Making It Legal:

A morbid thought as I’m sitting here blogging on the date of my wedding anniversary . . . but what would happen to my business if I got divorced? (I know the answer. What if it happened to you?)

Many business owners spend years of their lives trying to build a business, only to find that their spouse (or soon-to-be ex-spouse) wrenches it out of their hands, and they’re left with nothing to show for their years of hard work. For those who have started a company but not yet married, there are ways to protect it in a prenuptial agreement. (Or, depending on the laws of your state, with a post-nuptial agreement after you’ve married).

People shy away from prenuptial agreements for similar reasons (I think) that they shy away from business partnership agreements: They’re afraid that preparing one will jinx the relationship, and they don’t want to spend the money because they’re convinced that nothing will go wrong. “We’re in love.” Yup, so were the other 40 percent to 50 percent of couples who are now divorced.

Similar to furniture, cars and real estate, you can provide that what you brought to the marriage will be yours to take from it, should the big “D” arise. In many states, you have a much stronger claim to your educational degrees (and the earning power that results), investments and business assets if you created/accumulated them before marriage rather than during marriage (when it’s often seen as marital property, and should be shared). You may also be able to protect the increased value of those assets over time.

I know this sounds horribly clinical and detached. But not long ago a marital relationship was viewed to some degree as a business proposition and a property exchange. Traditional Judaism, for instance, has long instituted the ketubah, a form of premarital contract that was designed to ensure that the wife (usually entrusted with the running of the home and not earning her own money) would be provided for in the event of divorce.

I have a prenup. It doesn’t mean that I love my husband any less or that I don’t want to share the financial successes of my company. But I want that sharing to be on my terms, because I willingly give it and bring that to the relationship. Not because I have to. Raising the subject with my husband (then my fiance) was v-e-r-y difficult and awkward for me. (And I’m blessed that he was understanding and reponsive.) But it also gave me important training in raising tough topics with him–and plenty of those arise in marriage. We faced the issue head-on, discussed it, hired the lawyers, resolved it quickly and filed the document away. At most, the process took a little more than a month.

Consider it. You get insurance to protect your health and your belongings; why not a prenup to protect your business assets? There’s no harm in consulting with a matrimonial attorney in your state. You may well find that having these conversations with your “intended” about your expectations brings a well-needed clarity to your relationship that wasn’t there before.

Aside from the “two sets of books” scenario that provides the fodder for tabloid headlines and old movies, I tend to think of bookkeeping as, well, mundane (apologies to bookkeepers nationwide as well as to my own, Debbie, who’s a real firecracker). Not something sexy, just something that has to get done. Like brushing your teeth or doing the laundry. Ho hum.

But Lynnea Bylund’s May Intelligence Report made me think differently about it. (Lynnea happens to be co-chair of the President’s Small Business Advisory Council.) Just look at the legal (and other) problems that can emerge because of lack of proper bookeeping:

• Losing income because you haven’t kept track of who hasn’t paid you.

• Not qualifying for a business loan because you have nonexistant or insufficent financial statements.

• Over-paying taxes due to overlooked deductions.

• Not being able to sell your business because you have no measure of what the business is worth.

• Losing sleep from stress and anxiety.

• Setting prices at a level that you think is profitable, but actually isn’t.

• Getting into trouble with the IRS or state tax agencies because of missed or inaccurate tax payments, or the inability to provide supporting documentation.

• Deciding to rent and signing the lease for a larger office, but not being able to pay the lease after three months because your financial projections were inaccurate.

• Getting into legal trouble because you are paying someone as 1099 contractor when he or she is in actuality an employee.

• Not focusing on the work and growth of a business because you have no system to accurately monitor its financial health.

• Spending nights and weekends trying to manage the books yourself without sufficient training or software.

• Missing opportunities for business growth and development because critical information is missing or inaccurate.

From the people you love to hate, the IRS is offering a phone forum on Wednesday, May 21. All you need is internet access and a separate phone line. For registration information, visit the IRS Site.

