Starting up takes a lot. A lot of time. A lot of energy. Perhaps a lot of money. And definitely a lot of planning. At the very beginning, a business owner is looking for revenue, low costs, and maximum upside, in an understandable effort to build a foundation for an economically sustainable enterprise. Having an economically sustainable enterprise–especially one that may eventually be sold–requires sufficient planning to document the assets of the firm and to ensure the firm legally owns those assets. With assets often come certain liabilities, completing the picture and value proposition of the business for owners, investors, and potential purchasers. As tempting as it can be to pass on early legal planning for a business in light of other demands that feel more immediate, that planning will show its value for a business of any size or type when avoiding headaches, heading off informal disputes and even full-on litigation. Learn the core legal considerations for a business in its inception stages, along with the pitfalls you can plan around as you build your business.
It’s all about control. Regardless of what you call them, your “independent contractors” may very well qualify as employees for tax purposes. The degree of control the hiring party exerts over the party performing the work largely determines whether the person or company is an independent contractor or employee, regardless of the hiring party’s intention. Ensuring you have the proper contracts in place that clearly lay out the responsibilities of both the worker and the employer is an important step. These agreements should address specific information about things like the availability of employee benefits and the party responsible for tax reporting, among a number of factors that define the nature of the relationship between the hiring party and the contractor or employee.