In part two of our series – Building Your Business, we look at other factors affecting business decision-making in the early stages of a business’ growth and development. Though legislation that controls business practices vary from country to country and across regions, it is necessary to familiarise yourself with the laws governing good business practice. When starting your business, it’s necessary to understand all the legal requirements that must be met in order to begin operations.
Unless you’re a lawyer, you may not be able to comprehend the legal language that’s guiding your business operations. Having a lawyer guide you is probably the safest and most efficient option you can take. Meeting other business requirements in the areas of human resource management and accounting for example, might mean that you rely on additional resources. What professional services you need and how best to use them will be explored below.
Laws That May Affect You
There are many laws that are applicable to owners of small businesses. It is best to consult with professionals to determine which laws will be applicable to you, what permits you will need to commence business and where to go to comply with the various rules. Your attorney should be able to assist you in complying with labour laws such as the employment of minors, illegal aliens and workplace safety rules.
Your attorney may also be able to help with requirements for special business licenses (if required) as well as building codes and permits for remodelling and zoning laws, health and safety requirements and environmental laws.
On the other hand, your accountant should be able to assist you in filing:
- Income tax returns
- Franchise tax returns
- Employment tax returns
- The time for payment of withheld and employers share of employment taxes
- Unemployment tax returns and payment
Affordable Health Care
If you’re hiring staff, you should check on the legal requirements that companies should meet for their employees. Providing affordable healthcare and insurance coverage might be just two of the most prominent areas for consideration.
Featured Video: What Every Entrepreneur Needs to Know About Intellectual Property
Help from the professionals
In addition to the above items, your attorney should draw your partnership agreement or form your corporation, including the issuance of stock and appropriate filings with the relevant agencies. He or she will help advise on the best form of ownership, assist in negotiations to buy an existing business and review documents if you are buying a franchise. He or she will also advise on buy-sell agreements and draft appropriate documents.
If your business will require renting an office, store or factory, your attorney should review and approve your lease document. A lease obligation can become your biggest liability, and your attorney can help negotiate fair and protective terms. For example, if you anticipate growth, your lease should include a provision for how expansion requirements will be handled.
Your new business may require specialized legal advice to establish and protect your intellectual property rights. Intellectual property includes your ownership rights to your business name, trademarks, copyrights, and patents. Intellectual property law is a specialized field, and you may need an attorney who specializes in these matters.
Your accountant can be an important advisor in start-up decisions, such as
- Deciding the appropriate division of the capital you contribute to a corporation between stock and loans.
- Determining the best form of ownership.
- Helping set up the books and records of the business.
- Advising computer needs for accounting purposes.
- Filing tax returns, advising on the compensation of owners, preparing financial statements, helping forecast cash needs, including whether to expand, the addition of employees and determining profitability.
He or she will have a continuing role in filing tax returns, advising on the compensation of owners, preparing financial statements, helping forecast cash needs, including whether to expand, the addition of employees, and whether you are really making money in this venture.
You will need to decide with your accountant what kind of financial statements are prepared.
Featured Video: Business Partners
Your Payroll Service Provider
All entrepreneurs face the dreaded question, “How am I ever going to handle my payroll, payroll taxes and comply with ever-changing state and federal laws?”
Thanks to efficiencies achieved through computer technologies, a huge industry has emerged to take over increasingly complex payroll issues. “Payroll Service Providers” now permit small businesses to outsource these functions at very low costs. Now the start-up entrepreneur, even with a payroll of one person, can “outsource” his or her Human Resources department.
There are many payroll service providers listed on the Internet (go to “payroll service providers” on search engines.) In recent years, payroll service providers have expanded their services to handle other personnel issues as well, such as managing retirement plans, workers compensation insurance, and pre-employment verification. Many payroll service providers incorporate services such as
- Business Tax Protection & Payment
- Health Insurance
- Human Resources Help Desk
- Human Resources Software
- New Hire Reporting
- Payroll Tax Calculation, Deposit, and Filing
- Pre-Employment Screening/Background Checks
- Reporting Solutions
- Time and Attendance Solutions
Your Pension Plan Manager
As a business owner, you can participate in the benefits of tax-deferred pension plans for yourself and your employees. Good pension planning will help you attract and keep good employees. Some payroll service providers now handle pension plan management.
Your professionals can also be of significant assistance in helping formulate your business plan by advising on
- The appropriate form of organization.
- Roles of each partner, such as the control of each party.
- The areas in which each will have primary responsibility and the ownership of each party.
In connection with the acquisition of an existing business, they should advise on good and bad terms of the proposed deal and help negotiate with the seller and his or her attorney.
Finally, they should advise on your need for capital, both at the inception of the business and what additional capital will be needed if the business is successful and you decide to expand.
Your Pre-Employment Screening Service
Pre-employment screening is especially important when you are starting because you don’t have ongoing revenues to offset mistakes. Many start-ups skip screening because they’re unfamiliar with it or don’t know how to have it done at a reasonable cost. Unfortunately, this can open them up to resume fraud among other undesirable possibilities. Also, many tips on how to go about the hiring process can be found through search engines by entering “hiring tips.”
As an entrepreneur, your time should be focused on building up your business. A good way to do this is to outsource all the administrative and specialist tasks to external professionals.
Before you start up, collect referrals to and references about lawyers, accountants, and insurance agents so you can select the most appropriate professional advisors well before the time you will need their services. Perhaps they will provide you with initial free consultations for considering them as members of your professional team.