Here is what the forum will cover:

Learn what you need to know as a small business owner:

• Classifying workers as employees or independent contractors as determined by law, not the choice of the worker or business owner;
• Depositing federal withholding employment taxes, called trust fund taxes, according to the appropriate schedule;
• Making quarterly estimated tax payments to cover your own income tax and social security self-employment tax liability;
• Keeping good records to protect your personal and financial investment and to make tax filing easier;
• Considering a tax professional to help you with Schedule C;
• Filing and paying your taxes electronically; and
• Avoiding abusive tax avoidance schemes such as the IRS’s 2008 “Dirty Dozen.â€�

There will be a question-and-answer session after the presentation. Be sure you register and get your pin number for access. Times are listed on the link as well. Sign up now and put yourself and your business on the right path!

Thanksgiving is a day of gratitude, an opportunity to be with family. So on this family day, it’s somewhat fitting to have this post about family businesses.

If you are, or have any inclination to be, in business with a family member, there is a secret to ensuring its success. Some firms have been family-owned for thousands of years. Others have turned into major corporations. What will yours turn into? A thriving dynasty? Or a cesspool of squabbling?

As reported in CNNMoney.com (thanks to Investors Business Daily), although family-owned businesses represent about 85 percent of companies in the U.S., only about 12 percent survive to the third generation. Looked at another way, 88 percent of 85 percent of companies in this country either go out of business altogether or fail to stay within the family. That’s a huge percentage.

So what’s the secret to getting along? Having a succession plan. Not such an exciting secret, perhaps, but fewer than 70 percent of all family-owned companies have one, according to the article. A succession plan brings up issues that families don’t like to discuss, sometimes because they raise uncomfortable truths. Uncle Harry can’t be trusted with the bank accounts. Sister Sally is an incompetent. Cousin Carrie couldn’t care less about being involved in the business but might resent her Brother Bob’s windfall because he’s a vice president. These issues make Thanksgiving dinner a potentially uncomfortable event … and many families would prefer to sweep contentiousness under the rug. As a result, nothing gets planned, Grandma Georgina (who founded the company) remains a control freak unable to part with having a say in the business, the employees become thoroughly disgusted with the lack of direction, and the company goes mechullah (bankrupt).

Remember, family business has two components: family and business. It may be good family relations to avoid succession planning issues, but it’s not good business.

I’ve had a number of entrepreneurs come to me recently needing to make major changes in their business. Namely, they want out. Either they want to get rid of their business partner, their business partner has just shown them the door or they’re just plain sick and tired and want to sell (if possible). Other reasons that people have needed to “exit, stage left” (Saturday morning cartoon junkies “of a certain age” will get the reference) have included the joyful adoption of a baby . . . and the often difficult situation of caring for an ailing parent.

One that comes up less often–but deserves consideration–is what happens when you’re in the military? When you’re called into active duty, but the only person able to run the business is . . . you? What happens to your customers? What do you want to do with the vendors who supply your business?

According to the Dallas Morning News, there’s a new resource available to assist entrepreneurs with military obligations make these decisions. DeployProof.com provides a number of tips and tools, such as a questionnaire to help small-business owners determine whether to suspend their business or keep it running with the help of trusted friends or family, and links to other resources once a decision is made.

One of the challenges in owning a closely-held business is that it’s hard to get a day off. That’s come to mind for me as I’m en route to California for the rest of the week to attend Peak Potentials’ Train the Trainer workshop. I’ve been salivating over this program since I registered for it 5 months ago, and now the time has come! Friends of mine who have taken it call it “profound,” “mind-blowing,” and “a complete mind-shift.” They also caution me that “you’ll be going from 9am to midnight” and that “there’s little room for bathroom breaks, let alone time to check for voicemail.”

It’s that latter part that concerns me (although the prospect of long lines for the ladies’ room is not an attractive prospect, either). How can I keep my office functioning — and keep meeting my client obligations — when I’m tied up with other things? Here’s a couple of tips for making sure you stay on top of your client deadlines:

