Free Enterprise - The FindLaw Small Business Law Blog

April 2012 Archives

When times get tough, the tough get naked. At least that's what a Florida motel owner hopes, as he turns his 32-room property into a potential magnet for nudists.

The Fawlty Towers Motel in Cocoa Beach, Fla., is set to go clothing-optional May 1, after years of declining business and increasing competition from larger chain hotels, its owner told Florida Today.

Going nude wasn't a snap decision. Owner Paul Hodge first had to convince his skeptical wife. And he has yet to sway some of his concerned neighbors, who fear the soon-to-be nude motel will expose tourists, and local children, to some unwanted sightseeing.

Are You Guilty of 'Table Side Racism?'

While "table side racism" might sound like an insane dining service, it's actually a phenomenon sweeping American restaurants. A new study finds that "dining while black" can be just as bad for African-Americans as driving while black.

Minus the police brutality, of course.

The study was conducted by researchers from North Carolina State University. Researchers polled 200 food servers from 18 North Carolina restaurants. Their results showed 38.5 percent of respondents discriminated against black diners.

What reasons did wait staffers give for their actions?

To Register or Not to Register Your Trademark?

You're starting a business and you have a quirky name that you want to use in connection with the product.

You wonder if you can use the name and if so, how you can protect the name so that nobody else uses it.

Here are a few things to keep in mind regarding intellectual property law, when putting a new business name or product name into use.

10 Things to Do When Starting a Daycare

If you’re planning to start a daycare, it’s time to start doing your research. While anyone can open up their home to children, not everyone can operate a licensed daycare facility.

So what do you need to know if you want to start a daycare?

Here are ten things you need to consider when starting a daycare.

Transgender Workers Now a Protected Class, EEOC Rules

Don't discriminate against transgender employees or job applicants.

Up until now, this bit of advice likely would have been rooted in morality. But now, it comes straight from the Equal Employment Opportunity Commission, the agency tasked with interpreting federal employment discrimination laws. And according to a new ruling issued by the Commission, transgender discrimination is prohibited Title VII.

So if you engage in such discrimination, the agency may come knocking on your door.

3 Reasons Why Your Company Policies Must be in Writing

Guest post by Jennifer K. Halford, Esq.

I recently had a conversation with a very disgruntled employee. She was upset that her employer had reprimanded her for violating a company policy. The problem was that the "policy" did not officially least not in written form.

It is important that business owners create certain business policies and practices. Good policies help your employees perform to your expected standards. Good policies can also ensure your employees are not acting in a manner that will get you sued.

Spending your time and money to create company policies many not be at the top of your to-do list. However, your business is at risk if your policies are not in written form.

Financing Small Businesses: Do's and Don'ts

So, you want to know how to finance a small business?

For a small business, there are many avenues you can wander down, if you're seeking financing.

Now that we have your attention, here are 5 ways to finance your small business:

5 Tips on How to Handle Employee Theft

If you think shoplifters are your biggest problem, think again. In North America, employee theft surpasses shoplifting and in amounts eight times the average stolen by shoplifters.

With statistics like these, at some point during your career, you will undoubtedly catch an employee stealing. When that day comes, do you know how you will react? If you don't, it's time to start thinking about it. To get you started, here's a basic plan for handling employee theft.

Divide Founders Stock Equally? Bad Idea

You and some co-venturers have come up with a business plan and an idea that you want to bring to fruition. How do you decide how much each person will own in the company?

Many entrepreneurs think that each founder should own equal shares. This can be problematic, for many reasons.

Here are a few things to think about when dividing ownership and founders stock.

Business Start-Up Lessons From a Nude Maid Service

You know times are tough when even maids have to get naked for business. But start-ups can learn some valuable lessons from this nude maid service in Lubbock, Texas.

Sometimes to make a successful business, all that's required is adding a twist to a common service. But you have to be careful how far you take that twist.

Case in point. The nude maid is making good money, but now she's also facing heightened scrutiny from the police and possible fines.

So what can you learn from her mistakes? A lot actually.

Louis Vuitton Wins Counterfeit Bag Lawsuit

Louis Vuitton has no tolerance for counterfeiters, and neither does the U.S. International Trade Commission. The regulatory body has ruled in favor of the luxury brand in a counterfeit bag lawsuit brought against Jianyong Zheng and Alice Bei Wang and others.

