4 Ways to Scrape Up Extra Funding for Your Business

By Lisa 0

Searching for additional funding for your business can feel like a business within itself. With so much information available, it can be overwhelmingly time-consuming to comb through it all to figure out which sources are credible and worth your time. Read on to learn four ways you can find extra funding for your business. 

1. Business Grants

Funding your business through business grants is an often-overlooked option. Grants are different from loans in that they do not have to be paid back, which can make them very appealing to some. However, applying for a grant can be a lengthy process of quantifying on paper why you are the best candidate for the grant.  In order to qualify for a grant, it’s best to hone your writing skills or hire a professional grant writer. 

It is also wise to search for grants on an ongoing basis rather than wait until you are desperate for money. Similar to school scholarships, grants come in all types and amounts, and each one is specific to the demographic it is meant for. When searching for grants, it is common to come across scams, so the best place to look for grants is on an official government website.

Resource: https://www.valuepenguin.com/small-business/small-business-grants 

2. Business Loans

Business loans can be a good source of funding for your business, but you should be careful. As a business owner, you need to know yourself well and decide if you are comfortable taking on debt that you may be personally responsible for.

One of the main reasons people apply for business loans is because they need the money to scale and have grown beyond their ability to fulfill orders. Always have your paperwork in order with your current data so that you can expedite your loan application process as soon as possible. Along with having a good credit score, you may have to meet additional requirements for having been in business for a certain length of time in addition to generating a certain level of revenue. 

Resource: https://sunwisecapital.com/bad-credit-loans/ 

3. Angel Investors

An angel investor is usually one person (as opposed to a hedge fund) who provides capital to businesses they believe in. While angel investors are wonderful to have, you cannot risk your business by depending on one. Finding an angel investor is as easy as searching the web, but the hard part is scheduling an opportunity to pitch to them and then nailing it.

Additionally, the financial blessings of angel investors often come with strings attached.  It is seldom free money. The terms of the investment vary for each situation. However, usually the investor becomes, at the very least, minimally involved in your business.

Think of an angel investor as similar to a hedge fund in the sense that you are beholden to the initially agreed-upon terms.   

Resource: https://donnagriffit.com/guides/the-ultimate-guide-on-how-to-find-an-investor-and-get-a-meeting/

Crowd-sourcing

Funding via crowd sourcing is not just for musicians and artists. Over the past decade, crowd-sourcing has become a respected avenue for acquiring business funding. Consider using government websites for crowd sourcing education in general, and then begin with Kickstarter as just one example of the format.

Resource: https://digital.gov/event/2019/04/09/federal-crowdsourcing-mobilize-citizen-scientists/ 

Now that you have a little more information about where you may be able to find additional money to fuel the needs of your growing business, go out there and get searching. 

Need more assistance setting up your new business? Consult Lum Law Group about legal complexities that might affect your business!

4 Assets That Can Help You Scale Your Startup

By Lisa 0

Just because you have a small-scale business operation doesn’t mean you have to forego a professional look and feel. In fact, securing a professional appearance is essential to the successes of all small businesses. Consider using these four assets to help your small business project a confident and high-level demeanor.

A Professional Phone Number

Voice over internet protocol (VOiP) is a technology that allows you to use broadband internet to make telephone calls. Using VoiP will provide you with cost savings and other advantages. One of the biggest advantages is that you can talk to your clients from anywhere in the world as long as you have an internet connection. VOiP services generally have excellent phone connections and can be bundled with other services such as voicemail, fax, caller identification, call forward, last number redial and more.

Small business owners may also consider purchasing a toll free line (subscription) to give your business further credibility.

A Professional Business Presence

Even if you’re operating out of your home, you can use a virtual office to direct mail to a real business address. The appearance of a physical business location will go a long way toward establishing the power of your brand.

Entrepreneurs have several choices in this matter. If you work completely on your own, you can share a co-working space with one or more individual. Many co-working spaces also offer mailing address only services for a fraction of the cost of having conference room and shared space access. Other options include setting up a virtual mailbox online that will provide you with a physical mailing address. Vitrual mailbox services provide alerts when it receives physical mail on your behalf,  allowing you to manage your mail online. 

A Powerful Web Presence

A website isn’t a luxury, it’s a necessity. However, these days it is not just enough to have a website.  You need a website that will help potential clients to identify your brand. A website with an attractive design, informational blog posts and other key elements will help establish your small business as a local authority in your industry.

A Loyal Network

You are your own biggest asset. What you know and how you keep your customers happy is, perhaps, the biggest factor in scaling your business. By providing the best possible products or services, you’ll keep customers happy.  By keeping in touch with your previous customers and bringing them back as repeat customers, you are forming a network around your small business.  Doing so can lead to word-of-mouth, or testimonial marketing, a recognized economical method of getting more customers.

Remember that every business was once a startup. The key to scaling it is to wisely use assets available to you, including your own talents. 

If you’re growing your business and need legal advice, we’re here to help! Contact us today to discuss how we can help you.

Why the Order of Business Matters

By Jessica Suotmaa 0

Did you ever wonder which came first, the chicken or the egg? Similarly, you may have wondered if you should be filing your company with the State or with the Federal Government first? Or perhaps they’re just one and the same?

They are not.

There is an order which you should follow, but consultants offering quick and helpful tips will tell you to register for a tax identification number first. After all, if you’re a small business owner just getting started, you need your tax id to open a bank account and give to vendors to receive payments. Obtaining a tax ID may be your primary concern and all that other paperwork can be handled by them.

Note: Most banks require your State registration documents to open a bank account.

You pay them to set up the tax ID for you, and you don’t hear back unless there’s a problem–but usually there isn’t and you obtain your tax ID immediately.

Note: You can apply for a business tax ID for free on the official government website.

Then a month later, you may discover that you cannot use the name of your business. Someone else has already claimed it but you didn’t know because you didn’t check the name on your local State’s Secretary of State website.  It’s a quick and free search that prevents you from pursuing registration for a name that is not available to you.  In other words, it prevents you from wasting time and money.

So now what? You have to change the name on your tax ID because it doesn’t match. You may have to change website domain names, email names, logo designs, business cards, and other promotional material in which you’ve already invested.

Not ideal.

