One thing that’s good to keep in mind is that a contract is an agreement, and thus, there will always be a bit of negotiation involved. Therefore, it’s in your best interest (and the best interest of your business) to make sure you are negotiating properly and effectively. Here are some things you’ll want to keep in mind to ensure you do just that: ●Make sure you go into a negotiation with a clear objective. If you like, list out your goals. ●Research everything you need to know beforehand, including figures, facts, and relevant laws. ● Try to build some sort of trust between you and any other included parties. Trust is a great aid to effective communication. ●Decide beforehand what areas you are willing to compromise, but also make clear to yourself what is essential that you get from the negotiation. ● Listen to everything the other party says – don’t just wait for your turn to talk. ● Keeping everything ordered will help things proceed more effectively. Consider using a checklist or a first-draft of an agreement to facilitate this. Tips on Drafting a Business Contract There are some things you’ll want to keep in mind when it comes to drafting the language of your business contracts. It will help if you have a few things down first: ● Your contract needs to be focused, specific, and clear to be effective. ● Use short sentences to avoid ambiguity. ● Make sure everyone’s names are absolutely accurate or it won’t be legally enforceable. ● Define/stipulate each of the important terms you’ll use in your contract. ● Properly prepare for a dispute or litigation by specifying attorney fees, choice of laws, and should informal dispute resolution be preferred as a first step. ● Ensure everyone signs the contract. ● Number all of the pages so that it will be easy to see if pages were added/subtracted after a signing. ● You may want to review a sample contract or use a template to get started. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more!
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As anyone who owns a business knows – contracts are an indispensable tool to get things done and protect your business interests. However, if you don’t know anything about the laws that govern contracts, you may be doing more harm than good when you put pen to paper. Let’s talk through some of the basics of contracts and the law to make sure you have a good understanding of what’s at stake.
What Is a Contract? This is basically a legally-enforceable agreement between parties (two or more) that obligates both parties to fulfill particular things as specified within the contract. By party, this can mean a person, country, company, corporation, etc. What you want to keep in mind is that two things are always implied when the word contract is used: ●That there is an agreement made (something for something) ● The agreement is legally enforceable What Laws Pertain to Contracts? One thing about contracts is that the laws that govern them are determined by the state where the agreement between the parties was made. There may actually be a couple of types of state laws that govern the contract as well – depending on what type it is (e.g. property lease, sale of goods). For example, these are two types of law: 1. The Uniform Commercial Code or UCC: These laws govern contracts used for the sale of goods. The UCC is a standardized set of guidelines that oversee commercial transactions. While the code is not law itself, most states have adopted all or part of the code as law. 2. The Common Law: Other business contracts may be governed at least in part by “common law.” This includes all contracts like employment contracts, leases, etc. Each state has their own common law made from court decisions within the state over the years. How is a Contract Created? Any time an offer is made and accepted after a sufficient amount of “consideration,” a contract is legally valid. Let’s examine what these terms mean in the context of contracts: 1. An Offer: the terms of this offer must be clear and certain, and the party to whom such an offer is made must reasonably expect the offering party capable of the offer. 2. Acceptance: This is a clear expression from the party receiving the offer that they accept its terms and agree to it. 3. Consideration: There must be some gained and something obligated for all parties involved for the contract to hold. There must be an exchange of some kind of value. What Happens when a Contract is “Breached?” Anytime a dispute arises over a contract, one party may feel another party is failing to adhere to the terms of the contract they are obligated to adhere to. This is considered a breach and can result in legal action by the non-breaching party in an attempt to remedy the situation, which can happen in a number of different ways depending on the type of contract and breach. How Are Contracts Enforceable Under the Law? In the event that there is a breach of contract, the most common way to attempt to remedy the situation is to use a lawsuit through the court system.. However, there are other options for dispute resolution before turning to out-and-out litigation. These alternatives are mediation and arbitration. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! 28/11/2021 0 Comments How to make Successfully Make An OfferWhat Constitutes an Offer?
