Business Success Tips

Tips and advice for small business owners

Enforcing Trademark Rights

You’ve taken the necessary steps to properly register a trademark, but now someone is using it without your permission. This can have significant negative consequences for the success of your business and/or product. As a result, understanding the ways in which trademark rights can be protected is important to your business. What is a Trademark? Under federal law, a trademark is any word, name, symbol, or device, or any combination thereof used in commerce to identify or distinguish goods from those manufactured or sold by others. A service mark is the same as a trademark, but is used to distinguish services, as opposed to goods. Protecting Trademark The ability to stop someone from using a trademark, or one that is so similar that it is confusing, depends on the following factors: Whether the trademark is being used by the other person (or business) for competing goods or services; The likelihood that consumers will be confused by the dual use of the trademark; and Whether the trademark is being used in the same part of the country or is being used for related goods or services (goods or services that will likely be noticed by the same consumers). In order to prevent someone else from using the trademark, the trademark owner must be actively using the mark. In this context, “using” is defined as putting it to work in the marketplace to identify goods or services. However, this does not mean that the goods or services need to be actually sold.  Rather, they only need to be offered to the public. Under Pennsylvania law, the owner of a famous mark... read more

Use Caution When Firing an Employee

Unfortunately, if you own your own business, it is most likely inevitable that the time will come when you are faced with firing an employee. Deciding to terminate the employment relationship can be a difficult one, but also critical in helping your company be as successful as possible. When going through the process of firing an employee, there are several important considerations to be aware of. Restrictions on Firing Employee Under most private-sector employment relationships, the employment is considered at-will. This means that the employment relationship can end without any justification and at the will of either party. As a result, the employment relationship can end for any or no reason. For example, an employer could fire an employee because that employee stole something from the business. But, an employer could also fire an employee simply because he or she desires to end the relationship. However, if the employee agreed to an employment contract, that contract may have eliminated the at-will nature of the employment relationship.   Additionally, it is unlawful for an employer to fire an employee: Who serves on or testifies before a wage board; Refuses to submit to a polygraph test; For fulfilling a jury duty obligation; For union activity; For retaliation because the employee filed a wage complaint; For reporting wrongdoing by the employer; In a manner that violates the protections for veterans and reservists; or Who has had wages withheld to fulfill a child support obligation. Further, it is illegal to fire an employee for a discriminatory reason, such as because of the employee’s: Race; Ethnic background; Religion; Age; Sex; or Disability. If an... read more

Dissolving an LLC

For whatever reason, you may find yourself in the position of needing to end your limited liability company (LLC). It is important to realize that it is not as simple as just closing the door and walking away. Just as there was a formal process for forming the LLC, there are formal procedures that must be taken to end the LLC. Dissolution The process of ending a business is called dissolution, which officially ends the existence of the entity. It is important to complete this process because it takes the business out of the reach of creditors. While the focus here is voluntary dissolution, it is possible for a business to be involuntarily dissolved through a court order. In order to dissolve, the LLC must obtain clearance from the Department of Revenue (DOR) and the Department of Labor and Industry (DLI). Before this clearance is granted, all required state taxes must be paid. LLCs must file DOR Form REV-181 (Application for Tax Clearance Certificate) with both the DOR and DLI. For most LLCs, dissolution requires a vote of all members. Unless specifically prohibited by the formational documents, under the Pennsylvania LLC Act (Act), dissolution may be accomplished by a unanimous written agreement or consent of all LLC members. The decision to dissolve should be recorded in the official minutes of the dissolution meeting or on a written consent form. The LLC will continue even after receiving tax clearance and going through dissolution. This is because the LLC still has certain matters that need to be resolved. The process of winding up takes care of these final matters, which, under... read more

Specific Performance of a Contract

For most instances of a breach of a contract, damages are sought as a remedy. Usually, the payment of money is sufficient for the person harmed by the breach. However, this is not always the case. If this is true, a special remedy known as specific performance may be ordered by the court. Existence and Breach of Contract In order for specific performance to be possible, it must be shown that a valid contract was entered into and that there was a breach of that contract. Contracts do not need to be in writing to be enforceable, though it is usually advisable to form written contracts, particularly when it comes to business-related matters. In order to establish the existence of a contract, the following must be proven: Both parties demonstrated an intent to be bound by the terms of the agreement; The terms were sufficiently definite to be specifically enforced; and Both parties received consideration. A breach of contract may occur if one party does not perform on time, does not perform according to the terms of the agreement, or fails to perform altogether. The breach must also be material. The court examines several factors in determining whether a breach is material, including the following: The extent the non-breaching party will be deprived of a benefit reasonably expected; The extent to which the obligations of the contract have already been completed (if few or none of the obligations have been met, the more likely it is that the breach is material); and The extent to which the breaching party comported with the standards of good faith and fair dealing.... read more