To avoid a situation where you have to back track, start the process the right way.  The correct order for starting a business in California is as follows:

  1. Determine your business needs by the type of business you’ll be doing.
  2. Talk to a professional (such as an attorney) about the best way to organize your business (e.g. partnership, LLC, corporation).
  3. Decide on the organization and tax methods.
  4. Decide who will be the primary responsible person.
  5. Decide on a company name, trade name or “doing-business-as” (DBA) name.
  6. If applicable, search the State’s Secretary of State business website for the business name of your choice.
  7. If the name is available, prepare documents for registration.
  8. Pay applicable fees.
  9. Wait for the documents to arrive.
  10. Apply for the Employer Identification Number (EIN), aka “tax ID”.
  11. If applicable, order a copy of your corporate book.
  12. If applicable, order your marketing materials.

Starting a business can be challenging. While it’s tempting to allow companies that offer package deals to do-it-all for you, it’s important to realize you need to know what they are doing for you. Is it to your advantage? Will your business outgrow the model? Is the organization or tax method appropriate for your type of business? Consult a business attorney for professional advice.

3 Interview Questions to Stop Asking in California

By Jessica Suotmaa 0

If you’re a small business owner who isn’t accustomed to hiring, you’re probably unaware that many of the common interview questions from “back in the day” are now illegal to ask in California. We’ve divided this article into two sections: the three questions you need to stop asking now, and the three questions you should’ve stopped asking yesterday. Read on for how you can protect your business from employment discrimination claims.

Stop Asking These Questions Today!

1. “What are you making now?” Or, “How much were you making at your previous position?”

Remember when job ads would require a “five year salary history” in the cover letter? Those days are gone in California.

Previously, hiring managers might ask how much a job candidate was making, or is currently making, and decide which candidate would be the “cheapest” to hire.  Hiring managers may also offer different compensation packages based on current or prior salary history. As a result, if there was a wage gap between men and women, that wage gap was further increased with each new job offer.

California passed AB168 in 2017, which went into effect January of 2018, prohibiting employers from asking for a “salary history” or inquire how much a candidate is or was making at a previous position.

Note: If a potential hire reasonably requests a “pay scale“, you are required to provide it.  AB2282 clarifies that a pay scale is a salary or hourly wage for the open job position and does not have to include bonuses or other benefits.

2. “Have you ever been convicted of a crime?” or “Check here if you have criminal convictions.”

Gone are the days of asking an applicant about their criminal history at the interview.  California requires employers to discover any criminal history in the background check process. The bill, AB1008 was signed into effect in 2017 following the lead of San Francisco and Los Angeles cities, banning employers with five employees or more from asking about a candidate’s criminal history on job applications.

You don’t begin the background check process until after you have extended an offer of employment. You cannot run a background check before offering the position to the candidate.  If the background check results prevent you from hiring the candidate, you are required to follow these steps:

  1. Inform the candidate of the results and explain why you’re rescinding the offer.
  2. Provide a copy of the background check report (if available).
  3. Allow the candidate five (5) days to respond and defend themselves.
  4. If the candidate responds to the decision, you are to wait five (5) more days to consider his or her defense.

Note: The exception to the rule are employers who run medical facilities and hire employees who have access to drugs.

3. “How’s your credit score?” Or, “Will you consent to sharing your credit report?”

Where previously potential employers could obtain an applicant’s credit information as part of the on-boarding process, California now limits it to certain occupations.  You can no longer slip in credit consent forms into the offer package, nor can you judge a candidate’s hire-ability based on their credit report.

California limits the use of credit history in employment decisions, but does not outlaw it.  The following are exceptions to the rule:

  • Department of Justice employees
  • Managerial position
  • Peace officer or Law enforcement officer
  • Any position wherein a credit check is required by law
  • Position wherein an employee would regularly access credit card information
  • Position where an employee is a signatory for an employer’s bank or credit card account, or authorized to transfer funds
  • Position that involves access to confidential or proprietary information
  • Position that involves access to $10,000 or more of cash.

 

Are you not sure what you can ask now? Do you have questions about your job description? Contact us today!

 

4 Characteristics of Wildly Successful Startups

By Lisa 0

If you’ve studied successful startups, you might think that what makes a startup take off or remain permanently grounded is just luck–or a fluke. While all startups are unique, and there’s no guaranteeing that one will be a success, there are certain characteristics of startups that help them succeed better. Here we list the characteristics that every successful startup needs to ensure they cover.

Location, Location, Location

Where you place your startup is of great importance. Entrepreneurs should take into account several factors, including the visibility of signage, rent, utilities, and the relative safety of the area. This isn’t just a matter of choosing the right neighborhood in your city. It’s also about choosing the right city. You want to make sure your startup is located in a city that will be conducive to its growth but not so competitive that it’ll be washed out. Even if your startup is based online, you still need to consider practices like choosing shorter domain names and having a worthwhile host.

Business Sense

A startup can really teach you about the ins and outs of running a business. However, while there’s plenty you’ll learn through trial and error, there’s plenty more that needs to be grasped before you open your doors. As a startup founder, you should have a thorough comprehension of basic budgeting, hiring needs, and marketing. Be sure to hire people who have at least some startup experience.

Pacing

The most successful startups didn’t start raking in mountains of cash overnight. They got to reach their impressive heights because of discipline. As much as you might long to be a smash right out of the gate, you need to work your way up the ladder of success. Make a multi-year plan of things you hope to accomplish by certain dates. This will help you know what to strive towards. Then you can follow the steps and check-in with yourself regularly. Remember, consistency is key!

A Strong Legal Foundation

You need to consider what sort of business you want your startup to function as. You could be an S-corp, which lets owners and workers share income easily but caps the number of allowable shareholders at 100. You could be an LLC, which allows business assets to be kept separate from personal ones in the event of financial hardship, but you’ll have to cover self-employment tax. You could be an LLP, which can be more cost-effective but are restricted by some states. You could also be a proprietorship, which gives you singular reins of your organization but which makes you culpable for any marks on the business. This is a decision you shouldn’t make lightly.

When creating a startup, entrepreneurs can get stuck on having the most innovative idea above all else. While that’s certainly important, they shouldn’t forget about basic standards to follow. All of these characteristics are common among successful startups because they are sensible and important when it comes to sustainability.