One particular thing about business contract law is that there must be an agreement based upon an offer and acceptance for the contract hold. What’s more, there must be some exchange of value between the two parties using the contract to make it valid. Thus, a contract is an agreement to exchange values between the party making an offer, or the offeror, and the party to whom such offer is made, or the offeree. Let’s look a little bit closer at the offer part of a contract to see if we can add a little clarity to the topic. A Contract’s Purpose There are all kinds of contracts (lease, sale of goods, promise to render services). They each have a specific purpose in mind, which is expressed in the offer. So if the purpose of your contract was to secure the services of a painter to repaint your business office, an offer would have to be made and accepted. Now the question is, what are the terms of the offer? Thus, contracts need to include terms of agreement. A Contract’s Terms of Agreement The important thing here is that there is enough detail to make the offer and obligations it presents clear. This typically means that such terms must include some kind of material terms such as the price, type of services or goods, timeframe, and other key terms. Depending on the nature of the contract, terms may include a great many other things. Valuable Considerations What’s more, a contract offer must have a consideration to hold. If you were to offer the painter $10,000 extra dollars when they finished on top of the amount you already agreed to pay in the contract, you couldn’t be contractually obligated to pay that extra without any consideration. However, if you agreed to pay the extra $10,000 if the painter finished two weeks early and this was added to the contract, it would hold because of the valuable consideration of the expedited turnaround time. A Party’s Capacity to Accept Another legal consideration to an offer in a contract is what is known legally as “capacity.” That is, the person signing the contract must have legal authority over that which they sign for it to hold. This means that not just anyone can sign a contract for a company, but someone with the authority to do so. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! Getting Started as an Independent Contractor
Owning your own business and working as an independent contractor is a great alternative for some professionals. However, many don’t realize that freelancers are subject to several laws about how they must conduct business and therefore end up putting their business at risk. This is easy to do because often independent contractors don’t realize that some part time work will suddenly become their career and so they don’t think to plan adequately. Though it makes sense why this might happen, the fact of the matter is whenever you render a service to someone and receive payment, there are several government rules you must comply with. This is true if your position is a full career or never becomes more than something you do for a few hours each week. There are three things that independent contractors must do to ensure they are running a legitimate and legal business: 1. Name and register their business. (Registering it is only required in some states) 2. Register for a Vocational License (if needed) and Tax Certificate 3. Make sure to pay your estimated taxes throughout the year Naming Your Business There are several advantages to naming your business something other than your personal name. Namely it makes your business appear far more professional and therefore makes it easier to win client’s trust. However, when you choose a name, you need to register it. Any business that doesn’t use the actual legal name of the owner is required to register what is called a “fictitious business name.” This is true even if your business name uses part of your real name. Without registering your business name with the government, you may be unable to enforce any contracts you make under that name, nor will banks open an account for your business without its name having the proper registration. Of course, using your full legal name does mean you do not have to register your business name. If your business is small enough, this might be just what you want to do. If this is the situation you are in, starting out this way might be best. Registering a Fictitious Business Name This is typically done at the county clerk’s office in most states, but in Florida, you register your fictitious business name with the State Department. Check with a qualified business attorney in your area if you are unsure where to file your fictitious business name. Registering Your Tax Certificate Depending on the city and county you live in, your business may be required to register for a tax certificate. In some cities and counties this is referred to as a business license, but this is simply a tax for the privilege of doing business within the city. All independent contractors need to file for a Tax Registration Certificate even if they work out of their home. There are stiff penalties for failing to file that are far more expensive than registering, so it’s in your best interest to ensure you comply with local tax obligations before you incur expenses. Do You Need a Vocational License? Depending on the type of business you run, you may also need a vocational license to run a legal business. You may need to be licensed as a mechanic, contractor, therapist, etc. in order to legally provide such services and charge clients for them. If you are unsure, speak to a qualified and knowledgeable business attorney in your area. Self-Employment & Estimated Income Taxes If you are an independent contractor, no one holds anything out of your paycheck for medical insurance, social security, or tax obligations. This responsibility falls on the independent contractor. Setting aside the money to pay for the tax obligation each year is required of any independent contractor who makes at least $400* a year. The IRS also requires “estimated” tax payments throughout the year for contractors who make more than $3,000 annually.* One way to avoid having to do this if you are employed elsewhere is to have additional taxes held out of your paycheck there to compensate for the estimated tax obligations. Though it might appear tempting to not file and pay taxes, anyone who pays you more than $600 a year will be required to report it, so hiding from the IRS isn’t easy to do and it can jeopardize your business’s long-term viability. Yes, self-employment taxes are quite high, but not near as high as fees if you fail to meet your tax obligations. Registering with the IRS The best thing to do is to register as self-employed tax payer by (1) Filing the 1040-ES for your estimated tax obligations and (2) a Schedule C & Schedule SE at the end of the year with your 1040. These are all available from the IRS’s website. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! Despite the fact that business contracts can be very complex, the elements needed to make them enforceable and valid are in and of themselves fairly straightforward to understand. This might make you wonder about the pages of legalese you’ve seen in contracts from service providers and others in the past. The truth is this language won’t help you much when creating business contracts with third parties in order to build your business in a reliable and legally dependable way.