Zheng and Bei, who own multiple businesses in China, California and Texas, are accused of manufacturing and importing fake Louis Vuitton handbags adorned with the label's signature Toile Monogram design. The court has ruled that the pair and two other American companies have indeed violated trademark law.

The NLRB’s new “Employee Rights” poster is on hold, after a federal court in Washington, D.C., issued a temporary injunction Tuesday. The NLRB may not have the power to require such a poster, the court opined.

As this blog reported last fall, the National Labor Relations Board was set to require most private employers display 11-by-17-inch posters about union activity in the workplace.

The NLRB’s poster rule was set to take effect nationwide April 30, the Associated Press reports. But critics challenged the NLRB’s power to require the union posters — an issue that must be settled before the rule goes into effect, the D.C. court said in issuing the injunction.

IL Chef Sued Over Bakery's Missing Recipes

Patrons of Chicago's Fraiche Bakery Cafe are hoping for the best at a court hearing to be held later this week. The bakery has sued a former chef, accusing him of stealing two binders that housed the business' secret recipes.

When owner Susan Davis Friedman asked for the recipes back, the chef allegedly demanded that she sue. He also reportedly told another employee that she should have made copies.

Unless the judge orders their return, the bakery cannot make its acclaimed Cinnamon Bomb muffin.

Financing Your Business: What is Crowdfunding?

A hot topic for entrepreneurs these days is "crowdfunding." It's a way to raise money for small businesses that don't have the means to be funded through angel investors or venture capitalists.

For many small business folk, "crowdfunding" is an entirely new word. 

So what is crowdfunding?

Disclosing Foreign Accounts: IRS Form 8938

Wondering if you need to disclose your foreign bank accounts with your IRS tax return? If you have foreign assets, it might be time to start working with your tax attorney.

You might be obligated to disclose these assets in an attachment to your tax return this year. And the process isn't exactly painless. 

The Form 8938 Statement of Specified Foreign Financial Assets can take a whole day to complete, if not more.

Is JOBS Act Actually Good For Small Business?

Soon, it will become much easier to be an angel investor or a venture capitalist.

Last week, President Barack Obama signed the JOBS act into legislation. The JOBS Act, or Jumpstart Our Business Act, includes several changes which would greatly impact small businesses and startups.

But while the Act has some key benefits for small businesses, it has some dangers for investors. New investors need to tread cautiously. "Crowdfunding" may be a hot topic for small businesses, but it doesn't come without some caveats.

5 Legal Mistakes Startups Make

You've got a fabulous new idea. It's an idea that you believe will pick up steam, buzz. You might even be planning to approach a venture capitalist soon.

At this early stage, you might be thinking of doing the basics. While the following steps may sound very simple, you need to be cautious because early mistakes could cost you down the line.

Here are five legal mistakes startups make:

CA Supreme Court Eases Meal Break Rules

California meal break laws just got a whole lot easier for employers to swallow.

Up until now, an employer's meal break obligations were unclear. Are employers required to ensure that employees do no work during their meal breaks? Or can employees choose to work during that time?

In the just-issued Brinker Restaurant Corp. v. Superior Court of San Diego, the court decided to go with the second option.

Suspension Without Pay May Get You in Trouble

What does it mean for a small business when you suspend an employee without pay?

In theory, it sounds pretty simple. An employee violates policy and the employee is disciplined. Not too complicated, right?

Not so fast.

Can Nonprofit Board Members Receive Salaries?

Can a board member of a tax-exempt nonprofit also be a salaried officer of the organization?

The short answer: It depends.

In a previous blog post, we talked about the issue of private inurement, when discussing the recent case of Greg Mortenson. After allegedly abusing his status as a board member, he is still allowed to work as a salaried employee of the organization. But he is no longer allowed in any financial management role.

Does his case indicate that being a board member and being a salaried officer are mutually exclusive? Not necessarily

CO Amazon Tax Ruled Unconstitutional

Online retailers have been fighting what's been dubbed as "the Amazon Tax." Now, a federal court has ruled that a Colorado variation of the Amazon Tax is unconstitutional.