Before you go anywhere with your startup, you need to make sure that you have all your legal bases covered. Lum Law Group would be happy to answer your questions and help your new business get started!

 

Is Your Passion a Side Hustle aka Business or Just A Hobby?

By Jessica Suotmaa 0

While the term “side hustle” has become the new description for “gig” or “moonlighting” for professionals who try to earn an income on the side, the term itself does not mean it’s a business.  Why does it matter if it’s a business or not? Why does it matter if your cupcake blog, youtube vlog, or instagram influencer campaign is making any real money? The answer is that it doesn’t, until you have to file federal income taxes with the Internal Revenue Service (IRS). Come tax season, you should know if your side hustle is a legitimate business or just a hobby you are passionate about.

Why You’d Want to Have a Business

If you’re still not clear as to why you’d want your side hustle to be considered a legitimate business for tax purposes, then it’s time to brush up on deductions.

When you have a business, even if it’s a gig you do on the side to supplement your income, you tend to have expenses. Those expenses could be your space, your time, your equipment, the dollars you spend at a coffee shop to get work done outside the home, or advertising.  If you’re hustling on the side without it being a “business”, those costs eat into your profit margin.  You still have to report your income, but you can’t deduct any investments, expenses, or losses.

If you have a business, then suddenly you can deduct your startup expenses, your losses, and you can even rollover your losses to a previous or future tax year to reduce your overall tax burden.  In short, you can pay less taxes.

Is My Hobby a Business?

Generally, the IRS determines your side hustle or freelance gig is a business if it meets these five requirements:

  1. You dedicate sufficient time and effort into the “business”.
  2. You have the ability/skill/certification necessary to run the business and make a profit.
  3. You perform the side hustle for the purpose of earning a profit.
  4. Your side hustle generates a profit in three out of the last five years.
  5. If you do not make a profit, you make changes to improve your profitability.

What this means is that if you have a side business that doesn’t make a profit in the sense that you spend more on materials, equipment, and space, causing you to actually lose money or not earn much from your business, then it is a hobby.

A good example is someone we know who has a full-time job, but on the side makes soap to sell online.  She has a designated space in her home where she has her office and “laboratory” for making soap, so she deducts rent/loss for her space as a business expense.  She would also deduct her expenses, such as soap materials, equipment she needs, and all costs related to her online sales.  After deducting all her expenses, it turns out she’s really not making much out of her essential-oil all-natural soap business.  However, she enjoys making soap. It’s a calming activity that is like meditation for her.  If our friend does not improve her strategy, reduce her expenses, and sell more soap so that she can earn a profit, she stands to lose her deductions and owe full taxes on her hobby income.

Don’t Let Your Startup Become a Hobby

When founding a startup, it’s important to keep in mind that if it’s too hobby-like, and doesn’t generate a profit in two years, then you may lose your business deductions and owe federal income taxes.

Have questions? Talk to a tax law specialist today!

Scheduling a Meeting for Your Startup? 3 Locations to Consider

By Lisa 0

Startups already have it tough without having to worry about where to meet–those coffee house meetings get expensive after a while. Entrepreneurs have enough on their plate, between gathering financial resources and pitching projects, to have to worry about what address to send people for the next meeting. If you have a startup, you understand all of the struggles that are prevalent in the early days of a business, and how much you need a place where you can come up with solutions to your problems quickly with your partners and employees. While you might not yet have an office space to hold your work meetings, there are plenty of places available for meetings. We’ve compiled a list of a few of the best ones below.  

Library

The public library is one of the best places to hold meetings for your startup. First of all, in many public libraries, you can reserve private rooms. Secondly and even more importantly, you have access to lots of information that you can either find in book format in the library or order from another one. You also have access to wi-fi and even computers if you don’t have enough. Another option is a university library, which will give you access to an even larger amount of resources, but a public library will suffice if you don’t have access to a university library. A couple of the few downsides of using a library as your meeting place is that your meeting location might change depending on the other events that the library is holding, and university libraries might have more restrictions on who they allow to use their resources.

Meeting Room

Reserving a meeting room at a conference center is another option. Like a library, you’ll have access to wi-fi, and you might even have access to their computers. This option is also great because they are used to having people use these spaces for the very purpose of holding meetings. A formal meeting room has access to business tools and technology as an added bonus. This option can be less than desirable, however, if you need to pay for it, and it won’t give you the same level of access to information that a library will give you.

Chamber of Commerce

Your local Chamber of Commerce might be a great place to hold a meeting. First of all, if you have a membership, a meeting room should be free. It will have wi-fi, and it also has rooms that are designed for work meetings. But you’ll need to check with your local Chamber of Commerce to find out which rooms are available and if there’s a fee if you aren’t already a member. There are also Chamber of Commerce membership benefits that could make it worth your while to join.
While you have a lot of hurdles to overcome as a new business, there are a lot of resources available. Check out your city, and then make a decision based on your needs.

For all your business law needs, get in contact with Lum Law Group and see how we can help!

3 Things You Can Do to Make Interviewing Job Candidates Easier

By Lisa 0

While startup founders are well-known for their skills in selling their business, they’re also known for being smart about hiring.  Small business owners, especially long-term owners or new entrepreneurs, may not be as hiring savvy. If you’re new to the hiring process, here’s a few strategies you can employ for a more successful interview. 

Prepare to Sell the Position

A job interview is a two-way street. The candidate is interviewing you every bit as much as you are interviewing them. You will need to give a candidate a reason to want to work for you, knowing that they may have several employment options available to them. In order to prepare, you should figure out ahead of time what the selling points of your organization are and prepare an elevator pitch.  Rehearse how to work them into the interview. Expect that every candidate who walks in the door will be the right candidate for the job and be ready ahead of time to seal the deal.

Prepare Questions Beforehand

Job interviews are generally not very long. Before you know it, you are saying goodbye to the job candidate and sending them on their way. Wasting time during an interview helps neither you nor the candidate.  By taking some time before the interview to plan the flow of the interview and the questions you’ll be asking, you can use the scheduled time more effectively.  Just like you can sense that a candidate came unprepared, they can sense the same of you.  Not only does a little preparation go a long way to making a good impression, it also helps to guide the conversation. Come up with a few questions that you believe will give you a sense of your candidate’s abilities. It’s also a good idea to know who you can and can’t hire.