Instead, you want direct language that both parties clearly understand and that will be easy to assess in a dispute resolution situation like mediation, arbitration, or even formal legal proceedings (and can likely help you avoid these dangers). So accurate and detailed everyday language is actually a good thing if you hope to make your contracts enforceable and legally binding. Must a Contract Be in Writing? Most of the time, oral contracts are considered legally binding. However, there are a few exceptions in a few states, for example, if a contract is to last longer than a year it typically has to be in writing. The bottom line, however, is that you want something that is not only binding, but that is easy to enforce. Because of the often unclear nature of oral contracts, written contracts can provide incredible clarity and protection from dispute when compared to oral contracts and therefore it is highly recommended your business only use written contracts. What Is Required? In order to be binding and enforceable, all contracts need two things: 1. That the parties involved are in agreement. That is, that there is a clear offer made by one party and that the other party clearly accepts that offer within the terms of the contract. 2. There is an exchange between the two parties of something of value like goods, services, or money for one of the other in return. Typically, this is payment of cash for services or goods delivered. Let’s look at these two requirements in greater detail: Requirement #1: Agreement Between Parties The basic gist of the first requirement is that the clearer it is that all parties agree to all terms stated within the contract, the stronger it will be and easier to enforce. Reality is that things are not always so clearly black and white. Things get blurry. It’s not always so clear if everyone fully agreed to everything unless it’s explicitly stated that they do. Over time, much has been learned about issues where agreement isn’t so clear: Offer & amp; Acceptance To understand why this can be unclear, think of an example where you buy lunch. You walk up to a food cart and the vendor tells you the special is chicken for $5.99 with a side of potatoes. This would be his offer. If you tell him, “Sounds great, I’ll take it,” you’ve accepted the offer. If instead you tell him, “I think I want beef today,” you’ve rejected the offer. However, if you say, “I do like chicken, but I really want a salad instead of potatoes,” you’ve not accepted the offer, but have made a counter offer. This is where things can be a little unclear. When the discussion involves things more involved than what sandwich you are having for lunch, the stakes are higher and if there is a misunderstanding – someone has to pay for it. This is why making offer and acceptance clear is crucial to contracts. At What Point Acceptance Occurs The goal here is to determine as accurately as possible when acceptance does in fact occur as clear in the contract as possible. However, even when this is done, a party may want time to think about an offer. In the interim, the other party may reconsider and wish to change specific terms so that disputes can arise. To minimize the chances for this, certain rules should be followed concerning how long an offer should remain open, how you should revoke an offer,what sort of expiration date you may want to include, as well as how to handle counter offers. How Long Does an Offer Remain Open? The issue you run into is that without stating specifically in the contract how long the offer isvalid, it is legally considered open for a “reasonable” amount of time. This is clearly open to interpretation and can be the source of a dispute that could simply be removed by including an expiration date within the contract itself. This leaves no room for doubt. If you are on the other side of the contract and considering an offer without an expiration date stipulated, it’s in your best interest to accept it as soon as possible if you want to go through with it before they want to change the offer. Until you accept it, it can be revoked at any time. Revoking an Offer The party making the offer has the right to revoke it at any time before it’s been accepted. The Only exception to this is if they agree to leave it open for a specific amount of time. In this case,they must abide by these terms in order to avoid dispute. Since making a counteroffer does not constitute as acceptance, the party making the offer may still revoke the original offer if you respond with a counteroffer – they are not obliged to keep the original on the table. Offer Expiration Dates When a contract has an expiration date, or an option, this typically comes with a fee. A typical option is a 30-day option where the seller (an option is typically used in the exchange of goods for cash) agrees to not offer the product or goods to anyone else for 30-days while the buyer considers the offer. Regardless of whether or not a seller charges for the inclusion of an expiration or option in the contract, they are obliged to follow them. Counteroffers Counteroffers are an integral part of the negotiation process and are simply an offer made by one party against the other party’s offer. For example, a seller offers you chicken and potatoes for $5.99 and you counter offer by asking for chicken and salad for $5.99. Typically, if the party agrees to the counteroffer, acceptance happens at that point. It’s important to note that inconsequential differences cannot be used to void a contract where a counteroffer was accepted. In our example of the lunch special, if the food vendor agreed to provide salad instead of potatoes and it turned out the salad wasn’t as big as the side of potatoes, they wouldn’t owe you the difference in potatoes. Exchanging Something of Value The second major component of any contract besides the offer and acceptance is the actual exchange of value. That is, if you expect the terms of your contract to be legally valid, there must truly be a give and take – both parties must give something of value to the other. Defining the Thing of Value, or “Consideration” to Be Exchanged Legally speaking, whatever is to be exchanged of value between parties in a contract is called the “consideration.” In most cases, the consideration is a promise to render future services, or deliver goods or payment. For example, the promise to deliver a daily special with chicken and a salad in exchange for the promise to pay $5.99. A Contract Vs. A Gift If one party is simply doing something for the other or giving them something, they are under no legal obligation to follow through on their agreement to do so. For example, if someone promises to bring a pie to your party as a favor but instead shows up with a punch because the store was out of pie, you have no legal recourse to attempt to hold them to their original promise to bring pie. On the other hand, if there had been an agreement where both parties agreed to provide pie for events for each other, a contract would exist, and legal recourse would be available. Promises vs. Action There are a few situations where the consideration is met by actions instead of actual promises to perform them. For example, if you asked the food vendor for salad and instead of saying anything, they just gave you the chicken with salad – this would constitute agreement and that a contract was made. Legally, you wouldn’t be able to say, “I changed my mind, you should have double-checked first,” and be freed from the original verbal contract you had already entered into. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! 25/11/2021 0 Comments Structures of Business OwnershipLearn about the advantages and disadvantages of corporations, limited liability companies, partnerships, single proprietorships, and other business forms.
