Making It Legal:

I’m happy to share with you that I will be the guest expert on the Business Partnership Tele-Forum series on October 23, 2007 at 1pm (EDT).  And, surprise of surprises, I will be sharing my insights about business partnership agreements in my segment entitled “The Indispensable Partnership Agreement.�  J   If you’ve ever wondered: 

• What is the value of a partnership agreement?/Why should I bother?
• So what if I don’t have one?
• Awright, if I’m gonna do it, when’s the right time to create it?
• And what should it say, anyway?

then clear your calendar, hold your calls, and register now!  There will be time for your questions, too, so be sure to sign up for the Business Partnership Tele-Forum series today!

In some ways, the Internet is the Wild West . . . and Web 2.0 is like the Wild West meets the Sci-Fi Channel — unpredictable, potentially dangerous, and often bizarre.  If you’re involved in, or thinking about, doing business online at all, the Electronic Frontier Foundation is a great resource.  They’re even hosting a one-day Compliance Bootcamp on October 10, 2007 for people who handle issues arising from users and user-generated content. 

There are “basicâ€? legal issues that online content raises (such as defamation, copyright and trademark infringement, privacy, to name a few — see my article on “Common Legal Perils of Bloggingâ€?).  In addition, here’s a great post from Rafe Needleman — endearingly called 9 Fun Ways Web 2.0 Startups Can Commit Legal Suicide.  He points out two handfuls of other legal pifalls, including ignoring safe harbor rules (by not registering as a copyright agent), collecting data from children, failing to create a reserve fund for settling trumped-up lawsuits. 

His suggestion:  “The best bet is to keep a lawyer around.�

Whatever unpleasant associations background checks may bring up, they can form an important facet of your due diligence for your small business.  It’s not just about criminal matters, although that’s a part of it.  For example, if you intend to hire an employee to handle sensitive financial matters, you’d want to know whether they have a previous conviction for kiting checks.  If you want to enter into a strategic alliance with another company, you’ll want to know whether it has undergone a bankruptcy restructuring in recent years.  A Dun & Bradstreet report, a Better Business Bureau report – both are forms of “background checks.�

And, of course, there are laws that govern the procedures for obtaining this information.  As reported in “Legal Aspects of Background Checking,� 

So far as the financial records are concerned, the Gramm-Leach-Bliley Act (GLB) governs the procedures through which personal financial information are disclosed to a third party. Then there is the Fair Credit Reporting Act (FCRA) that protects the privacy of a person’s consumer reports. Similarly, The Drivers Privacy Protection Act protects the past driving records of individuals.

Particularly when it comes to employees, many states do not require background checks (although they do require that you have employees fill out an Employment Authorization Document Form I-9, which documents immigration status).  The Privacy Rights Clearinghouse provides an overview of what you can and cannot ask for.  But most importantly, if a satisfactory background check will be a required condition of employment, this should be conveyed to the prospective employee in advance of the check and permission obtained. 

Don’t ask me where the time has flown!  My computer crashed on Friday the 7^th, so my trusty tech support, ZEI Ltd., commandeered the machine for the day.  Over the weekend, I celebrated my brother and sister-in-law’s wedding anniversary with them.  Monday was filled with doctor’s appointments, and Tuesday and Wednesday disappeared in a haze of meetings and flurry of client work before I close my office for Jewish New Year, which I observed on Thursday and Friday.  Today, Monday, I received an email asking when I’m planning to post my next item on the blog because, well, it’s been over a week, and I had committed to at least two posts a week.

I recount all of this not to impress you with how busy I am, or to gain sympathy for being duly chastised, but to share with you how important it is to build wiggle room into your deadlines.  Anything can happen.  My week was not filled with anything calamitous, but still, I missed a deadline.  Small business owners have a lot to juggle in their business and, sometimes, the personal things creep in.  Your parents have to be taken to the doctor.  Your babysitter doesn’t show up.  Your spouse/significant other needs your counsel regarding a difficult work situation.  The computer crashes.  The car crashes.  You crash.  All of these are reasons that the project is late, the document can’t get finished on time, the logo design is unfinished. 

What are some of the things you can do to give yourself more leeway?

1.                  At the outset, build in more time to get the project completed.  You may think you can have it finished within 1 week, but you might need more information from the client.  Or the resources you need to get it finished (such as, say, information or materials from third parties) may take longer than you expected.  Rather than commit to a nerve-wracking minimum, allow yourself the luxury of breathing room.  Besides, if you can complete the project sooner, so much the better!

2.                  Keep communication open.  This is where I fell down on the job.  When I saw that I was getting backed up, I should have let people know beforehand.  In most situations, clients are happy to give you more time; they’d rather be in the position of giving permission than having to follow up with you.

3.                  Get the ball rolling.  Check your contracts to see exactly what you committed to do.  It might be that providing a piece of the project is all that’s needed – not the entire thing in finished format.  In my case, I didn’t need to have done all of my blog reading and research before writing a post – there are plenty of issues that come up that I could have written on without having to be a crazy perfectionist about it. 

It ain’t easy.  And as the experts in my New York Enterprise Report article, “How to Choose a Business Partner� reveal, you may not want to go it alone. 

The same way you invite your gal-pals to have brunch with you and your sweetie (because, of course, you want to get their feedback to make sure you’re not making a terrible mistake with this person), so you want an objective eye looking at your potential business partner.  There are red flags, like divergences in communication style, or differences in values and vision – at first, you might be tempted to tolerate them, but in the end, they could act as a wedge between you.  Outside feedback – especially at the outset – is invaluable when you’re in a situation where your emotions might cloud clear thinking.

In light of our just-celebrated Labor Day, I thought I’d share a little something about the dangerous games that small business owners play when, in essence, they hire employees and pay them as independent contractors.   

From Shakespeare’s Romeo and Juliet, 1594: 

What’s in a name? that which we call a rose

By any other name would smell as sweet . . . . 

Call the person whatever you like, but if you control much of what they do, how they do it, when they do it, and with what tools they do it, you’ve probably just hired an employee.  And the penalties that befall a company sanctioned for not paying in the appropriate employment taxes are nasty.  

As Rush Nigut points out in his post, “Employees vs. Independent Contractors,� many businesses treat employees as an independent contractors for two main reasons: (1) they want to save money on taxes, red tape and benefit coverage; and (2) they don’t fully understand the distinction between employees and independent contractors.  This is not an area to play fast and loose with the law.  It’s like gambling in Vegas; the house is stacked against you.  As confident as you think you may be about the situation, it’s wise to confirm your choice with an employment or other business attorney.