Copyright Infringement

For writers, artists, and other creators, protection of their work is critical in achieving success. If people’s original, creative work is allowed to be copied and sold by others, the incentive to create diminishes. As a result, federal law provides protection for creators from copyright infringement. As a creator of original works, it is important to understand your rights when it comes to your creations. Basic Elements of Infringement There are two basic elements to demonstrate that copyright infringement has occurred. The first is that the plaintiff must allege and prove that he or she has ownership of a valid copyright. The clearest and best way to demonstrate this is through a certificate of registration issued by the United States Patent and Trademark Office (USPTO) before publication or within five years after first publication. This certificate is prima facie evidence of the ownership and validity of a copyright. Prima facie evidence is a fact presumed to be true unless proven otherwise. Importantly, even if the presumption that comes with a certificate of registration is not available because the five years have already passed copyright owners of U.S. works must register before filing an infringement lawsuit. Therefore, it is often advisable for copyright owners to register, even if no infringement has occurred, in order to gain the benefits of the presumption of ownership and to avoid having to register later if infringement is suspected. The second element in an infringement case is that the plaintiff must prove that the defendant violated one of the exclusive rights reserved to the copyright owner. Under 17 U.S.C. §106, these rights include, but are... read more

Employee Time Off for Medical Reasons or Death in Family

One of the most important issues for employees is the time off that they are given in order to take care of medical issues or a death of a family member. This time off is considered particularly important because it often needed during a very sensitive period of a person’s life. While paid time off may not always be required to be granted by law, providing it can often be an effective way of fostering the goodwill of employees. Family Medical Leave Act Under the Family Medical Leave Act (FMLA), certain employers are required to give qualified employees the ability to take an unpaid leave of absence for specific family and medical purposes. During this unpaid leave of absence, group health insurance continues for the employee as if he or she had not taken a leave of absence. Upon completion of the leave, the employee must be returned to the same position or one that is nearly identical. A position that is nearly identical is one with: Identical pay and benefits; The same shift or work schedule; A similar location or geographic proximity; and The same or similar duties, responsibilities, and status. The unpaid leave of absence may be for 12 workweeks in a 12-month period for the following purposes: Birth of a child and the care for a newborn within one year of birth; Care for an adopted child or a child under foster care within one year of the placement of the child with the employee; Care for a spouse, child, or parent with a serious health condition; An employee’s own serious health condition which causes the... read more

Employee Handbook

For all businesses, one of the most important items is the employee handbook. Employee handbooks are critical for the success of the business because they set out the company’s policies, procedures, and expectations. They also provide for a structured work environment, which helps the business run as efficiently and effectively as possible. The following describes some of the important provisions that should be included in employee handbooks. Defining Employees The handbook should contain definitions of all individuals who perform work for the company. This includes designating what constitutes an employee as opposed to an independent contractor. Whether a person performing work for the company is an employee or independent contractor has important tax and benefit implications. The employee definition section should not contain the word “permanent” in relation to employment. Compensation A section discussing the required deductions the company will make in relation to federal and state taxes should be included. The compensation section also addresses issues such as overtime pay, salary increases, bonuses and other benefits. Workweek In addition, the handbook should include a section that defines the workweek. This includes defining expected or core work hours and what days of the week work is or can be expected. This section also addresses issues like attendance, punctuality, the requirements for reporting absences, and the availability for flexible schedules or telecommuting. General Policies The daily management and operation is detailed in the general policies and procedures section of the handbook. This addresses issues related to employment policies, such as the company dress code, job classifications, transfers, and relocations. Leave Another section of the handbook should address issues related to... read more