You'll need to know your choices before you can select how you want to organize your company. Here's a quick summary of the most prevalent business structures:
Sole Proprietorships A sole proprietorship is a one-person business that is not incorporated or registered with the state. To start a sole proprietorship, you don't need to do anything specific or file any paperwork; you simply go into business for yourself. A sole proprietorship is legally inseparable from its owner; the company and the proprietor are one and the same. This implies that the business owner is personally accountable for any business-related responsibilities, such as debts or court judgments, and declares business revenue and losses on his or her personal tax return. Sole proprietorships are appropriate for businesses where personal responsibility isn't a major concern, such as small service businesses where you're unlikely to be sued and won't need to borrow much money for inventory or other expenses.
Partnerships A partnership, on the other hand, is a company owned by two or more persons that hasn't filed papers to become a corporation or a limited liability company (LLC). To create a partnership, you don't need to file any paperwork; the agreement takes effect as soon as you start a business with another individual. The partnership's owners pay taxes on their share of the business revenue on their personal tax returns, much like a sole proprietorship, and they are personally responsible for the full amount of any business obligations and claims. Both sole proprietors and partners in a partnership may qualify for the 20% pass-through tax deduction established by the Tax Cuts and Jobs Act (TCJA). Partnerships, like sole proprietorships, are appropriate in businesses where personal responsibility isn't a major concern.
Limited Partnerships Limited partnerships are difficult to set up and manage, making them unsuitable for the ordinary small business owner. Limited partnerships are often formed by a single person or corporation (the "general partner") who will seek investment from others (the "limited partners"). The general partner is responsible for the day-to-day operations of the limited partnership and is personally accountable for any business obligations (unless the general partner is a corporation or an LLC). Limited partners having little influence over day-to-day business decisions or operations in exchange for not being personally responsible for business debts or claims. If you're interested in starting a limited partnership, speak with a professional.
Limited Liability Companies (LLC) Forming and running an LLC is a little more difficult and expensive, but it's well worth the effort for certain small enterprises. The major advantage of forming an LLC is that it reduces the owners' personal liability for corporate obligations and court judgements. Limited liability companies (LLCs) restrict personal liability for company debts and claims. However, LLCs are more like partnerships when it comes to taxes: the LLC's owners pay taxes on their portions of the business revenue on their personal tax returns. LLCs are ideal for business owners who are concerned about being sued by customers or accumulating a large amount of corporate debts, or who have significant personal assets they wish to shield from business creditors.
Corporations Creating and maintaining a corporation is more difficult and expensive than forming and operating an LLC, but the structure restricts the owners' personal liability for business obligations and court judgements against the company. The fact that a corporation is a separate legal and tax entity from the persons who own, control, and manage it distinguishes it from all other forms of companies. Because of this distinction, a company's owners do not use their personal tax returns to pay taxes on corporate earnings; instead, the business pays these taxes. The TCJA introduced a single flat tax rate of 21% for businesses, which is substantially lower than the 15% to 35% rate that firms paid previously. Owners only pay personal income tax on money they get from the business in the form of wages, bonuses, and other benefits. Corporations make sense for business owners who either (1) face consumer lawsuits or a large amount of business debts, or (2) have significant personal assets they want to safeguard from business creditors.
Nonprofit Corporations A nonprofit corporation is one that was established for the purpose of pursuing philanthropic, educational, religious, literary, or scientific goals. Individual and corporate gifts, as well as public and private grant money, can help a nonprofit raise much-needed finances. Because of the advantages they provide to society, the federal and state governments do not usually tax nonprofit businesses on money they receive that is connected to their charitable mission.
Cooperatives Some individuals fantasize of creating a genuine equals business, one that is owned and run democratically by its members. These grassroots business organizers frequently refer to their companies as a "group," "collective," or "co-op," however these terms are typically used informally rather than legally. A consumer co-op might, for example, be founded to manage a grocery shop, a bookstore, or any other type of retail business. Alternatively, a workers' co-op might be formed to produce and sell arts and crafts. Most states have rules governing cooperative formation, and in certain jurisdictions, you may file papers with the secretary of state's office to get your cooperative recognized by the state.
Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! 24/11/2021 0 Comments How to start a Consulting BusinessBefore you decide to start a consulting firm, there are a few legal concerns you should be aware of.
