Is Your Employee Really An Employee?

Is That a Real Employee or a Common-Law Employee?

The IRS and the Department of Labor are cracking down on businesses that use contractors but treat them like real employees – or, as the IRS calls them, “common-law employees.”  Before you misclassify that contractor, ask yourself these 5 questions:

1.  Do you control the work?  If you direct how and where and at what time someone works for you, then the government says you have an employee, not a contractor.

2.  Do you furnish the equipment?  If you have given someone a computer or other equipment on which they will perform work for you, they are likely to be classified as your employee.

3.  Are you in one of these industries?  Some industries are audited at a higher rate than others when it comes to employee misclassification, including nail salons, restaurants, cleaning services, security guards, landscaping companies, property management and drywall.  If you are in one of these businesses, you need to educate yourself on employment law with the help of a Creative Business Lawyer™.

4.  Is there anything in writing?   Most contractors operate with a contract that spells out the work they will provide and the compensation they will get for it.  We can help you prepare a contract to ensure your contractors are not deemed common law employees.

5.  Do they just work for you?  Most contractors are free to work for other people, not just you.  Even if they don’t actually have other clients, it should be clear that they are free to pursue other work without your permission.

If you’re a small or mid-size business owner, call us today to schedule your comprehensive Small Business Audit Session.  Normally, this session is $1,500, but if you mention this article and we still have room on our calendar this month, we will waive that fee.  

Do you need help determining what your team members should be classified as?  If you’re a small or mid-size business owner, call us today to schedule your comprehensive Business Planning Starter Session if you are just starting out or a Business Planning Audit Session if you are up and running.  Normally, this session is $1,500, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Wilson, lf is a family-focused boutique law firm specializing in small business planning located in Andover, MA and Washington, DC helping small business owners organize their business affairs, in style, to protect their investments and provide for their loved ones.  Call (978) 296-4140, email info@wilsonlf.com, or visit our website at www.wilsonlf.com, for more information.

Scammers, Hackers, & Your Business: Protecting Your Small Business from Cybercrime

The Association of Certified Fraud Examiners has reported that companies with fewer than 100 employees lost an average of $155,000 annually as a result of fraud, identity theft and cybercrime.  Here are some tips for protecting your small business from becoming a victim:

Protect bank accounts and credit cards.  First, be sure that your personal banking and credit accounts are kept separate from business accounts.  Be stingy with issuing company credit cards and pay bills online.  Use a secure mailbox for sending and receiving mail.  Check your bank accounts daily online for any suspicious activity.

Firewall protection.  Be sure your business computers are fully protected with a firewall and have anti-virus, malware and spyware detection software installed on every computer.  Have a robust back-up system for all your business data.

Dedicated banking computer.  Use a dedicated computer for all online banking activities and make sure it is never used for web surfing or other online activities that could make it more vulnerable to a cyber attack.  

Password policy.  Invoke a password policy company-wide that is changed every 30-60 days.

Educate employees.  Educating employees on threats and prevention methods is your best defense.  Hold regular training sessions and be sure to educate new hires.  Before hiring anyone, conduct a background check to ensure you are hiring the right people – but check with a Creative Business Lawyer™ to be sure your checks are in compliance with local laws.

Insurance.  Get an insurance policy that protects you against any loss or liability suit that could arise from cybercrime.  

A comprehensive asset protection plan for both your business and personal assets is a must for any business owner.  If you’re a small or mid-size business owner, call us today to schedule your comprehensive Business Planning Starter Session if you are just starting out or a Business Planning Audit Session if you are up and running.  Normally, this session is $1,550, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Wilson, lf is a family-focused boutique law firm specializing in small business planning located in Andover, MA and Washington, DC helping small business owners organize their business affairs, in style, to protect their investments and provide for their loved ones.  Call (978) 296-4140, email info@wilsonlf.com, or visit our website at www.wilsonlf.com, for more information.

Past Due? How to Make Sure Your Business Gets Paid and Doesn't Get Stiffed By Customers

Sooner or later, you are going to have a client who doesn’t pay you for services or products provided.  Customers who do not pay are a fact of life for every business, so what are your alternatives?  Here are some options:

In-house collections – Designate someone in your firm to contact the buyer personally to see if the invoice was lost or if there were other reasons for nonpayment that you can work out.