Practice Active Listening

President Lyndon Johnson once said, “You aren’t learning anything when you’re talking.” This holds true when you are conducting an interview as talking too much is one of the common mistakes that interviewers make. While you want to sell your company, an interview is also your chance to see how a job candidate handles certain situations and responds to pressure. It is difficult to get a sense of the candidate when you are the one who is doing all of the talking. At the same time, practicing active listening does not necessarily equal silence as it is possible to listen and still participate in the conversation.

By knowing ahead of time how best to conduct a job interview, you can go a long way to ensuring that interview will be productive.  A good job interview helps you schedule fewer interviews, spend less time interviewing, and ultimately find the right candidate quicker.

If you would like share your interviewing tips and experiences with other new employers, please comment below!

mompreneur asks

By Jessica Suotmaa 0

A “Mompreneur”, a mom who is also an entrepreneur, recently asked how she can lock in her business name so that no one else can use it. She is in the early stages of starting her business and isn’t ready to have a sign on the door or even a website.  She had many, many questions regarding her logo, her business name, other business names and logos, which basically came down to how she can create the brand she’s visualized without legal ramifications.

While answering her questions, we realized these may be common questions that start up entrepreneurs and new small business owners ask.  We decided to share both her questions and our answers in this blog for your reference.

Note: Our Mompreneur’s anonymity is fully protected.

Question: I know what my business will be about. I have a name picked out and two design ideas but I wonder:

  1. Does it make a difference that the name I want is used in a different industry? Can I still use it?

  2. One of the designs looks similar to a design used by a foreign company overseas. Can I still use it?

  3. How can I lock in my business name so that no one else can use it?

  4. I’m not ready to have a website yet, but I want to set up my Facebook Business Page. How can I reserve the website name so that others can’t use it?

Answer: It sounds like you are well on your way to starting your business!  Startups require much thought and it’s great that you’ve started on the online branding already.  However, the order in which branding occurs is important for legal purposes.

To properly answer your question on the business name, we would need more details, such as the name you have in mind and the businesses and industries of said businesses that already use your chosen name.  There are many ways to answer this question and to give you an idea of what the different ways might be, here’s what we would typically ask:

  • Have you registered a business entity for your business idea? Do you plan to? Do you plan on using your brand name as the business entity name?

    • You can go on California’s Secretary of State website to look up your chosen business name and see what businesses (if any) have already registered your chosen business name in the State.
    • The State will not allow you to register the same business name as an existing active business entity, even if in different industries.

  • If not, do you plan on registering a trade name or “doing business as” (DBA) fictitious business name?

  • Would you like to trademark your business name?

    • If you really want to protect your brand, then we would recommend trademarking your business name and logo.  Start by searching the trademark database to see if your chosen business name is already in use.
    • You can trademark your desired business name even if another business is already using that name, provided they are in a different industry with dissimilar products/services.
    • You should have begun using your desired trademarks in commerce prior to registering.
    • A trademark will prevent others from using your registered business name, or names and logos that are similar to your registered trademarks. If it does not, then at least you will have legal “weapons” to protect your intellectual property.

Once you have the strategy down for your business, then start searching website domain names and finishing up that Facebook Business Page!

If you need assistance with any of the steps above, a good business attorney specializing in small businesses and startups can help analyze your specific needs and provide insight and help. Contact one of our experienced business attorneys!

 

5 Things to Consider when Choosing a Co-working space

By Jessica Suotmaa 1

We at Lum Law Group know many who have ventured into the modern world and signed up for the modern working space.  Instead of hiring an agent to find a traditional office space, negotiating a one to five year long lease, and waiting months to move in, a co-working space can start you in their offices as soon as your credit card payment is processed.  Still, a newbie entrepreneur or small business owner might wonder, what factors should I consider when choosing between renting a traditional office space and signing up for a co-working space? As such, we have rounded up our thoughts into this listicle for your convenience.

1. Length of Obligation

Traditional office leases require at least a one year commitment with a few months deposit.  This can be a hindrance for an entrepreneur, startup owner, or small business owner who is unsure of how much space is needed at the beginning. You might want to upgrade your facilities after a few months when you hire an extra five employees.  You might need larger co-working spaces for planning and meetings.  Perhaps your employees would prefer more space for leisure activities you didn’t consider before.  There are many reasons why a business owner might realize a larger space is needed, but the traditional office lease does not afford such flexibility without loss of deposit and possible fines.

A co-working space is often associated with a “desk” or couch space in a large warehouse-like open area where freelancers can drift about.  These days, the term “co-working space” is interchangeable with executive suites where a lessee rents an office and shares the remainder of the space.  Where an executive suite contract may require a few months to a year, a co-working space is often on a month-to-month basis with little to no deposit.  The commitment is flexible and you can upgrade from a shared open space to a desk, to a small office, to a large office any time you feel it’s necessary. Decide you don’t like sharing a conference room with other tenants?  Move to your own space! The co-working space allows you to adjust and pivot when you desire.

2. Financial Obligation

As mentioned above, traditional office leases can cost more in desired downtown locations and require a high deposit depending on your personal or business credit rating.  However, a co-working space often requires little to no deposit, and starts at rates of $100 a month, depending on location. Since there is no minimum length to your contract, the financial obligation for a starting business is especially low.

3. Your Business’ Online and Offline Presence

Traditional offices offer businesses exclusivity.  You can have your business name on the street corner, on the first floor, on the list of businesses, on your door, etc.  Some may consider this a requirement for a “legitimate” business.  Most co-working spaces cannot offer this, though some executive suites may be able to put your business name on the front door or waiting area.  If you rent a private office at a co-working space, then you can place your business name on the door (or beside it), but it depends on the company offering the space.

Online Presence can be an issue for executive suites and co-working spaces without suite numbers.  On Google Business, for example, a business name, address, and phone number is associated with a location.  When an executive suite has multiple businesses registered at one location, then it’s possible that when searched online, only one location phone number will show up.

If another business at the same location of yours hires a marketing company and has especially good SEO, then it’s possible your company will be overshadowed by theirs.  Clients may call the first number that pops up and expect to be transferred to you, the way executive suites traditionally work.  In this case, the potential client may struggle to reach your business via phone, and even mail can easily be misdirected.  This is especially true if there are multiple businesses offering the same service, e.g. law offices, CPAs.