Starting a consulting company has a specific set of legal issues. Choosing the right company entity, acquiring licenses and permissions, dealing with tax difficulties, creating policy statements and contracts, obtaining appropriate insurance, and dealing with workers are just a few examples. Keep in mind that "consulting business" can refer to a variety of activities. Some consultants work primarily in their own offices, while others work in other people's offices or on project sites, both indoors and outdoors. Furthermore, some consultants are "professionals" in some legal senses; for example, they may be licensed by the state. Make allowances for your specific type of consulting as you go through this text. Choosing the Business Entity You may be able to operate as a sole proprietorship or partnership, depending on the specifics of your consulting firm. You should, however, think about selecting a legal structure that protects you from personal culpability. If you are a member of a recognized profession, you have extra alternatives, such as a professional corporation or professional limited liability company, in addition to the more usual ones, such as a limited liability company or corporation.. In many circumstances, consulting work may not appear to be particularly hazardous, and personal responsibility scenarios may appear improbable. However, if you are in charge of important data, physical property, or even specific persons, you may be exposed to the danger of anything being destroyed or lost, or someone being hurt. This may happen at your own business location or somewhere else, but in any case, you want the company to be accountable for any liabilities, not you personally. Licenses and Permits Even if you operate as a single proprietor, you should consider getting a federal tax identification number, often known as an Employer Identification Number (EIN); an EIN is required for other legal types of company. The procedure is straightforward and may be performed entirely online at the IRS website. Furthermore, even if you work as a single owner, you may be required to get a general business license from a state or local government agency. If your consulting firm will operate under a name other than your own, for example, you may need to file a "doing-business-as" (DBA) certificate (also known as a fictitious business name certificate). In addition, each state requires state licenses for at least certain vocations and professions, ranging from conventional professions like physicians, attorneys, dentists, and accountants to occupations like barbers, cosmetologists, real estate agents, and insurance agents. Before putting yourself up as a consultant, be sure you hold the necessary professional or occupational licenses. Most states need you to get a sales tax permit for the sale of most products if you will be selling things as part of your consulting firm. Finally, even if your consulting firm is "low-key" or office-based, local zoning regulations may restrict your firm from operating in some areas. If you plan on running your business out of your house and live in a plainly residential, rather than commercial, neighborhood, this is more likely to be an issue. Even if the business is permitted under the local zoning code, you may be needed to get a zoning compliance certificate. In summary, before you begin for business, you need to look into zoning restrictions. Health and Safety Health and safety are unlikely to be a top priority for office-based consultants. If you will be working "in the field" in potentially dangerous situations, such as construction sites, or if you will be working with hazardous materials in any way, you should research federal OSHA and EPA regulations, as well as your state's occupational health and safety and environmental regulations. Tax Matters Depending on the legal structure of your firm, your tax status will be different (corporation, professional limited liability company, partnership). You must attach a separate schedule (Schedule C) to your personal income tax return, even if you are a sole owner. You'll have to work with whole new tax forms in more sophisticated structures, such as a S Corporation or a multimember LLC. If you're used to working as an employee, this extra degree of complexity might be perplexing at first; in which case, hiring a skilled accountant may be a smart investment. Self-employed consultants are the most common type of consultant. If you're leaving a job, you'll have to deal with a new tax form issued by customers that pay you for your services: IRS Form 1099-MISC. While there may be certain exclusions based on your business's legal structure, you should be aware that as a self-employed person, you will be liable to the federal self-employment tax. With this increased tax liability comes the necessity to make quarterly estimated tax payments; IRS Form 1040-ES contains information and instructions on how to make these payments. Your status as an independent contractor is another problem that is sometimes lumped together with tax concerns. The word "consultant" may make you think you're a freelancer rather than an employee. However, it's a good idea to study the IRS's independent contractor rules, which are included in IRS Form SS-8, as well as any parallel state guidelines that are accessible. Finally, you may be eligible to claim a deduction for business use of your home if you conduct your consulting firm from your house. IRS Publication 587 explains how to calculate the deduction in detail. Insurance Appropriate insurance for a consulting firm will differ based on the specifics of the company. Even if you plan to work primarily from home, you'll need appropriate premises liability insurance in case a customer or other business-related visitor slips and falls or is harmed in any other way at your place of business. You'll also want appropriate property coverage for your actual company equipment, as well as insurance for the loss of your personal data. Professional liability insurance should also be thoroughly considered – or may even be needed – depending on your field of competence. If you'll be working in settings that are plainly physically hazardous, you should check into personal injury insurance, both for yourself and, if required, for others. Similarly, if you'll be driving between job locations, you'll want to be sure you've got the right insurance. You may discover that working with multiple different insurance agents with different areas of experience is necessary to receive the greatest information and coverage. Look for agents that have written policies in the areas that are important to your business. If you'll be advising on dangerous chemicals, for example, look for an agent who is familiar with hazardous substance coverage. Policy Statements and Contracts By its very nature, "consulting" is usually a very flexible company, and various customers may want somewhat different services from you; as a result, you may be interested in meeting these varied demands. While you don't want to limit what you may offer potential clients, it may be in your best interests to create and give broad principles about how you work in advance—and in writing. You might consider putting your policies on your website if you have one. Whether or not you have a website, you should develop a printed document including basic policy information that you provide to each of your clients before you make any agreements or start working. Depending on the type of consulting you provide, general policy components may differ significantly. Billing issues (whether you bill by the job or by the hour; any minimum charges or hourly billing increments; how you charge for travel