The 2010 Colorado law obligated retailers with $100,000 or more in yearly sales in Colorado to issue a report to the Colorado consumers, notifying them that they had to pay sales tax on online purchases.

GSA Scandal Reveals Small Biz Not Getting Contracts

Small businesses are suffering from the latest government spending scandal. The General Services Administration (GSA) has come under heat recently for its spending practices and in its processes for awarding government contracts.

Many of the government contracts mandated for small businesses were instead diverted to larger businesses, according to The Washington Post.

The Perils of Selling Overseas

If your business has an online store, then you may think that you're ready to enter the world of international sales. Chances are you're not.

Whether you're working with importers or individual customers, selling overseas is a whole new beast.  Not only are there tax implications, but you'll have to navigate the world of export law. That means customs and tariffs.

The entire process involves a lot of work.

The IRS Lost My Tax Return. Time to Protect Your Business

Watch out, taxpayers. The IRS can lose your tax return. That’s what the First Circuit Court of Appeals essentially said in a recent case. If you’re running a small business, you might want to take heed. It’s important to keep track of all your tax documents, in case the IRS or the U.S. Postal Service loses  your return.

If the IRS claims that it never received your return, you will have to prove that you sent it. That was the problem in this case. The taxpayers, a medical center, filed a claim for tax refund but the IRS claimed that they never received anything from the taxpayers.

'3 Cups of Tea' Author Greg Mortenson Owes His Charity $1M

The charitable trust doctrine assumes that a gift given to a charity will be used for charitable purposes. As a manager of a charity, a violation of that rule can cost you. It's certainly costing author Greg Mortenson. The author of the best-selling novel "3 Cups of Tea" must pay back $1 million to the very charity he founded, reports CBS News.

After 60 Minutes investigated Mortenson last year, they found that the author and philanthropist had been "mismanaging and personally benefiting from the funds of his charity," CBS reports. The charity in question is the Central Asia Institute, an organization that builds schools in remote Pakistani and Afghani villages.

Want To Protect Your Business in a Divorce? Be Batman

Divorce can be hell. It can be hell on your family and friends. Hell on your mental health. But most of all, divorce can ruin your business.

You might be thinking right now that the last thing you'd be worried about in a divorce is protecting your business.

Not necessarily.

Running Late? Submit an Extension to File Taxes

Tax day is creeping up fast. Do you have your tax return ready? For self-employed or small business owners, you might not have to file your taxes in April, depending on when your year end lands. But if you are running a sole proprietorship, you might want to get cracking.

Unless, that is, you opt to file for an extension to file your tax return. If you aren't ready to file, there's no need to worry. 

Getting an extension is actually quite simple. Here's what you need to know:

5 Things You Must Know About Employees Health Benefits

Guest post by Jennifer K. Halford, Esq.

There has been a lot of information in the news about health care reform and how it affects small businesses. Yet, I still find many business owners scratching their heads trying to understand what it all means for their businesses.

You need to know what your business is required and not required to do. Not knowing can cost you unnecessary expenses and penalties.

Here are five things you must know about employee health benefits:

What Type of Injuries are Covered by Workers Comp?

Injuries on the job happen. That's when workers' compensation laws and insurance become vitally important. But what counts as a workers' comp injury?

It depends. But as an employer, you should become familiarized with what is covered.

Typically, workers' comp laws cover a variety of different injuries that happen at work. The law is meant to ensure injured employees receive compensation if something does occur.

So You Want to Deduct a Home Office? Watch Out.

Tax season is creeping up on us fast. And these days, many Americans are working from home.

But does working from home necessarily entitle one to a home office tax deduction? It depends on whether you want your tax return to become "audit-worthy." 

Tax professionals are split on home-office tax deductions. Many tax professionals urge caution due to the looming threat of an audit.

For those who are not self-employed, the home office tax deduction becomes even riskier.

Top 5 Employee Dress Code Mistakes to Avoid

Guest post by Jennifer K. Halford, Esq.

The number of questions I have received from business owners about employee dress codes has increased since Disney's recent change to its grooming policy.

How employees are dressed and groomed can have a direct financial affect upon a business. A customer may judge a business based upon one employee interaction. Thus, you want your employees to look their best.

Yet, employers with dress codes have been sued for discrimination.

So how can you protect your business' image without getting sued?