Building a successful business is hard work. You need a great product or service, a marketing plan for getting the word out, skills in sales to convert your product or service into actual money, a head for numbers and finance, and innumerable leadership skills to tie it all together. Today, let’s talk about the marketing/branding piece. We’re often asked: Should my business name and brand name be the same? What is a DBA, and do I need one? And how do I file one here in Ohio? The Secretary of State doesn’t have a DBA form. And what is the difference between a trade name and a fictitious name?
In Part 1 of this series, we explained how securities laws impact small businesses that are trying to raise money. Before asking someone to invest in your business, you must comply with both federal and state laws, and you must either register (at both the federal and state levels) or be exempt from registration. Not surprisingly, most small businesses try to fit within an exemption from registration to avoid unnecessary filing fees and regulatory complexity.
So what are the common exemptions Ohio small businesses rely upon at the state level? (Remember, we’re discussing investors who are located in Ohio. If your potential investors are located in another state, you would have to look to that state’s securities laws to determine whether there are any exemptions from registration in that state.)
Recap: In Part 1 of this Series, we discussed the various options for structuring a social enterprise, and in Part 2, we discussed the unique problem non-profit organizations can face when they generate Unrelated Business Taxable Income (UBTI). But how your non-profit operates its social enterprise can also have a major impact on the organization's tax-exempt status.
In addition to the potential UBTI issues, non-profits often create separate corporations for their social enterprise endeavors so that the liabilities of one do not threaten the assets of the other. Like any business venture, the question has to be asked—what happens if the social enterprise fails? Will the nonprofit be accused of using funds inappropriately, particularly funds that could have better supported its charitable purpose? Could the failure of the social enterprise impact the non-profit’s financial viability, especially if the non-profit was using its own funds to start the social enterprise? Separately, does the social enterprise itself pose any risks that could be subject to litigation? Non-profit boards must carefully consider the potential risks a social enterprise activity might create. Creating a separate corporation to “house” that risk and operate the social enterprise can protect the non-profit parent organization (and its separate assets).
But (and there’s always a but), creating a separate corporation for your social enterprise activity is not a get-out-of-jail-free-card. Keep reading to learn about best practices to follow when operating both a non-profit and a social enterprise corporation.
As your business grows, it’s inevitable that you’ll need extra help. And often, you’ll need this help before your business can really afford to hire extra help. Enter: Unpaid Internships. Your small business gets free labor, and the intern gains valuable experience for their resume and (hopefully) a good reference for later on down the road.
But like so many things, the law isn’t so simple. All employees are entitled to at least minimum wage under the Fair Labor Standards Act (FLSA), and the FLSA determines who is an employee (regardless of what you might call the worker). So the question for you as a small business owner is whether or not your intern will be considered an “employee” under the FLSA.
Non-Profit Caveat: While most of our blog posts apply equally to both for-profit and non-profit entities, this one is an exception. The Department of Labor recognizes that individuals may freely volunteer their time to non-profit organizations. Because of this, unpaid internships are generally permissible in the non-profit sector. However, non-profit organizations should still be careful with paying stipends because they can call into question whether the person is still a volunteer or is now an employee.
In Part 1 of this series, we discussed the importance of conducting a trademark search. In Part 2, we explained this idea of the “likelihood of confusion” and what to look for in that trademark search. And in Part 3, we discussed how to register your trademarks with the USPTO. But once your trademark is registered, it’s your job to protect it and enforce your rights. To do so, you must file certain maintenance documents in a timely manner and actively police your trademark.
Hiring a new employee is an exciting time for any business. But it can also be a legal minefield, especially when you don’t have a dedicated HR professional or department. Once you find your next great hire, should you send them an offer letter or an employment agreement? What’s the difference between the two? And what legal risks should you be aware of, regardless of whether you decide to send an offer letter or an employment agreement?
To recap, in Part 1 of this series, we discussed the importance of conducting a trademark search, and in Part 2, we explained this idea of the “likelihood of confusion” and what to look for in that trademark search. Assuming your trademarks aren’t confusingly similar with that of another company offering related goods or services, how do you go about actually registering your trademark with the U.S. Patent and Trademark Office (USPTO)?
Raising money is a critical concern for most start-ups and small businesses. Whether it's seed funding to get the business started or raising capital to take the business to the next level, every business needs money (and probably more of it). But it's not as simple as offering potential investors an opportunity and then letting the money pour in. Anytime a business seeks to raise money by promising a return of some sort on the investment, then securities laws apply. This includes offering an ownership interest in the business (whether that's stock in a corporation or a membership interest in an LLC) and even debt obligations like promissory notes. In this series, we'll break down these securities laws and how they apply to small businesses.
In Part 1 of this Series, we discussed the various options for structuring a social enterprise. This week we turn to one of the unique issues impacting non-profit organizations who try to raise money by starting a social enterprise--unrelated business income. As a non-profit (and for this blog post, we're going to focus on 501(c)(3) organizations), how do you start a social enterprise without jeopardizing your charitable status and without incurring unexpected tax liabilities?
Nonprofits must be organized and operated exclusively for religious, educational, scientific or other charitable purposes. The general rule for business revenue earned by a nonprofit is that the revenue must be related to the organization’s charitable purpose. Otherwise, the revenue is treated as unrelated business taxable income (“UBTI”). The IRS requires nonprofits to pay tax on UBTI when engaged in commercial business activities in order to prevent tax-exempt organizations from having an unfair advantage over for-profit, taxable competitors.
We’ve talked before about why it’s so important to know the difference between an employee and an independent contractor (and the penalties for getting this wrong). But as I was deciding what this week’s blog post should be, I realized…we didn’t really discuss what is the difference between an employee and an independent contractor? As year-end approaches and you start making strategic plans for next year, it’s critical that you know how to make this determination.
The IRS considers a worker an independent contractor “if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.” If you think about it, this makes sense. An independent contractor must be “independent.” If you are telling a worker what to do, when to do it, where to do it, and how to do it, they’re not an independent contractor. They’re an employee. Even if the worker has some level of discretion (as most professionals do in this day and age), the key is whether or not you as the employer have the legal right to control what is being done and how it’s being done. In other words, are you paying the worker to accomplish a result, or are you paying the worker to perform a list of duties and responsibilities)?
Are you paying the worker to accomplish a result or to perform a list of duties and responsibilities?
Of course, like most things in the practice of law, it’s never as simple as results vs details. The IRS is cracking down on misclassification, and with the growth of the so-called gig economy, some states are even passing legislation to treat more workers as employees. The ultimate answer to the question “what’s the difference between an employee and an independent contractor” is it depends on the specific facts in your situation. How’s that for a lawyer answer?