time; whether you bill bi-weekly, monthly, or only at the end of a project), payment issues (do you take retainers; do you expect monthly or other periodic payments), and who pays for certain expenses are just a few examples (such as special equipment, airfare, or hotels). The unique agreements you establish with each individual customer are at least as essential as generic principles. These should ideally take the form of service contracts that describe a variety of issues, including those already stated (invoicing, payments, and costs), as well as the specifics of the job you are required to complete. Remember that in order for a contract for services to be legally binding, (a) you and your client must agree on what the contract is for (a "meeting of the minds"), and (b) there must be an exchange of value (also known as "consideration"—in the case of a consulting business, usually the exchange of your services for money from your client). If the services will be finished in less than a year, the contract does not need to be in writing; nonetheless, most consultants will not provide services without first receiving a formal, signed agreement. In fact, you should consider creating (or having a lawyer create) a standard contract that you may customize for each client. Employees If you plan to hire people, you should educate yourself on fundamental employment law topics including illegal discrimination, workers' compensation, and how to conduct the recruiting process. Learn how to do the following when it comes to hiring:
Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! Owning and managing a home company has never been easier thanks to modern technologies. To contact consumers, all you need is a mobile phone and a laptop. But there are a few things you should know before you put up your sign and start promoting
Advantages of a Home Business A home-based business is both easy and cost-effective. The costs of starting a conventional brick and mortar firm are significantly lower. You don't have to worry about paying rent, utilities, or commute costs. Low overhead implies less risk and greater profit potential. Home companies also provide independence and flexibility to its proprietors. You may work on your business in your jammies during your leisure time. Running a home company also has tax advantages. Choosing the Right Business The possibilities for a home company are virtually limitless. A few suggestions are photography, dog walking, house painting, and home décor. A virtual assistant, graphic designer, or social media professional are all options. Consider your passions and hobbies. What do you excel at? What do you like to do in your spare time? What is the most common topic on which individuals seek your advice? The answers to these questions may be able to assist you in making the appropriate decision. Many people work as associates or consultants for a well-established firm. This "company in a box" option assists novice entrepreneurs with marketing and communications. You'll also get the opportunity to work with seasoned mentors. Picking a Business Structure After you've decided on a business name, you'll need to decide on a business structure. Sole proprietorships, limited liability companies (LLCs), and S corporations are the most common types of home enterprises. You can create a partnership if you have two or more owners. For many company owners, a single proprietorship is the most convenient choice. A sole proprietorship, on the other hand, does not provide personal liability protection against your business's debts and other responsibilities. Instead, if your company has the potential for legal liability, you should consider forming an LLC. Make sure you do your homework on the many business entity options and which one is ideal for you. Securing a Business License Location-specific licensing and permission restrictions apply. Visit the Small Business Administration for a list of state-specific regulations. Home companies, in general, require a business license from the local government. The needed license can be obtained through your city's business or tax department. You should also look at zoning laws. Operating a company from your house may be prohibited by homeowner's associations or zoning regulations. You might be able to acquire a variance if this is the case. Before you open, make sure you have the permissions you need. Health & Safety Permits Additional licenses may be required for some enterprises. A fire permit may be required if you welcome consumers into your house or keep hazardous merchandise. Food and personal care product manufacturers and sellers are frequently subjected to health inspections. It's possible that you'll need to obtain a health or environmental permit. For additional information, contact your local business office. Professional and Sales Tax Licenses Professional certification is also required in businesses such as hairdressers, legal and financial advisers, and home childcare services. For a comprehensive list of businesses that require professional license, go to your state's business website. A sales tax license may be required if you offer goods or services. This is sometimes included with the business license, and other times it is a distinct document. Insurance Considerations Your business is not covered by your homeowner's insurance. If you run a company out of your house, your insurance coverage may be voided. Notifying your homeowner's insurance carrier about your business venture is a smart idea. To safeguard against business losses, you should get business insurance. General liability insurance is required by all enterprises. Property damage, inventory and product damage, and personal injury coverage are all available. Data breach insurance is required for every company that stores sensitive information online. In the event of a calamity, business interruption insurance replaces revenue. Make careful to read the tiny print to understand what the policy does not cover. Bookkeeping and Accounting Keep track of your company's revenue and expenditures. You may use a basic Excel spreadsheet or accounting software to track all of the money coming in and out of your firm, but you must keep track of it all. To keep your personal and company funds distinct, open a separate banking account for your business. It's also a good idea to get a separate credit card for your business. To keep track of your finances, make copies of all receipts and income statements. Make sure you're on top of your documentation. Set aside one day every week to focus on invoicing, bill payment, and record keeping. Taxes You are self-employed when you run a home business. Taxes, including Social Security and Medicare, are your responsibility. The IRS usually requires you to make estimated quarterly payments. Tax Deductions All home business owners may deduct ordinary and necessary business expenses. These include:
The Home Office Deduction You could be eligible for a home office deduction. This deduction is only applicable to spaces that are only utilized for business. You cannot claim the deduction if you work from your bedroom or kitchen. The storage of merchandise and samples, as well as home daycares, are the only exceptions. You can deduct a percentage of your homeowner's insurance, homeowners' association fees, cleaning fees, mortgage and interest, and utilities under the home office deduction. Home repair expenditures can also be deducted, however the amount depends on whether the repairs are direct or indirect. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! If you're hiring your first employee, you'll need to file paperwork with various government agencies and pay taxes to them.