 4. Networking Opportunities

When a traditional business owner at a traditional office space wants to network, they have to seek networking opportunities through their friends, acquaintances, and clients.  They often join professional organizations, become board members, or sign up for classes. The traditional business owner has to leave their office in order to network, while the modern business owner networks everywhere.

Co-working spaces offer networking opportunities just by definition of being a “co-working space”.  To the savvy networker, this means you have more opportunities to strike up conversation with other professionals in a variety of industries, thus expanding your network.  Since co-working spaces often offer soft drinks, including coffee and tea, it’s easy to “grab a coffee” with someone who happens to be reaching for coffee when you are.

More importantly, to the business owner who is less savvy at networking, many co-working spaces hold weekly and monthly events.  These events might be industry targeted, they might offer professional education, or become opportunities for you to showcase your experience and skill set.  Many co-working spaces offer these events for free to their members, but charge a fee to outsiders to offset their costs. This means you have opportunities to meet people outside the co-working space.

5. Security and Privacy

A traditional office offers business owners privacy in that they have control over who is on the premises, the hours of operation, and the wireless internet cyber security protocols.  These are factors that are of utmost importance for certain industry professionals.

The large, open-space co-working space doesn’t offer much privacy if you haven’t subscribed to a private office or scheduled a conference room.  This could be important in industries where confidentiality and client privacy are important even if you’re just on the phone or typing an email.  There are co-working spaces that now offer private, sound-proof rooms for solo use.

 

If you’re still on the fence as to whether you should consider a co-working space or a traditional office, contact Lum Law Group to speak to an experienced attorney.

Top 3 Differences Between a Sole Proprietorship and a Single-Member LLC

By Jessica Suotmaa 0

If you’re a one-man (or woman) business, you might wonder whether you should continue operating as a “sole proprietor”, or register as a single-member Limited Liability Company (LLC). Since both business entity types are for a single owner, we will cover the top three items you should consider in deciding between sole proprietorship and single-member LLCs.

1. Costs

Sole Proprietor: The cheapest way to start a business is to “be” the business as the owner of a sole proprietorship.  You could obtain an Employer Identification Number (EIN) for free (for banking, payroll, and tax purposes).  As a sole proprietor,  your name is your business. However, if you want to “do business as” another name, you can obtain a fictitious business name for a fee through your county.  You would not have to register your “company” officially through any channel or pay any maintenance fees.

Single-member LLC: This is not the case with a LLC.  To register an LLC with your local State, you would have to pay registration fees and file Articles of Organization.  Depending on your organization, you will also have to file annual Statements of Information (for a fee). In California, an LLC pays a minimum tax of $800 a year.

2.Taxation

Sole Proprietor: As a sole proprietor you would report your income and losses on your personal tax return with Schedule C and itemize when necessary.

Single-member LLC: Since LLCs are not federally recognized as separate entities, LLCs are taxed as one of the other entities: disregarded single-member LLC (sole proprietorship), partnership (if more than two members), or corporation. As a single-member LLC, you cannot elect to be taxed as a partnership, but you can choose between sole proprietorship and corporate.  To be taxed as a corporation, you would need to file a separate form with the IRS.  If you opt not to do anything, you will default to sole proprietor taxation.  To be taxed as a sole proprietor means you would use one of the Schedules and file with your personal income taxes.

In California, LLCs electing to be taxed as corporations have no annual fees. Whereas, an LLC taxed as a partnership or sole proprietorship will have an “LLC fee” if its income is greater than $250,000.

3.  Liability

Sole Proprietor: Since a sole proprietorship means you are your business, it also follows that your business’ income and debts are also yours.  This simplifies your tax preparation, but it complicates your liability.  If your business goes bankrupt, you go bankrupt. If your business is sued by a customer or employee, you are personally sued in the process.  If your business loses all its assets, you could lose all of your personal assets.  Probably the most significant reason small business owners choose to register an LLC over sole-proprietorship is to protect themselves from full liability.

Single-member LLC: A limited liability company means, quite literally, that is offers limited liability protection to its members.  Each state has different limitations and rights afforded to LLCs, so its important not to just read an article on a generic website or service, but specifically refer to California Corporations Code.

An LLC protects its members from outside liability suits, but it does not protect from internal suits, meaning members can sue each other for e.g., profit losses. However, this protection is not all-inclusive. In some cases such as personal negligence, LLC members can lose their personal assets. In other cases, external creditors can obtain your shares in an LLC, or your share of the profit distribution.

Note: It’s important to note that one of the main differences in operating a sole proprietorship and an LLC is the separation of personal and business funds.  As a sole proprietor, you don’t have to keep close records of your business funds. However, as a member of an LLC, you do need to keep your business funds and expenses separate from your personal funds. If you fail to do so, you may lose your liability protection.

 

If you are unsure as to whether you need an LLC, or if another type of business entity would better suit you, contact an experienced business attorney. You may also want to contact an insurance representative to discuss liability insurance.

5 Scams Every Small Business Owner Should Know

By Jessica Suotmaa 0

At the end of the year, many small businesses take stock and plan how to do better in the next year– much like how individuals check their bank accounts and step on their scales to see how they can improve those numbers come January 2019.  The desire to improve is commendable. Yet, where large companies have skilled experts on their payroll to apply tried-and-true strategies, small businesses don’t.  They rely on external professional opinions. As a result, scammers tend to target solo entrepreneurs and small business owners.

1. The “You don’t know anything about SEO or websites” Scam

Nearly every day, we get an email from someone who claims to be an SEO expert.  Granted, a few of these professionals might actually know a thing or two about SEO, but even they make their services sound too good to be true.  These professionals will inform you that if you knew SEO, or had a better website, you would have more customers.  Your website would rank higher on Google Search Results.  Your business would get more exposure, which then would result in more sales, or clients, or fame.

The truth is that you don’t know if they have SEO skills. You don’t know if their website design is better than your current one, or the one you were thinking about designing.  The SEO scammer knows you lack the internet knowledge to question their scam, and will send you “personalized” reports that they can generate with a click of the mouse.  These reports are copy pasted information that will tell you all the things you need to improve–for a price.  All your problems can be solved by throwing money at them.  Don’t forget to ask them how much.