Understanding the Different Business Formations

If you are considering starting your own business, a crucial step in that process is deciding what business formation your enterprise will be. The choice of a particular business formation will impact items like how the company is taxed and potential personal liability for company obligations. Choosing the right formation at the outset can increase the chances that your business will achieve success. What are the Options? Quite often, very small businesses are organized under sole proprietorships. While sole proprietorships may be suitable for businesses that are exposed to only a minimal amount of risk, they are still not ideal because they offer no protection for their owners. If the company is the target of a lawsuit, the personal assets of the owner can be used to satisfy any judgment against the company. Another type of business formation that provides no asset protection for its owners is a general partnership. These are easy to form as they do not require any formal documentation. A potential risk of a general partnership is that a partner could use the partnership to borrow money. If that partner defaults on the loan, and the partnership cannot satisfy the debt, the other partner could be held responsible for repayment. Alternatively, a limited partnership offers some protection. Under a limited partnership, a general partner runs and manages the daily activities of the business. The general partner can be held personally liable for the company debts. The limited partner only provides funding for the partnership, with his or her risk only being the investment made in the business. It is also possible for a business to... read more

Buyout Agreements

For companies that are owned by more than one individual, forming a buyout (or buy-sell) agreement is an important part of protecting the business in the future. While it is not a necessary condition to business formation to have a buyout agreement, it is highly advisable. The future is unpredictable and, as a result, business owners need to have a plan in place in the event changes to ownership structure occurs. What is a Buyout Agreement? A buyout agreement is a binding contract between the owners of a company that controls the manner in which an owner may sell their interest in the company, as well as which individuals may buy that interest and the price they will have to pay. It is common to use prenuptial agreements as an analogy to buyout agreements. In other words, owners may plan to always own their interest in the company, but, in the event changes occur, the buyout agreement controls what will happen with that ownership interest. Ideally, buyout agreements will be formed at the formation of the business. Further, they are important whether the business is formed as a corporation, partnership, limited liability company, or even, in certain circumstances, a proprietorship. Some of the more common situations when buyout agreements become important include when a co-owner: Retires or wishes to leave the company; Files for bankruptcy; Becomes disabled; Goes through divorce and his or her ex-spouse will receive part or all of the interest in the company; or Dies. Why is this Important? Buyout agreements are important to help in avoiding disputes that may arise between remaining owners regarding whether... read more

Be Aware of Potentially Misclassifying Employees

One of the many issues that employers face is the possibility that individuals who perform work for the company are misclassified as independent contractors and not employees. In some instances, an employer may intentionally misclassify an employee in order to avoid having to provide the benefits to that person that employment confers. But, it is also possible that a relationship that an employer truly intends as non-employment will be deemed misclassified by the court. Therefore, it is important for employers to understand how the determination of whether a worker is an employee or independent contractor is made. Classifying Workers Generally speaking, there are two types of workers: independent contractors and employees. If a worker is not considered an employee, the employer can avoid having to provide the worker with the benefits that employees are entitled to. Some of these include overtime compensation, workers’ compensation, insurance, and family or medical leave. This can result in significant cost savings for the employer. But, it is important to correctly classify employees. There are many factors that affect whether a worker is considered an independent contractor or employee, with many of them relating to the amount of control the employer has over the worker. Specifically, these factors include, but are not limited to, the following: The amount of direction the employer has over how the worker completes the work; Whether the employer provides for training of the worker; Whether the relationship is exclusive or is it possible for the worker to perform similar work for other companies; Who is responsible for providing tools and supplies; and Whether the work is a key aspect... read more

Protecting Your Business When an Employee Leaves

While it would be ideal for a company to never have employee turnover, the reality is that it happens all the time. As a business owner, if you have an employee who is leaving but will continue to work in the same field as your business, it is imperative that you have in place protection for your company. A former employee may leave with trade secrets or customer lists that can negatively impact your business. Pennsylvania Uniform Trade Secrets Act Pennsylvania is one of the many states that have adopted the Uniform Trade Secrets Act (Act). The Act provides protection for businesses from having their trade secrets improperly taken and disclosed by former employees. Further, client lists are usually considered trade secrets for purposes of the Act. Specifically, under Pennsylvania law, trade secrets include a customer list that: Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. If a person has taken a trade secret, a business may file a lawsuit for injunctive relief, damages, and attorney’s fees. If the court grants injunctive relief, it will order the defendant to stop violating the plaintiff’s rights and to take steps to preserve the secrecy of the plaintiff’s information. A court may also order the defendant to pay damages to the plaintiff for the economic harm caused by the taking of the trade secrets. If the court determines that the defendant... read more