Congratulations on hiring your first employee! It's critical to get off to a good start as an employer by making sure you follow all of the new legal requirements. Being an employer comes with a slew of new responsibilities, ranging from tax forms to government registrations to insurance requirements and beyond. Our to-do list for new employers can be found below. 1. Obtain a tax identification number for your company. When you hire employees, you must obtain an employer identification number (EIN) that you can use on your tax returns and other IRS documents. To obtain an EIN, fill out IRS Form SS-4. The IRS website, www.irs.gov, has the form available for download. 2. Register with the labor department in your state. You'll have to pay state unemployment compensation taxes once you hire employees. These funds go to your state's unemployment compensation fund, which helps workers who have lost their jobs in the short term. A list of state unemployment insurance tax agencies can be found on the Department of Labor's website. 3. Get workers' compensation insurance. Workers' compensation insurance should be in place to protect employees from on-the-job injuries. The vast majority of states require workers' compensation insurance, though some make exceptions for very small businesses. 4. Set up a payroll system to withhold taxes. You need to withhold and submit a portion of each employee's income to the IRS, and pay social security and health insurance taxes to the IRS. For more information, see IRS Publication 15, Circular E, Tax Guide for Employers on the IRS website www.irs.gov. (You may also need to withhold taxes for your state. For more information, please contact your state tax authority; for links to each state authority, please visit the Association of Tax Administrators website www.taxadmin.org /State tax authority.) 5. Have each employee fill out IRS Form W-4, Withholding Allowance Certificate. Employees will use Form W4 to tell you how many allowances they have applied for for tax purposes so that you can deduct the correct tax from their salary. (You do not need to submit a form to the IRS.) This form can be found at www.irs.gov. If an employee wants to change the allowance, you should ask the employee to fill out a new W4 form every year. 6. Fill out Form I-9, Employment Eligibility Verification for each new employee. The United States Citizenship and Immigration Services (USCIS, formerly known as INS) requires employers to use this form to verify whether any employees they hire are eligible to work in the United States. (You do not need to submit this form to USCIS, but you must keep it on file for three years and provide it to immigration and customs officials called ICE for review.) You can obtain this form online at www.uscis.gov. Please note that these are completed The form should be stored in a separate I9 folder for all employees, not in each employee’s personnel file. 7. Report each new employee to your state's new hire reporting agency. The New Employee Reporting Program requires employers to report information on all new employees for the purpose of identifying parents who owe child support. Each state has a different new hire review agency. To find the name and address of your state's new hire reporting agency, see the New Hiring State page on the Children and Families Administration website (www.acf.hhs.gov). 8. Post required notices. Some government agencies require employers to publish notices of workers' rights to their employees. For more information on federally required posters, see the Department of Labor website at www.dol.gov/elaws/posters.htm. DOL's "Poster Advisor" will help you determine which posters to display in your workplace. In addition, you must comply with your state's department of labor poster requirements. A list of state labor departments is included on the website of the Federal Department of Labor 9. File IRS Form 940 each year. You must complete IRS Form 940 to report your federal unemployment taxes for any year you paid $1,500 or more in a quarter or for any year an employee worked for you. for 20 or more weeks of the year. You can find the form at www.irs.gov 10. Adopt workplace safety measures. Virtually all employers must comply with the requirements of the Occupational Safety and Health Act (OSHA) by providing, among other things, a hazard-free workplace, training employees to do their jobs safely, notify government administrators of serious workplace accidents, and keep details of safety records. For more information on these rules, see the Occupational Safety and Health Administration's website at www.osha.gov 11. Create an employee handbook. Although not required, it is best to have a manual outlining your company’s employee policies and clearly stating that employment is free, unless the employee has signed a written employment contract. 12. Set up personnel files. For each employee you hire, create a file to save work-related documents, such as application forms, job vacancies, IRS Form W4, performance evaluation, and employee benefit registration forms. Medical records should be kept in a separate confidential file and kept in a locked cabinet. The I9 form that records the employee's immigration status should also be kept in a separate file. 13. Set up employee benefits. If your company has an employee benefit plan, such as health insurance or a 401(k) plan, you will need a registration process so that employees can register, name their dependents, and select options. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! Learn about the pros and cons of hiring an independent contractor versus an employee.
