Making It Legal:

Happy Hallowe’en! Scarier than horror flicks and costumes in the NYC Village parade is the lack of “grasp” that many entrepreneurs have about the businesses they claim they want to start. They’re looking for the BIG PAYOLA (”I want to start a lotto-type business . . . kinda like my state’s lotto but different”). Or they get w-a-a-a-a-y ahead of themselves in their planning (”I will start out as one shop in a mall . . . then grow to four locations . . . I would only need to hire about six employees and no managers, right? . . . but I want to expand into other areas of the U.S. . . .”). Or they get hung up on titles (”If I run the business, does that makes me owner AND manager?’)

Here’s what my father always told me: “Go look it up.” Sure, you may need to consult with experts for the nitty-gritty. But if you want to know, for example, how to sell handcrafted jewelry online, start doing a little background reading. Don’t expect people to spoon-feed you the path to your dream. Pick up the Dummies guide to Starting an Online Business. Want to know about business management and operations? Start with Michael Gerber’s The E-Myth Revisited.

Educate yourself first about the business you say you want to run–then go ask questions.

If you’re looking for a rising star in the urban firmament (and a great place to do business), look no further than Pittsburgh.  “Pittsburgh?” you say, barely concealing your surprise and disgust.  “Isn’t that just an old steel town?”

No longer.  With major industry changes in the 1980s, Pittsburgh shifted its economic base to education, services, tourism, medicine and high technology.  For those who live there–natives and transplants alike–there’s a cultural renaissance going on as well.  Nestled in the fork where the Allegheny meets the Monongahela to form the Ohio River, history abounds.

Pittsburgh has also made great strides in encouraging an entrepreneurial as well as artistic culture.  In addition to the Business Tech Conference on November 13 (at which I will be this year’s keynote speaker), Pittsburgh’s SBDC (located at Duquesne University) has sponsored an Entrepreneur’s Growth Conference for 10 years.  If you’re anywhere in the area, this year’s Business Tech Conference will be the place to be–and I say that not just because I’ll be speaking there.  A host of workshops that will be offered, so many of which look immensely valuable for entrepreneurs and business owners.

Let me know if you’ll be there!

It’s hard to let go of a dream.  But when that dream becomes a money pit, it’s no longer a dream:  It’s a nightmare.  How can you close it and let it go “gently into that good night?” (with apologies to Dylan Thomas)

The short and obvious answer is:  It depends.  It depends on when you started your business and whether you’ve filed all necessary tax returns.  It depends on whether there are creditors waiting to get paid.  It depends whether you’re a corporation or an LLC.

Assuming there are no creditors and all taxes have been paid, dissolving the company is usually a matter of filing a few forms with the secretary of state of your state and confirming with the state taxing authorities that no taxes are owed (it’s a slightly simpler process if you’re an LLC because your profits and losses would already have shown up on Schedule C of your tax return).

Don’t expect to avoid having to account for your taxes if you didn’t make any money.  Chances are, you earned something, so you’ll have to make a note of that.  But if your business expenses exceeded your business income, it may end up being  a wash.  Speak to your accountant and your attorney about the best way to handle the situation.

NOTE:  Make sure to have that conversation before the end of the year–some states charge companies an annual “franchise” tax (a nominal tax for the privilege of doing business in the state), and the tax is levied as of the beginning of the year.  A little pre-planning to ensure good timing can save you money.

Election Day is just around the corner, and I have to confess–I get a little misty when I enter the election booth and pull the thick curtains closed behind me. In so few countries around the world do people get to vote without coercion or fear of reprisal on who will lead their government. Whatever I may think about the current candidates for president (even if it’s “the lesser of two evils”), I do have a choice.  For the many freedoms we enjoy, we have the responsibility to participate in voting.  Not such a bad trade-off.

New York City employment attorney Deborah Shapiro reminded me that New York has laws on the books that require employers to give their employees “sufficient” time off to vote.  “Sufficient time” is deemed to be four consecutive hours.

Employees are entitled to voting leave if:

1. They are registered voters; and

2. They do not have at least four consecutive hours in which to vote, either between the time the polls open and the start of their work day or between the end of their work day and the time the polls close.

These employees are entitled to take up to two hours of paid leave. They also may take an additional two hours of unpaid leave, if necessary, to have four consecutive hours off while the polls are open (but employees who are exempt from overtime laws must not be docked for this time).

If employees wish to take voting leave, they must provide you with notice at least two days, but not more than 10 days, before Election Day. You are permitted to designate whether an employee takes his/her voting leave at the start or the end of the workday.

Different states’ laws may vary, so check with your attorney to see what the requirements are.