Attorney – An In-House Business Counsel can help you collect if your own efforts have failed.  Sometimes all it takes is a stern letter on attorney letterhead to get action.

Collection agency – You won’t get the full amount – a collection agency generally takes 25-40% of a collection – but sometimes something is better than nothing.

Small claims court – You can file a claim in small claims court if the amount due is within the limits for courts in your area.  This will take more of your time than money, but could pay off.

Tax write-off – You may be able to take a bad business debt deduction if all your collection efforts have failed.

If you find yourself getting stuck with accounts receivable on a regular basis, you very likely need to review your invoicing practices.  We can help you with that.

There are also new technologies that allow you to get paid on the spot, on your smart phone or tablet device.  

If you are still sending out paper invoices, consider changing to electronic invoicing and be proactive about following up once a payment is even one day late.

We proactively monitor and review these kinds of matters for our clients.  Let us know if we can do so for you.

A comprehensive asset protection plan for both your business and personal assets is a must for any business owner.  If you’re a Massachusetts or District of Columbia small or mid-size business owner, call us today at 978-296-4140 to schedule your comprehensive Small Business Structure Audit.  Normally, this session is $1,500, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Wilson, lf is a family-focused boutique law firm specializing in small business planning; helping small business owners organize their affairs, in style, to protect their investments and provide for their loved ones.  We are located in Andover, Massachusetts and Washington, DC and we frequently meet at our clients' businesses for true "In-House" Business Counsel service.

Protecting Your Business From Personal Legal Liabilities

Most small business owners are aware of the importance of protecting their personal assets from business liabilities.  However, the reverse is just as necessary – protecting your business assets from personal legal troubles.  

For example, if you are at fault in a serious auto accident that injures someone and you own a business, the assets of that business could be under attack in a personal injury lawsuit unless you have undertaken the proper steps to insulate your business from personal liabilities.  Here are three things you can do to shelter your business today:

List all your assets.  Make a list of all of your personal assets – both business and personal – including any debt that is secured by the asset.  This list will be the beginning of your process helping you to evaluate your exposure to risk.   

Look into Umbrella insurance coverage.  An umbrella insurance policy covers any claims against you in excess of your basic insurance coverage limits.  By having umbrella coverage, which is typically, not very expensive, you can ensure any judgments against you are paid before your business is put at risk to satisfy a judgment creditor.   Beware though, this type of insurance typically does not cover actions that are negligent, reckless, fraudulent or criminal.  

Consider whether your business entity has extra built in protection. If your business has been set up as a limited liability company (LLC) in a state with charging order protection (and there are 13 states that have LLC Charging Order Protection), you may have extra protection for your business.  If you have an LLC formed in a state with this extra protection and a judgment creditor tries to take your business, they cannot. Instead, all they will receive is a charging order against the business.  This means that they would get distributions only when the other members do, but they would still need to pay taxes on undistributed profits AND they couldn’t even force any profits.  Many creditors would prefer to settle for pennies on the dollar rather than receive a charging order against a business entity. 

Best Form of Protection. If asset protection is extremely important to you, consider irrevocable trust planning.  A properly set up irrevocable trust could protect your business from divorce, creditors or even bankruptcy.  

If you’re a small or mid-size business owner, call us today at (978) 296-4140 to schedule your comprehensive Small Business Structure Assessment and we’ll consider the best asset protection strategies for you and your business. Normally, this session is $1500, when you mention this article and we still have room on our calendar this month, we will waive your session fee.

Wilson, lf is a boutique family-focused boutique law firm specializing in small business planning located in Andover, MA and Washington, DC.  We help small business owners organize their affairs to protect their investments and provide for their loved ones.  www.wilsonlf.com

The Family Post Blog

Welcome to The Family Post, a blog by Wilson, lf; a boutique family-focused law firm specializing in estate and small business planning.  We help parents and small business owners organize their affairs, in style, to protect their investments and provide for their loved ones.  We are located in Andover, Massachusetts and Washington, DC.  Please feel free to call us at (978) 296-4140, email info@wilsonlf.com, or visit our website www.wilsonlf.com.  We look forward to meeting you!