Commercial Leases

For small business owners, deciding on a commercial space is a very important matter. This is particularly true of companies that require customers to visit the place of business. There are important issues to be aware of when negotiating and agreeing to a commercial lease. Length of the Lease A commercial lease is simply a contract between a business and landlord for the rental of space in a building. The length or duration of the lease is negotiable and may be just about anything. However, agreeing to a very long lease term can pose risks to an owner of a business. Perhaps the biggest concern for business owners is the risk of the business failing. Incorporating was most likely done in order to avoid personal liability for the actions of the business. However, if a business is newly formed, it is common for landlords to require owners to make a personal guaranty before leasing the space. The result is the effective loss of personal liability protection. A very long lease term, coupled with a personal guaranty on the lease, puts at risk significant resources of the business owner. This risk is further enhanced by the fact that landlords in commercial leases can usually invoke the acceleration clause and request the entire unpaid rental amount for the remainder of the lease term. Owners should request that an escape clause in the event the business fails be included in the lease agreement, especially if the lease term is a long period of time. Alternatively, it is advisable for new or less stable companies to enter into shorter lease terms with renewal... read more

Breach of Contract

Contracts are a part of everyone’s life. You might have a contract for cell phone service or to have work completed at your house. For a business owner, the number of contracts, and their importance, increases. They help you to ensure that you receive the products and services you need to successfully run your company. Unfortunately, sometimes the obligations required by a contract are not fulfilled. Existence of a Contract The first step in a breach of contract case is proving that a valid and enforceable contract exists. Generally, a contract can be oral, in writing, or inferred from the acts and conduct of the parties. However, in some circumstances something known as the statute of frauds requires a contract to be in writing. For example, the statute of frauds typically applies in the sale or transfer of land. For a contract to be valid there must be consideration, which means the parties must surrender a legal right in exchange for a benefit. If a contract is shown to exist, the next step is to prove the defendant did not perform under the contract. Proof of Breach In order to recover, it must be shown that there was a breach of the contract and that the breach was material. A breach may occur if a party does not perform on time, does not perform according to the terms in the contract, or does not perform at all. The court will consider several factors in determining whether a breach was material, including, but not limited to, the following: the extent the other party will be deprived of the benefit reasonably... read more

Some Basics of Trademark

There is a high likelihood that wherever you look right now, you will see a trademark of some kind. It may be the “Dell” on your computer or the “Nike” on your shoes. But, though you encounter trademarks every day, you may not know exactly what one is and why someone would want one. Defining Trademark The law governing trademark is codified in Title 15 of the U.S. Code. Under §1127, a trademark is defined as any word, name, symbol, or device, or any combination thereof used in commerce to identify or distinguish goods from those manufactured or sold by others. The term service mark is the same with the exception that it is used to distinguish services, rather than goods. Frequently, the term “trademark” is used when referring to either a trademark or a service mark. Registering Your Mark It is important to note that registration of a mark is not required for protection. Rights to a mark can be established by using the mark in commerce. However, registering the mark does have significant benefits, such as: Giving constructive notice that the mark is owned by you. After using the mark for five consecutive years after registration, your right to use it is incontestable. If a violation occurs, it allows the registrant to recover defendant’s profits, any damages suffered by the registrant, and the costs of the action. In order to register a mark, the owner must file an application with the Patent and Trademark Office (PTO). The application must state the applicant’s domicile, citizenship, date of first use of the mark, date of the first use of... read more

LegalZoom or LegalDoom?

Ask any lawyer who focuses his or her practice on the representation of small businesses and small business owners whether they are competing with online document preparation service providers like LegalZoom, and you are bound to get a variety of answers. Some practicing attorneys with many years of experience will get incredulous at the thought that they might be competing with non-lawyers, while other lawyers may recognize that a portion of potential clients that otherwise may have sought out their advice, are electing instead to use low-cost non-lawyer document preparation services. My thoughts on companies such as LegalZoom, is somewhere in the middle. For my practice, the Philadelphia Small Business Law Center, the existence of low-cost document preparation service providers like LegalZoom has been a mixed blessing. While I have definitely lost potential clients who elected to utilize the services of LegalZoom because it was less expensive, my practice currently derives a decent portion of its revenue from small business owners who are under some form of  duress wrought by poor service, poor document drafting, or some other form of tragic mistake that you would not otherwise expect to see were it not for the fact that these small business owners relied on the advice of non-lawyers and were led to believe it was just as good as the advice provided by practicing lawyers. More importantly, these aren’t just problems my clients have faced, it is much more widespread than that. You don’t have to take my word for it. Search on Google for “LegalZoom screwed up” or LegalZoom complaints” and read for yourself, or read this online review,... read more