Rep. Charles Gonzalez (D-TX) recently introduced the Home Office Tax Deduction Simplification and Improvement Act (H.R. 7074).  According to a press release by the U.S. Small Business Administration’s Department of Advocacy, the goal of the bill is to simplify the home office deduction by introducing a standard deduction for small-business owners.  It is companion legislation to S. 3371, introduced earlier this year by Sen. Olympia Snowe (R-ME).

According to research from Advocacy, tax compliance is 67 percent more burdensome for the smallest businesses compared to their larger competitors.  Tax complexity, combined with the fact that 53 percent of America’s small businesses are home-based, prompted Advocacy’s support for H.R. 7074.

A few tidbits before I’m off for the Columbus Day holiday:

Q: I want to start a grand hotel chain across the country. I’m thinking big, maybe too big. For example, I’m designing a hotel/theater/casino complex. I’m estimating that the first one from start to finish will cost tens of if not hundreds of millions. I know I have to incorporate and write a very well-written business plan, but what else must I do? How do I finance starting this? How do I get this off the ground and get the wheels rolling?

A: Nothing wrong about thinking big, but yeah–if you don’t have tens of millions of dollars in independent wealth, you’ll have to have an exceptionally well-written business plan . . . particularly for this economic climate. Start with the business plan. Do your research about the hotel and entertainment industry. Ask yourself why you want to start this kind of business. Have you ever run a hotel before? Don’t incorporate or waste time or money forming a business entity until you have done the legwork to know why you want this business, how it will work, how it will differ from competitors and what you can bring to the table.

Here’s a particularly apt query:

Q: I’m a woman, living in a military town wanting to open a strip club. How do I get started? Whom do I speak to? Lots of money to be made, and I want a part.

A: Now that’s one spunky gal! The exploitation of women has, sadly, always been a lucrative business ["that’s not true--these women are liberated, not oppressed"]. First thing to do is check with the local zoning department to see if there’s anything that would prevent you from opening up a strip club. Also check into liquor licenses to see if you’ll be granted one, or whether BYO (bring your own) liquor will be permitted. [Not that I’ve been to too many strip clubs, but my understanding is that patrons prefer not to be stone-cold sober when some luscious T&A is shaking in front of them]. You will want to put into place a v-e-r-y careful employee screening process, as strip clubs have been known to attract some of the seamier elements (prostitutes, thieves, etc.). Finally, living in a military town could either be a huge boon or a bust–is this really something that the community will permit (or at least, not interfere with)? Give it some thought and plan it carefully.

Does your business have a privacy policy? If not, depending on your business, you could find yourself on the wrong side of the law . . . or of customer expectations.

Here’s a handy article with links to sites you should know, such as Privacy Rights Clearinghouse, plus six tips to keep in mind as you consider developing your privacy policy:

1. Take inventory of the personal information you collect and store. This also includes any trade secrets of other businesses that you may possess.

2. Analyze how safely you use and store this data. Don’t make it easy for hackers by scrimping on data security.

3. Make sure you’re complying with industry or federal laws. Strong privacy policies and practices may be mandatory if your business is governed by certain government or industry regulations.

4. Post a privacy policy that is clear and comprehensive.

5. Have your policy reviewed by an attorney or by a privacy seal program.

6. If you have employees, make sure their personal information is protected, too.

From the “mailbag,” here are this week’s three “letters”:

Q: I have a new business, mobile advertising in the area, and no one else has one. How do I introduce it to people so they can understand how effective it is, [more] than any other form of outdoor, radio or newsletter advertising?

A: You need to do some homework to determine how best to market your product to your prospective target market. You may be able to get guidance from your local industry association or business library on marketing techniques to come up with a concerted plan.

Q: I want to open a business such as a coffee shop, with a good portion of the profits to go to a nonprofit to support foster children. I would like to keep control of decisions but wish to get the most tax advantage. Would you suggest some ideas or where I might find answers?

A: You have two ways to make your contribution to the cause of foster children: You can make the contribution through your business, or you can distribute the money to yourself and make the contribution personally. The approach that will provide the better tax advantages will depend on your personal tax situation and the legal form of business that you choose. The most direct answers to your questions will come from a consultation with an accountant who is familiar with both business and personal tax structures.

Q: I have one good idea just like a discount card. Please tell me the procedure to get the patent right.

A: Wow. That’s such a big, open-ended question I don’t even know where to begin. “Like” a discount card? Is it a form of discount card? Or is it something else? What about it makes you think you need a patent? Get back to the books to develop a really clear idea of what you want to do and how you think you want to create a business around it; otherwise, you’ll be spending a huge amount of money getting general counseling from professional advisors that may not (ultimately) be as specific as you need to get the business started.