2. The “You Deserve An Award or Feature” Scam

Back in the day, scammers used to sell “directory listings” as a way for small business owners to gain exposure and new clients.  The SEO scam is a modern version of that scam, but there is another scam that is similar: the “Congratulations! You have been featured” scam.

In this scam, you receive an email or phone call about you, or your company, has personally been selected to be “featured” or awarded something.  The scammer provides a lot of details on the publication, company, or organization that is granting you this great honor, and asks you quite a few questions about when you would like to be “honored”.  At the end of the conversation, they will give you a price.  It’s usually a few hundred dollars for an award and a few thousand dollars for a feature.

Many small business owners will think of it as an “investment”, thinking this cost will be offset by the respect having that plaque or print magazine feature hanging on their wall will buy them. If you feel the same way, that’s fine with us, but we think it’s cheaper to self-publish.

3. The “You Can Be Like Me” Scam

The modern day “You Can Be Like Me” scam is usually done by an “influencer“, someone who is popular, has a wide following, and is able to use his or her influence to sell products and services.  First of all, there are plenty of influencers who are not who they say they are, but there are also influencers who are not as wealthy or successful as they claim to be.  They use their popularity to gain free products and services from businesses in exchange for reviews and exposure.  On an initial level, a small business owner can be scammed by a person who claims to be an influencer, but actually only has fake followers. That’s why there’s no ROI.

On a second level, the influencer will sell coaching programs to teach ordinary people how to become like them.  When they target small business owners, or aspiring entrepreneurs, they will highlight how easy it was to get started and how they earn “passive income” and were finally able to quit their nine to five jobs.

On a final level, there are professional coaches who aspire to be influencers.  They sell coaching programs that promise you great things, but it’s almost impossible to verify their credentials. It is also difficult to glean whether or not a coaching program has worked for you.  Are you lagging in progress because your coach is sub-par, because the content doesn’t speak to you, or because you haven’t been putting in enough effort? If something doesn’t work, the coach will say they have a better idea and this next strategy will definitely work for you.  It’s comparable to the blind following the blind.

4. The “Phishing Scam”

Scammers “fish” for your company information via a “phishing scam” by telephone or email.  If by email, they will impersonate a real company, such as Google or Fedex, and ask that you “login” to their fake website that looks exactly like the real website.  If by phone, they will try to “verify” your information over the phone, and expect you to make purchases or pay bills on the phone with them to gain your credit card information.  Avoid this scam by directly typing the URL of the website your trying to access rather than clicking on email links. If you receive an email that you suspect could be a scam, avoid clicking anything and mark as spam immediately.

5. The “Did You Forget” Scam

Scammers know that small business owners tend to have an external accountant, or someone else in the company acting as bookkeeper.  They also know that small business owners tend to be busy and do not have time to mind every single invoice that enters their inbox.  As such, they will often send random invoices, even past due reminders, to pressure accountants to pay off balances immediately.  We have seen emails for services never rendered, hotel vacations in Ventura, and office supplies we didn’t buy. Be careful of email invoices and ensure that every invoice is matched with an internal request.

 

We hope by writing and talking about the five scams we’ve listed, and more, we can help small business owners avoid being scammed.  Remember, if it sounds like it might be too good to be true, it probably is.  For the official Federal Trade Commission anti-scam guide, click here.

Are you worried you might be a victim of a scam? Give us a call and talk to our attorney today.

 

Are you prepared for an ICE RAID?

By Jessica Suotmaa 0

Since the beginning of the year, we’ve seen an increase in ICE employment site raids. Many attorneys discuss what to do when ICE knocks on your door–discussing your rights and responsibility of compliance, but here we’ll be advising the employer.  If you’re small business owner, franchisee, or anyone who employs another person, this is for you.

Why does ICE conduct “raids” and “audits”?

ICE stands for Immigration & Customs Enforcement, which means unless you’re in the import/export business, they are knocking on your door to check for undocumented workers.  An ICE audit requires employers to provide copies of all I-9 forms, which verifies an employee’s employment eligibility, on file with HR.

ICE also arrests employers who grossly break employment laws, and issues fines for employees who are not compliant.

Did you know? An error in record keeping can cost you $224-2,236 per form/employee!

What does I-9 compliance mean?

As an employer, you are required to collect United States Citizenship & Immigration Services (USCIS) I-9 forms from every employee working in the U.S.  The most recent I-9 Employment Eligibility form can be viewed here.

Did you know? 76% of I-9 forms have an error that could result in a fine!

Instructions state you must have the employee fill out the I-9 form first, then within three days of hire examine and verify the employee’s documents. The employee should have provided two forms of identification and have valid employment authorization.

Don’t think the three-day deadline is optional. Employers who are caught with employees whose identifications they failed to verify can be charged for willfully employing illegal aliens.

Backdating forms is also not an option–it is illegal. Falsifying documents is one of the worst crimes a small business owner can commit. In 2015, a small California-based manufacturing company was fined $12,000 for two things: 1. Failure to maintain valid I-9 forms for 18 of its employees. 2. Backdating I-9 forms after receiving an audit notice.  Don’t be like Liberty Packaging Inc.

Once you’ve obtained executed I-9 forms and have verified the IDs, then you must keep the forms for three years from the employee’s first day of employment, or one year after the employee’s last day of employment.

I’m just a small business owner–they won’t audit me

Many of us might think only large companies are audited, but this is not the case. In 2014, ICE conducted 1,320 work site audits, of which fifty percent had under 100 employees (“small” businesses).  Your business might not be on the radar, but if even one employee has an outstanding warrant of arrest, then all of your employees will be inspected onsite.

What do I do if ICE is outside?

  • Ask for identification. Get a business card or take a picture of it with your cellphone.
  • Ask if they have a warrant.
  • Check that the warrant is signed by a judge.
  • Make a copy of the warrant.
  • Give them your lawyer’s business card.
  • Be polite and ssk them how you can help them.
  • Do not be defensive or uncooperative.
  • Ask if they will accept copies instead of originals. If they refuse, then ask that you be allowed to make copies before originals are taken offsite.
  • Ask for an inventory of everything they’ve seized, if relevant.
  • Call your attorney.

Know that you only have to let ICE into private premises if they have a signed warrant to inspect premises. Otherwise ICE can only enter places of business.