Hiring an independent contractor (IC) has many advantages, but also some disadvantages. Before deciding how to staff a particular position, you will need to weigh the pros and cons and ensure that your selection will be accepted by state and federal auditors Benefits of Using Independent Contractors There are some big advantages to using independent contractors instead of employees, with financial savings at the top of the list. You will probably save money. While most employers pay CI per hour more than they would pay employees to do the same job, it often costs employers more to hire employees. When you hire an employee, you'll have to pay a number of costs that you don't have to pay credit unions, including employer-provided benefits, office space, and equipment. You will also need to make the necessary payments and contributions on behalf of your employees, including:
All together, these expenses can easily increase your payroll costs by 20% to 30% -- or more. You have flexible employees. Working with CIs allows employers more flexibility in hiring and firing workers, which can be especially beneficial for employers with fluctuating workloads. You can hire a microchip for a specific task or project, knowing that workers will be gone when the job is done. You won't have to deal with the potential injuries, costs, and legal issues that can come with layoffs and layoffs. You can also enjoy greater efficiency when using integrated circuits. Since most credit institutions bring specialized expertise to the job, they are often productive immediately, eliminating training time and costs. You reduce your exposure to lawsuits. Workers have many rights under state and federal law, so there are many legal claims they can bring against their employers for violating these rights. Because credit unions are independent traders, they are not protected by many of these laws. Among the rights available to employees but not to credit institutions are:
Employees can also sue their employer for unfair dismissal. ICs cannot bring this type of lawsuit Disadvantages of Using Independent Contractors After reading through the possible benefits of hiring a CI, you might think that you will never hire an employee again. But there are also significant limitations to the use of integrated circuits, and the risk is that your classification decision will be questioned by government agencies. You have less control over your workers. Unlike employees, whom you can supervise and keep a close eye on, independent contractors have a certain degree of autonomy in deciding how best to complete the task you have hired them to do. . If you interfere too much with an IC's work, you run the risk of making the IC look like an employee, who by law requires you to pay payroll taxes, workers' compensation insurance premiums, etc. If you want to have significant control over what and how your employees do it, categorize them as employees. Your workers come and go. Many employers only use CI when necessary for relatively short-term projects. This means workers are constantly coming and going, which can be frustrating and disruptive. And the quality of work you get from different integrated circuits can be very evident. Employers who want to rely on the same workers day in and day out are more interested in hiring employees than credit institutions. Your right to terminate your IC is subject to your written agreement. You don't have unlimited rights to enable ICs, like you can with your employees. Your right to terminate IC's services is limited by the terms of your written IC agreement. If you fire an IC in breach of the agreement, you may be liable for the breach of contract. You may be liable for injuries caused by CI on the job. Employees injured on the job are usually covered by workers' compensation insurance. In exchange for the benefits they receive for their injury, these employees waive their right to sue their employer for damages. Credit unions do not compensate workers, which means that if they are injured on the job, they can sue you and pay damages. You cannot own copyright to works created by IC. If you hire an IC to create a copyrightable work, such as an article, book or photograph, you may not be considered the owner of the work unless you use a written agreement to transfer ownership of the copyright from the IC to you. On the other hand, if an employee creates a work like this. So in most cases you automatically own the copyright. You are at risk with government audits. Federal and state agencies, especially the IRS, want to see as many workers as possible classified as employees, not ICs. The reason is financial: the more workers are classified as employees, the more tax and insurance money flows into government coffers, and the harder it is for workers to report or hide their income. them with the tax authorities. Some state and federal agencies may inspect your business if they believe you have misclassified an employee as a CI. At the federal level, you may face an audit from the IRS; The Department of Labor, which enforces federal minimum wage and hourly laws; The National Labor Relations Board, which advocates for workers' rights to form unions; or the Occupational Safety and Health Administration, a workplace safety law enforcement agency. At the state level, you may be able to bring to the attention of your state unemployment compensation or workers' compensation agency if a worker you have classified as an IC is claiming benefits. You may also face an examination from your state's tax office. Yoel Molina, Esq. (AKA “Mo”) Feel free to join our WhatsApp group if you want to know more about his and more! |
AuthorYoel “Mo” Molina, I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters.. Archives
May 2022
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