What You Need to Know About Limited Liability Corporations

A limited liability corporation (LLC) provides protection for owners (known as members) from personal liability, while at the same time conveying certain tax advantages that other business structures do not enjoy. These are often considered hybrid business structures because they borrow aspects of both corporations and partnerships. Limited Liability A primary consideration for most business owners is protecting themselves from being personally liable for the debts and actions of the business. Forming an LLC protects the members from having personal assets such as their houses or cars involved in claims against the business. Therefore, members only have at risk what they specifically invested into the company. However, in what is known as “piercing the corporate veil,” the court may disregard the “shield” of limited liability and hold members personally liable. This most often occurs when it is shown that the members are not truly separate from the company. An example of when this might occur is if a member used a company account to pay personal expenses. It is important to understand and follow the legal formalities of running an LLC in order to ensure the limited liability protection will be upheld. Pass-through Taxes For federal tax purposes, LLCs are not considered separate entities, meaning the business itself is not taxed. Instead, the income of the business passes to the individual members who report their share of profits or losses on their income tax returns. In a corporation, the company is taxed on any profits earned. The individual shareholders are then taxed on any of those profits that are distributed to them. The avoidance of this “double-taxation” is one of... read more

Small Business Law – Understanding Copyright

Copyright law is a federal statute in the United States, found under Title 17 of the U.S. Code. The Copyright Act of 1976 (the “Act”) revised Title 17 and provided the structure for the current laws regarding copyright. Copyright is important because it provides an incentive for the creation and distribution of new works. Basics of Copyright According to §102 of Title 17, copyright protection exists for “original works of authorship fixed in a tangible medium of expression,…which can be perceived, reproduced or otherwise communicated.” To be “fixed in a tangible medium of expression,” the work must be recorded in some physical medium, such as on paper or audio tape. Works of authorship include the following:      literary works;      musical works, including accompanying words;      dramatic works, including accompanying music;      pantomimes and choreographic works;      pictorial, graphic, and sculptural works;      motion pictures and other audiovisual works;      sound recordings; and      architectural works. Additionally, there is one other requirement for a work to be considered copyrightable subject matter. Pursuant to §102(b), copyright protection does not “extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery.” Often, simply the term “idea” is used when discussing §102(b). Ideas may simply belong to the public domain, which means they are under no intellectual property protection. Alternatively, protection may exist, but only if the idea is found to be patentable subject matter; copyright offers no protection for ideas. Under §106 of Title 17, the copyright owner is given the exclusive right to do many things, including to reproduce the work, prepare derivative work based on the copyrighted work, and to publicly distribute the work.... read more

How to Improve Your Cash Flow with Good Invoicing Practices

How to Improve Your Cash Flow with Good Invoicing Practices Many business owners encounter cash flow problems at one time or another, primarily due to slow collection on past due invoices. However, the way you invoice can help you avoid late payments. Here are six tips to good billing practices: Identify each service or good being provided along with its cost. Be sure to include a place to set the quantity of each service or good sold. If payment is not to be made at the point of sale but after services are provided, set a “due date” so customers or clients know when payment is expected. If your business charges a late fee or interest for accounts that become delinquent, be sure to state in conspicuous fashion the terms of the late fees or interest. You should also consult with a business attorney to discuss any limitations on what may be charged under state law. In order to collect delinquent accounts, it may be necessary to retain legal counsel to seek recovery. Therefore, it is important to give notice of the right to seek recovery of attorney’s fees, if necessary, to collect the account. Use clear, conspicuous language so your company’s terms and conditions are clear. If your company engages in emergency services such as responding to plumbing problems on holidays or weekends or evenings, spell out any other fees for such services provided during non-work hours. A well-constructed invoice can help you minimize problems with collecting unpaid bills and enhance customer relations by showing your company is clear and honest about its fees and costs. To learn... read more

