Startup

Update! I-9 Forms and Immigration

Posted by on Oct 2, 2013 in Startup

Earlier this year, the U.S. Citizenship and Immigration Services (“USCIS”) issued a newly revised Form I-9 for use by employers. The Form I-9 is used to verify the identity and employment authorization of individuals who are hired for employment in the United States. Thus, all companies who have employees must ensure that a Form I-9 is properly completed for each employee. As of this date, employers should be using the revised form, which is available at: http://www.uscis.gov/files/form/i-9.pdf. The USCIS’s revisions to the I-9 form are subtle, in that USCIS simply: Added data fields for the employee’s: foreign passport information (if applicable) telephone number e-mail address Improved the form’s instructions Revised the layout of the form, expanding it from one to two pages (not including the form instructions and the List of Acceptable Documents) The revised form can be identified by the revision date “3/08/13 N” printed in the lower left-hand corner. Please contact an attorney if you have any questions about using the Form I-9 or your duties in verifying an employee’s identity and work...

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What Types of Insurance Should I Have For My Business?

Posted by on Sep 18, 2013 in Startup

Branching off from our discussion of whether you need an entity for your business, one related issue that’s important to keep in mind is what types and amounts of insurance you should obtain and maintain with respect to your business. Whether the insurance policy is personal in nature (such as a policy to cover your personal automobile or home) or commercial in nature (worker’s compensation, professional liability, etc), insurance plays a vital role in the minimization and management of risks associated with the operation of your business. We will go over insurance that is more commercial in nature next time, but for now, we will talk about insurance that is more personal. What Types Of Insurance Should You Have? While the overall answer will ultimately depend on the nature of your business, there are some types of insurance, particularly personal in nature, that are always a good idea to obtain and maintain because they protect you on a personal level– no matter what happens to the business. To the greatest extent possible, business owners should strive to minimize and manage their personal risk so that their capacity to focus on the business operations will not suffer as a result of a personal loss. While this may seem like common sense, if you’re a business owner who also owns a home, you’re going to want to make sure you have homeowner’s insurance of an adequate type and amount, which can help protect you from accidents that happen at home or may have occurred due to your own actions. In order to run your business, you need to make sure your home, and items inside the home, is adequately protected–so all of your resources can be focused on the business. This concept also applies to business owners who do not own a home, but who rent. Renter’s insurance is equally as important if you are a renter to protect your home and items inside your home (which may or may not be useful in your business). While there are other coverages which probably seem like common sense (e.g. personal automobile insurance or health insurance), you probably get the point concerning insurance which is personal in nature and are more curious about insurance which is commercial in nature. We will visit commercial insurance coverages next time, but before we leave this topic, it is important to drive home one more point: Because many small business owners operate their businesses as sole proprietors (i.e. entities for which there is little to no separation of assets, profits, liabilities and obligations), it is especially important to consider how best to protect your personal assets which may directly or indirectly impact the operation of your business. If you have questions concerning insurance or how best to manage and minimize risk for your business, please talk to an attorney–or an insurance...

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Do I Need An Entity for My Business? Cont…

Posted by on Sep 13, 2013 in Startup

As we discussed before, most people end up operating their business through an entity of some sort. However, there are some individuals who do not necessarily need an entity and can operate their business as a sole proprietorship. Without going into details concerning the various types of business entities, it is important to remember that a sole proprietor is personally responsible for the debts and obligations of the business (i.e. there is no “shield” or “veil” of limited liability as in a corporation or LLC). While this may sound scary, it is actually not that big of a deal for some people–and the good news is that sole proprietors do not have to pay Tennessee Franchise & Excise taxes (which are typically between 6%-7%). We will discuss a bit more concerning the various factors that you should consider when trying to decide whether to create an entity through which to operate your business: #1: The kind of service or product you are providing. If you’re providing a risky service or product, that is an argument in favor of having an entity for your business. There is a huge difference between someone who is manufacturing tires and someone who is taking photographs of people. While photography may entail certain risks (risks particularly related to personal identity, images and/or other intellectual property rights), those risks are inherently less risky than the tire manufacturer scenario. Keep in mind that there are many other factors to consider in addition to the type of service or product you are providing, and we will discuss those in more detail later. However, for now, explore whether the level of risk your business entails may be curtailed by purchasing an insurance policy to adequately cover those risks. There are many types of businesses that can cover their risks adequately (and in a way that agrees with the business-owner’s risk tolerance) by purchasing general liability and other insurance policies to cover things like services which cause or are alleged to have caused bodily injury or property damage. If your risks may be covered by insurance policies which are less costly than the TN F&E taxes, it may be a better idea to stay a sole proprietorship and avoid the TN F&E taxes. This is a very brief and general discussion of a rather important topic, so we strongly recommend that you discuss your business with an insurance broker and an attorney so that you can fully understand how best to curtail the risks associated with your...