1. Let people know in advance. Yes, you’ll work like a dog before you leave (I just had to reschedule a lunch meeting and a session with my personal trainer because what I needed to get off my plate was going to take longer than the time I had alloted) — and you’ll work like one when you come back. But the sooner people are aware that you won’t be available, you’ll find — almost miraculously! — that their schedules have changed, too. That oh-so-urgent contract that they wanted you to review while you were in the airplane is now being held up another 10 days by the other’s attorney.
2. Cultivate CYA colleagues. Who can handle emergencies for you while you’re away? I’m fortunate to have a business partner who fills that role for me. Certain employees can take that on, if they’re properly trained. Or, if you’re solo, make it a point to develop a close relationship with a similarly-situated colleague so that you can each step in to hold down the fort for the other in the other’s absence. You know the kind: the “can I pick your brain for a minute?” kind of colleagues who will generously give you 30 minutes of their time when you would have been eternally grateful for merely 10.
3. Get wired. If you don’t have anyone in category #2 to fill in for you, it may be a little more difficult for you to detach. Maybe you’ll need to bring the laptop to the beach; maybe you can get away with just the BlackBerry. Either way, make sure your vacation messages are set and that your voice mail gives adequate information about how to reach you — or how often you’ll be checking in.
4. Set boundaries. Whether you’re on vacation or in a workshop (as I’ll be) or just need quiet time with an ailing parent, there’s no reason that technology needs to be intrusive. Set particular times of day that you’ll check and return messages and keep to it. That way, you won’t feel the constant pull of checking in.

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. 

For any number of reasons, “going green� is gaining steam.  And whether your idea of going green strictly pertains to the environment, or reflects a social consciousness that you want your company to espouse, there are ways to make it happen. 

For ideas on how other women entrepreneurs have created a business structure around “done well by doing good,� have a look at my WomenandBiz.com article, “Green, Global, or Just Plain Good: Cause Marketing and Socially Conscious Companies.� 

And if you’re definitely focused on “going green,� check out Bootstrapper’s “The Green Entrepreneur’s Toolbox,� with 100 networking resources, guides, and links!

You betcha you do!  Home business, office business – doesn’t matter.  If you’re in business, you should have it.  Like the old American Express tagline, “Don’t leave home without it,� I caution entrepreneurs not to go into business without it.  Particularly as many of them prefer to operate as sole proprietorships, in which case their personal assets are at risk in the event of any problem or calamity.

And make sure to read the article, “Do You Need Insurance for Your Home Business?� by George Devendorf on the Professional Insurance Blog.  It provides the very apt example of an eBay entrepreneur . . . and you’d not be alone in thinking, “Everything’s online!  What would someone like that need insurance for?�  Read on to find out why.

Happy Independence Day!  Entrepreneurs are blessed with a wonderfully independent, can-do spirit, which deserves to be celebrated.    But sometimes, that independent streak can cross over into just plan stubbornness, or controlling behavior. 

So my interest was piqued by Jeremy Fain’s post, 2 Entrepreneurial Worst Practices.  He points out two “worst practices� that get in the way of business growth: 

1.                  Doing your bookkeeping and legal work on your own (okay, so that one is near to my heart), and 2.                  Not committing full-time (in other words, having outside employment as well). 

What do you think?  In the meantime, I’ll be toasting (not toasted) your independence!

The official start of summer will soon arrive, and with it, millions of high school and college-age students available to help out in your business.  Your eyes sparkle with the thought of getting staffing help at reasonable rates (read: cheap labor), which can give your business the boost that it needs.  Good, cost-efficient idea, right? 

Not necessarily.  Using workers in your business without paying them could run you afoul of the Federal Labor Standards Act, which does not take a kind view of having people work for no pay (slave owners did that, remember?).    As the New Jersey Star-Ledger reported, there are six criteria that an internship needs to meet in order to be properly viewed as an internship and not merely as unpaid work:  ·         The intern must receive training similar to what he or she would receive in a vocational school

·         The training must be for the benefit of the intern

·         The intern must not be displacing a regular employee — in other words, doing a regular employee’s work

·         The employer has no “immediate advantage from the activities” of the intern

·         The intern is not necessarily entitled to a job at the end of the internship

·         Both the intern and the employer understand that the intern is not entitled to wages (although the student may be able to receive a stipend). 

And be especially careful if you are using workers under age 18.  To make sure you don’t violate federal and state human right laws, (1) make sure you are working with a reputable school program that understands the appropriate guidelines (don’t just pick up any ol’ student off the street), and (2) double-check with an attorney to ensure that you’re on the right path.

Many thanks to attorney Anthony Cerminaro’s BizzBangBuzz blog for bringing this tidbit to my attention.  This handy article, which appeared in Business Intelligence Lowdown earlier this year, lists 101 common sense management tips for entrepreneurs.  What floored me was that all 101 tips appear in the article (and not in a link to purchase a book for $197.00)!  :-)