Regardless of your circumstances, we do not recommend you to hand over any I-9s without consulting an immigration or employment attorney familiar with I-9s and ICE audits.  Contact our office if you need to speak to an attorney now.

What if I receive a notice of an administrative audit?

If ICE has a warrant for your company’s I-9 forms, you have 72 hours to produce the forms.  We do not recommend you to rush to your HR and produce them immediately. Rather, schedule a date and time for the I-9s to be picked up.  Be sure to make a copy of everything you submit to USCIS or ICE and maintain records of all interactions.

If you have several locations, or your HR is not on site, or you just don’t think you can make the 72 hour deadline, then explain your circumstances and ask for an extension. ICE will normally grant you a short extension.

Finally, if ICE determines you have formative errors in your documents, it will give you 10 days to correct them. If ICE determines you have substantive errors in your documents, it will issue you a notice of a fine or otherwise. If you passed your audit, you will receive a clearance notice.

What can I do to prepare for an audit or raid?

If ICE is outside your door, it’s already a little late. It’s also a little late to start panicking when you receive an audit notice in the mail.  The key is to prepare before a potential audit. Here’s what you can do to ensure your business is ready for an I-9 audit or ICE raid:

  • Take out all your existing I-9 forms and keep them in a separate file
  • Ensure all employees have filled out an I-9 form in its entirety
    • If upon review you discover an employee has not filled out the I-9 at all, then have them fill it out immediately and use the current date. Do not back date.
    • Ensure non-citizen employees fill out either their Alien registration number of I-94 number.
  • Ensure you have filled in Part 2 of the I-9 form in its entirety
    • Fill in any blank spaces with a different colored pen and date accordingly.
  • Fix any errors immediately.
    • Correct and notate the correction using a different colored pen and having the person filling it out initial on the side with a current date.
    • If the error cannot be corrected, fill out a new form and attach a memo as to why a new form was necessary.
  • Shred any I-9 forms you no longer need to keep (3 years, 1 year rule)
  • Keep track of any employees who have Employment Authorization Cards (work permits)
  • Ask HR to keep a schedule of EAD expiration dates and promptly remind employees of the deadlines
  • Ensure you are equipped to produce anything ICE may ask you for, including:
    • List of current employees (not independent contractors)
    • List of recently terminated employees
    • Quarterly wage and hour reports
    • Payroll records
    • E-verify confirmations (if relevant)
    • Business information, including business owner’s social security number
  • Designate someone who will be in charge of monitoring the ICE investigation, keeping records, and notifying your attorney.
  • Have employee rights information available and pass out to all employees.

If you have further questions regarding an ICE raid or administrative audit, contact our office and speak with an attorney.

How to Protect Your Business From Common Lawsuits

By Lisa 0

As an entrepreneur, it’s your responsibility to make sure that the business runs smoothly and is not affected by anything. One thing that can greatly harm your business is a lawsuit for tort liability. To avoid being a victim, here are five ways to protect your business from common lawsuits:

1. Monitor Your Actions and Words

You should be very careful when making public announcements or launching marketing campaigns. Always be honest with your promotions and avoid misleading advertisements. In addition, public statements should be respectful and avoid slander.

2. Institute a Sexual Harassment Policy

In your company’s sexual harassment policy, define what sexual harassment is, state that your business won’t tolerate such practices, talk about how your firm will discipline wrongdoers, include a procedure for filing such complaints, and outline protective measures for those who report such conduct. Gender shouldn’t be a basis for discrimination or irresponsible behavior; therefore, train your employees to treat each other with respect.

3. Have Personal Liability Insurance

Take up personal liability insurance to protect your personal assets from personal injury claims. You never know when an employee may decide to sue you for damages. For example, an employee can get injured at work due to their negligence, but choose to sue you for the accident. If you’re still in the process of building your commercial property, then take steps now to ensure that your construction company follows regulatory requirements for the structure. This will ensure that your property is up to code in terms of health and safety. Some additional precautions that you can take to avoid such a scenario are to section off dangerous areas and to install safety signs in places with heavy machinery. Ultimately, your business carries the duty to prevent personal injury for both the customers and employees on your premise.

4. Keep Your Files Safe

In the cloud computing era, it’s perfectly normal for your business to store information on the cloud since it minimizes costs and guarantees operational efficiency. However, before you select a storage system, ensure it’s safe to prevent the theft or misplacement of your client’s personal data and files. A customer can sue you for data breach and win if he or she discovers that you lost their personal information or it fell into the wrong hands.

5. Maintain Separate Accounts

You should not mix your business and personal accounts. An employee or an interested outside party can easily sue you for misappropriation of business funds if they discover that your accounts are not separated. Even if you don’t misuse company funds, it may be hard to support your claim due to constant withdrawals from your personal account.

Wrapping Up

Try incorporating the above strategies into your business operations to minimize costly lawsuits. Additionally, have a well-defined code of conduct in an employee manual to ensure employees know how to conduct themselves while at work. 

For more information on how you can secure your business against common lawsuits, or if you have any questions on how to handle a lawsuit that’s been brought against you, contact us now. At Lum Law Group we help our clients form and protect the businesses they’ve built from the ground up.

5 Things Startups Need to Know About OSHA

By Lisa 0

Every business should be concerned about employee safety, whether you are part of a large organization or a fairly small one, including startups. And even offices have occupational hazards, so don’t be lulled into thinking that only jobs involving physical labor need to be aware of OSHA regulations. If you’re part of a business, then you need to know and be able to implement workplace safety. To help you better understand OSHA, here are five things that businesses should know.

1. What is OSHA?

OSHA stands for Occupational Safety and Health Administration, and is under the United States Department of Labor. The OSH Act was created to ensure the safety of employees while they are at work. OSHA is a government agency that regulates workplace safety practices, ensuring that all employees have a safe place to work.

2. What and Who is Covered Under OSHA?

According to the OSH Act, employers are required to provide a safe work environment that is free of known hazards. This covers all potential hazards such as dangers from chemicals, trips and falls, workplace violence, and almost all other potential workplace hazards. One of the few exceptions to this is any hazards that involve food with workplaces that sell it. Private sector businesses are required to be in compliance with OSHA regulations, but self-employed individuals who do not have employees are not. It is critical that if you are thinking about starting a business or have already started a business that you comply by the OSHA rules and regulations.