Back to the Basics – The Importance of Incorporating a Business

The early stages of forming a new business involve a number of critical decisions.  Among the most important is whether to incorporate.  Once incorporated, the owners of a corporation (called the shareholders) are normally not personally liable for the obligations of the corporation.  Neither are the directors or officers of the corporation.  Usually, only the corporation itself can be held liable for the corporation’s obligations.  One’s personal assets are protected from such obligations.  Personal assets such as one’s house or vehicles cannot be reached. This post lays out the essentials of incorporating a business. The Essentials of Incorporating a Business When it comes time to incorporate a business, the identity of the incorporator or incorporators must first be determined.  Incorporators can be one or more natural persons, eighteen years of age or older, or even an entity, such as another corporation.  Incorporators are necessary because they hold the organizational meeting to elect directors and adopt by-laws.  The elected directors will adopt the bylaws at the organizational meeting.  The basic contents of the bylaws include matters of internal governance such as officers’ duties and meeting times. Next, the Articles of Incorporation (“Articles”) must be drafted.  The Articles must include the name and address of the registered agent or office, the name and address of the incorporators, the name of the corporation itself and must include the number of authorized shares.  The name of the corporation must not be deceptively similar to that of an already existing corporation.  It must be noted that these are the bare minimum requirements; the Articles may include more, and usually do.  Unless stated otherwise in... read more

Top 10 Legal Tips for Entrepreneurs

If 2015 is the year you decide to strike out on your own and start your own business, there are some basic legal issues you need to take into consideration as part of your start-up planning. Here are our top 10 legal tips for entrepreneurs: 1.  Choose the right business structure. Most businesses start life as a sole proprietorship, but if you have personal assets to protect, you should consider operating your company as a limited liability company (LLC) or corporation. These entities will protect your personal assets from business liabilities and can offer you some tax advantages as well. 2.  Get insurance. Business insurance is a necessity for most companies, but especially important if you are operating a potentially risky business. Even if you are just starting out as a consultant, you could get sued by someone who acted on your advice and was disappointed with the outcome. 3.  Put everything in writing. All agreements with independent contractors, employees, vendors and customers need to be in writing.  4.  Partners need a buy-sell agreement. If you are operating as a partnership, you need to plan for what  happens if one of you becomes disabled, dies or simply wants to leave.  A buy-sell agreement allows you to do this. 5.  Understand employment laws. If your startup is dependent on work from independent contractors, you must be aware of what the law defines as a independent contractor vs. an employee or you could get in trouble with the IRS. 6.  Address your need for legal documentation. If you are operating as an LLC or corporation, there are legal formalities that must... read more

The 4 Legal Agreements Every Business Owner Needs

One of the most common questions business owners want to know is what kind of legal agreements they need. And while the answer to this question depends a lot on what kind of business you operate, there are four key legal agreements that virtually every business owner will need to protect and operate their business legally: Owner Agreements. If you are in business with another person, it doesn’t matter if your business structure is a partnership, an LLC or a corporation – you will need an owner agreement. These can take the form of a partnership agreement, an operating agreement, a founders’ agreement or a shareholders’ agreement and details how ownership in the company is being distributed, compensation, capital contributions and other operational issues – including what happens if someone wants out. Employer Agreements. These agreements set the rules for how your relationship with employees will be governed and should also be used to cover independent contractors. Having an employment agreement for everyone ensures that expectations for job performance are spelled out and what the grounds are for termination. Vendor Agreements. Every business needs formal agreements with vendors and suppliers that help ensure the needs of the business are being met as agreed upon. Issues of exclusivity, indemnification and liability limitations all need to be set form in your vendor agreement to protect your business against claims where a supplier is at fault. Customer Agreements. Whenever you make a sale to a customer, you have entered into a contract and that needs to be designed to provide both the business and the customer with the proper legal protections. If... read more

Hiring Employees in the New Year

When you find yourself struggling to keep up with your booming business, it is time to hire some help. Employees are an asset to a business. It is important that the interview process reflect the need of the business, but it is even more important that the business’s ability to hire employees complies with both state and federal regulations. Before Hiring an Employee Businesses that desire to hire employees must have an Employer Identification Number (EIN). The EIN is used to report to the U.S. Internal Revenue Service (IRS) and is also known as the Employer Tax ID (Form SS-4). The EIN is a lot like a Social Security number for your business, and is used to report taxes as well as information about employees to state agencies. If you do not have an EIN, you should obtain one immediately. As a business owner it is your responsibility to record your business expenses, costs, profits, etc. These records will aid you in monitoring your business and in preparing and supporting tax returns. There are three different taxes that may be withheld: federal income tax withholdings, federal wage and tax statement, and state taxes. Employers who pay employee wages may be subject to these withholdings. Hiring New Employees Once you have taken the previous steps you are now ready to obtain the forms required by federal law to verify an employee’s eligibility to work in the United States. As an employer you are responsible for verifying an applicant’s eligibility to work. Failure to comply with the federal regulation may result in legal action against you as the business owner. Employers... read more