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The Employment Side of Starting a Business: Hiring Employees

We are continuing our conversation on the ABCs of starting a business. We will follow the progress of a fictitious newly formed Yoga Studio. In episode 128 we looked at business structure and today we will focus on hiring employees.

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With us is Cory Johnson from Cory W. Johnson, CPA, LLC  which is located in Silver Spring, Maryland. He has about 200 individual clients and about 30 business clients located all throughout the country. He provides accounting, payroll, CPA, incorporation, and tax services.

Hiring Employees  – Key Points

  • When hiring employees, you can choose to hire either employees or  contractors to work for your business.
  • The front desk worker is probably an employee while the yoga instructor is most likely a contractor.
  • Look for guidance to help you determine whether someone is your employee or a contractor.
  • In addition to salaries, payroll-related expenses include social security, medicare, and unemployment tax payments.
  • Use a payroll service provider to make mandated state and federal payments as well as monthly or quarterly filing of relevant taxes.
  • Monthly, quarterly, and annual employer tax returns may need to be filed.
  • A business owner can have a solo 401(k), but if you are employed and run a business, there are limits to what you can contribute to it.
  • Putting money away in a retirement savings account reduces your tax obligation.

Listen in and find out Cory’s best tip on doing due diligence.

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Looking out for Employees After a Business Acquisition

Today, we’re continuing our conversation with Christina Hynes Mesco from The Prinz Law Firm, and we are looking at the employee side of a business acquisition. You may go from being an employer of 10-50 people to become an employee among 10,000 others. What are your rights now and what should you look out for regarding executive compensation?

The Prinz Law Firm is located in Chicago, Illinois, and Christina is a business and employment law attorney.

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Business Acquisition – Key Points

  • Hans watched a business owner gradually lose control over a company that he built.
  • Consider having an agreement that makes some portion of your interest in the company “non-dilutable.”
  • It might be expensive to engage an attorney to safeguard your interests, but an ounce of prevention is worth a pound of cure.
  • People in executive positions of an organization often assume they will be treated right after a business acquisition, but that doesn’t always happen.
  • Be proactive and get some terms in writing to ensure you enjoy continuity and predictability in your employment.
  • Why you should be part of the process that determines achievable performance targets.
  • Severance terms should be clear from the outset. Take the opportunity to negotiate for yourself if your employer doesn’t bring it up.
  • Read the fine print to assess what constitutes “cause” for severance.
  • Decide which factors result in constructive termination.
  • Tips to help find an attorney who specializes in the employment space.

We hope you enjoy this exciting topic.

Links and Contact Information

Here are some of our featured free resources.

What You Need to Know about Employees’ Rights

You own a business, and you’ve had to hire people. Are you hiring them as employees or subcontractors, and do you have an employee handbook? Here is what you need to know about employees’ rights.

Christina Hynes Mesco from The Prinz Law Firm helps us look at what employers need to know about employees’ rights. Christina is a business and employment law attorney who advises small and medium-sized entities on a range of issues business owners might run into. Whether just starting or continuing their business practice, employment-related questions come up, and knowledge in employment-related litigation is key.

Christina is licensed to practice in Illinois but she gives general advice to clients all over the US. The Prinz Law Firm is located in Chicago, Illinois.

Find out more about how to start your own business

Employees’ Rights – Key points

  • It is not uncommon for a business owner to overlook the area of employees, yet it is one that is rife with misunderstanding and litigation.
  • Employee contracts and formalizing employment relationships are vital to employees’ rights as they lay out rights and responsibilities of all parties.
  • You must decide whether you need to hire an employee or an independent contractor.
  • We offer tips to help in distinguish between employees and independent contractors.
  • Non-disclosure or confidentiality agreements are used to protect your information.
  • Restrictive covenants are usually a part of an employment contract.
  • It is sometimes helpful to have different terms distributed into separate documents.
  • Employers need to establish whether an individually negotiated agreement is required, which is primarily for key employees.
  • When an employee is terminated, a severance agreement is used to obtain a “release of claims” that complies with federal and state statutes.
  • Employment litigation can be very contentious and bitter.
  • In cases of mergers and acquisitions, employees will be required to sign new employment agreements.
  • A retention agreement can calm possible concerns of top employees and prevent disruption to business operations, as well as an offering monetary incentives,

Tune in to learn about employees’ rights.

Links and Contact Information

Here are some of our featured free resources.