3. What Services Does OSHA Offer?

OSHA offers training, education, and outreach programs for businesses. These services are designed to equip businesses and their employees with necessary knowledge in order to work safely. Among these opportunities are classes and grants to help non-profit organizations become more knowledgeable about workplace hazards and how they can be avoided and minimized.

4. How Are OSHA Regulations Enforced?

One of the ways that OSHA regulations are enforced is through inspections. These are conducted without advance notice, and businesses with higher incident rates or worker complaints are more likely to be inspected. Businesses that have had catastrophes and fatalities are most likely to undergo OSHA inspections.

5. Do Injuries and Illnesses Need to be Reported?

As of January 2017, organizations are required to report injuries and illnesses electronically. Many of these injuries and illnesses are ones that were already required to be recorded on-site.

 

Employee safety is a concern for all businesses, both large and small, including startups. Those who are seeking further clarification can visit the OSHA website, which explains the mission and recent changes more thoroughly.

 

Resources:

About | OSHA.gov

How OSHA Rules Apply to Startups | NBC Chicago

Personal Injury Case Law | Craigswapp.com

Why Is OSHA Important in a Company? | Chron.com

 

5 Game-Changing Business Tips For Entrepreneurial Immigrants | Lum Law Group

 

5 Game-Changing Business Tips for Entrepreneurial Immigrants

By Lisa 0

In the U.S., you have already seen plenty of active businesses everywhere. What you may not notice is that many companies fail and are replaced on a regular basis. Entrepreneurial immigrants frequently do very, very well in business-friendly locations, but they aren’t immune to harsh market forces either. Here are five essential tips for immigrants who want to start a business in a new country.

Learn the Customs

Personal hobbies and interests are different in every country. Some countries promote spending time with family, while others support more self-centered independence. Learn more about Americans to create products and services that they will need and want.

Learn the Laws

American business owners have many rules to follow if they want to remain in business. They need to obtain and renew licenses, follow safety regulations from the OSHA or FDA, and pay their taxes every year. If you’ve worked in another country, you may find hundreds of additional rules to learn and follow.

Other rules pertain to the specific type of industry. Construction workers are required to wear protective clothing, while medical professionals need certain immunizations. For every rule, also learn about the penalties, such as fines or imprisonment, for not complying.

Improve Communications

Communication is the most important field to study in business. You cannot find customers if you cannot communicate with them effectively through advertising. Furthermore, as Franchise Gator advises, you will be unable to understand the important business paperwork that you will need to read and file.The first step is to read, write, and speak better English.

There are classes for people learning English as a second language along with online learning software. Wordcounter.io includes free grammar tools that will help your written communications sound like native English. Correct all spelling and grammar errors before you advertise to customers.

Focus on Marketing

Getting in contact with customers is one of your most important tasks as a business owner. Work with American marketing professionals from the beginning. They already understand the culture, and can offer advice on everything from creating websites to building SEO content.

Get Help

There are several small business loans available specifically for entrepreneurial immigrants through the US Small Business Administration — which might be one of the reasons why 48% of overall growth of US business ownership between 2000 to 2013 was attributed to immigrant business owners, and the number of self-employed immigrants more than doubled between 1994 and 2015.

If you find yourself having difficulty securing a loan due to low collateral or other challenges, signing a “comfort agreement” may be helpful. This is an additional contract between the borrower and the lender that provides the lender with wiggle-room or recourse in the case you default on your loan.

 

You may have the money and resources, but if you don’t have basic knowledge about doing business in America, you won’t succeed. Come up with a plan on how you will gain this knowledge. Then, learn the tips that are proven to help countless entrepreneurial immigrants.

 

How to Improve Focus and Superpower Your Startup

By Lisa 0

If you have a startup, then you know how much work it takes to make it successful. With so much competition today, you need to have strong strategies at work to win and compete. Focus is key in this adventure to grow your company. Here are some tips to stay on top of your game:

 

Marketing

No startup can succeed without focus in the marketing department. The best way to get this is to set specific goals as to what you are looking to achieve. If you have the best marketing in the world but no solid game to capitalize off of it, you could be in for a world of hurt. Make sure that you are bringing your team in regularly to review your goals and that your marketing is accomplishing what you need it to.

 

Hiring

Let's shake on business

If you want to have focus and superpower status in your business, your talent is going to be very important. Without the right team to bring your goals to the forefront, you risk not having the competitive edge your deserve.

 

Schedules

If you have no schedule, it is easy to let focus get away from you and not have the results that your startup needs. If you don’t have specific meeting times, creative time, and rest time, then you might spin out of control.

 

Smart Drugs

Just a few years ago, it might have been uncommon to hear about CEOs and others taking smart drugs to improve their performance. However, these drugs are not illegal. These are focus and power drugs that give business people an extra edge. For instance, according to Mind Lab Pro, nootropics change the brain in a way that lets you access more neurons and thinking power. This can range from intense prescription medications like Adderall to simple caffeine supplements, to vitamins. Not every one of these substances is right for everyone, but many of them can aid your creative problem solving.

 

Standards

Improve your startup by having a standard that must always be met. When people know what they must meet to stay a part of the team, it will help improve their focus all around. Don’t just write it down, but review it daily to ensure you’re getting the most out of every member of the team.

 

Iteration

There is always room to improve. Constantly iterate and check your results. One tweak could mean the difference between profit and loss.

In the world of startups, the ones that move with the most focus and speed win. Don’t risk falling behind. Use the tips above and watch your results grow day by day.

Small Business Owners: Trademark Your Brand and Grow Your Business

By Jessica Suotmaa 0

Our intellectual property attorney, A. Justin Lum, was interviewed by Steve Thompson, writer of 245 Days to Go, a blog for small business and startup entrepreneurs and Contented Writing.

One of the biggest issues for a startup business is protecting your ideas. Every startup is built on the solid foundation of an idea and the passion of an individual. We can all see a niche in the market or something that has never been tried before. As an entrepreneur, you look to develop what you offer every day so customers can see your product or service and flock to you. This is how success is made.
But without the proper protections in place, you are vulnerable to other businesses and unscrupulous operators. Something needs to be done. Don’t worry – there is help at hand.