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Planning for the End in the Beginning

Posted by on Sep 3, 2013 in Startup

Succession Planning When most people start a business, their main focus is, understandably, on building a successful brand, service, or product. There is excitement for the road ahead—networking with mentors and possible investors, signing new leases, testing new technology. Often, people go into business with their good friends or a family member, and rarely do new business owners contemplate in those early stages all that could possibly go wrong if personal relationships fall apart or if one person decides to leave the business. A thoughtful and thorough business succession plan can protect the business and its owners in the event of a voluntary or involuntary departure of a business owner. Whether you draft a separate buy-sell or shareholder agreement or include detailed provisions in your operating agreement outlining what happens when one owner, member or partner of the business leaves, setting ground rules upfront before a problem or departure arises can help alleviate the stress and emotions that any business breakup might bring. Departure of one owner can take any number of forms and a good agreement will contemplate involuntary or unexpected events such as death or illness and voluntary departures such as a move or decision to pursue other interests. Finally, it is important to draft an agreement that accurately reflects the owners’ future goals for an exit strategy. Many new businesses rely on standard language in form agreements and fail to openly discuss specific needs or possible departure scenarios. Developing an exit strategy in the initial stages helps owners understand their options and plan for the successful growth and development of the business. Some things to consider: Trigger events for sale of ownership interest Transfer of a business interest to an heir or family member Restricting ownership transfer or control How the business will be valued How will the business pay a departing owner (does the company have the necessary capital to buy out the partner, insurance for certain owners, will the business need to find a...

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UPDATE!

Posted by on Jun 7, 2013 in Startup, Update!

The Revised Tennessee Business Corporation Act (“TCBA”): NOTICES IN ENGLISH The TCBA sets forth laws governing for-profit corporations in the State of Tennessee.  In order to ensure that the TCBA was up-to-date in terms of its applicability to modern business conduct and operations, revisions to the TCBA went into effect on January 1, 2013.  One change that may affect how corporations in Tennessee conduct business pertains to general notices which, according to the TCBA, corporations and shareholders must provide under certain circumstances.  As of January 1, 2013, all notices and other communications must be in English unless agreed upon by the sender and the recipient.  (TCA 48-11-202). Given the influx of non-native English speakers into the State of Tennessee, as well as the increasing presence of foreign-owned and affiliated corporations, this language requirement could end up affecting more businesses than one would otherwise suspect—especially those closely held corporations which are owned or managed by individuals for whom English is a second language. Therefore, when drafting corporate documents or when communicating in writing, it is important for corporations (including their shareholders, managers and directors) to communicate in English if they have not clearly established in writing, whether in the communication itself or in the corporation’s bylaws, that another language is...

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Welcome to the Chambliss Startup Group Blog

Posted by on Jun 5, 2013 in Startup

We are excited to launch our Startup Group’s blog, and we hope that our readers find the information we share helpful, if not entertaining! As part of our efforts to help entrepreneurs and small business owners with their legal and business needs, we will be posting periodic blogs with tips, pointers and legal updates which we believe could be helpful to those who are starting a business or operating a relatively new business.  We hope to get to know you, but first here’s a little bit about us: WHO WE ARE: We are a group of attorneys with a variety of expertise from the Chambliss law firm who love meeting, hanging out, learning from and helping entrepreneurs and startups. WHAT WE DO: We hold regular legal clinics and host seminars at a variety of locations around town.  We also love to have a good time, so we host periodic Startup Socials where entrepreneurs and like-minded innovators can come hang out, eat, drink and network in a casual environment. WHY WE DO IT: We do this because we are passionate about our city and region and want to be a part of the progress and innovation. WHAT WE WANT: We want to meet and get to know you, hear what you’re passionate about, learn about your current or future business and help you in any way we can–even if it’s making a simple introduction or recommending a good restaurant to patron or a good way to enjoy our city. We welcome any feedback and discourse, so please do not hesitate to contact us.  Also, check out our website: https://www.chamblissstartup.com/  and come visit us on Facebook (“Chambliss Startup Group”) and follow us on Twitter:...

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