FundingPost.com - another option

If you have an idea and are looking to get it off the ground, one of the more popular places to go is FundingPost.com. I spoke with a potential client today and she reminded me about this website and it is cerainly worth looking at if you are a hungry entreprenuer.

What to Know About Hiring New Employees… And What to Avoid

What to Know About Hiring New Employees…And What to Avoid

By Jessica Hawthorne, Guest Poster

Due to the complexities of California employment laws, when the time arises to hire a new employee it’s a good idea to eliminate the guesswork.

Many large companies with skilled human resource personnel typically understand where the pitfalls lie in the hiring process. Smaller business owners may also have a solid grasp of the necessary hiring techniques, but grey areas still remain for both.

The hiring process involves three key areas – recruiting, interviewing, hiring.

Recruiting: Creating a job description is sometimes an overlooked facet of the hiring process. It will not only help supervisors more readily define what they are seeking in a new employee, but can later be used to show that person their areas of responsibility.

A thorough description can also be the basis for creating a job advertisement for newspapers, industry publications, professional journals, and online sites such as Craigslist. Don’t overlook an internal job posting as well.

Be careful to avoid any inappropriate terms or discriminating language when posting a job advertisement. The rule is don’t include references to race, sex, religion, age, medical condition, marital status, sexual orientation, and disability or any other protected class.

Below is an example of an unsuitable ad.

Gal Friday Needed: Community newspaper is seeking a woman to answer phones, greet visitors to the office with a smile, and handle faxes and incoming mail. Must possesses lady-like appearance and speak clear English.

This ad is sexist and ethnocentric and should not be used.

Interviewing: It’s always a good practice to conduct a preliminary interview by phone, providing one gives the applicant some advance notice. The phone interview serves as a screening process and will narrow the field of applicants.

Creating a test for applicants is a suitable action that will help provide an accurate measuring stick for a person’s job skills and aptitude. Beware that a reasonable accommodation must be given to a disabled person when they take the same test.

Preparing a core set of questions that will be used for all applicants is another suggested step to follow. Ideally, many of the questions are derived from the job description. Be sure to ask questions that elicit lengthy responses.

Below is an example of an inappropriate question.

"I see your last name is Gonzalez. Does that mean you speak Spanish and are comfortable interacting with Hispanic people?"

The question is discriminatory because its function is to determine the applicant’s national origin and ancestry.

Hiring: On the first day of work, have the new employee review and fill out all the legally required and company-related forms. Be prepared to explain.

To get a new employee properly acclimated, an orientation program is recommended so the person understands the job responsibilities and any safety procedures that accompany the position. Introduce them to the company handbook and review all important policies.

Neglect during the new employee training can lead to various problems, like this one below.

Inadequate training: An employee for a road repair company shows up for his first day of work and is immediately assigned to a crew that morning. No safety instructions are provided and the worker spills hot tar on his uncovered forearm, causing a severe burn that requires medical care.

If an employee suffers an injury that could have been avoided through proper safety training, the company may be liable.

Jessica Hawthorne is an employment attorney with CalBizCentral, a division of the California Chamber of Commerce. This column was excerpted from a series of five booklets called "What Every Manager Needs to Know About", now available from www.calbizcentral.com.

40 Government Sites You Can't Live Without

I ran across this article from Entrepreneur.com and sent it to several of our Private Equity clients. It's a good compilation of informative government sites, particularly the government grants catalog.

http://www.entrepreneur.com/startingabusiness/startupbasics/findinghelp/article65696.html

Dangers of Internet Legal Research: Misinformation Aplenty

A client recently was conducted some legal research on the Internet, and came across the following, which he then showed to me and asked me about:

Subject: Re: Closing down a california S-corp
Answered By: taxmama-ga on 31 Jan 2005 14:38 PST
Rated:
Dear Yarbles,

The State of California would like you to believe that you must file each back year and pay the annual $800 fee AND all the penalties and interest related to that fee. They also will want all the fees and penalties for not keeping up with the annual report of officers taht the Secretary of State requires. (That's a $20 fee if you file it on time; $250 penalty if you don't.)

However, under the Ralite case, where the owner of the corporation was permitted to walk away from all these liabilities, by simply doing nothing. Do NOT file the closure paperwork with the State Franchise Tax Board or Secretary of State. Do nothing.

You can read the particulars here. http://www.boe.ca.gov/legal/pdf/90_sbe_004.pdf

You may want to have your tax professional review the case and make sure that you qualify. In fact, they may be happy to see this for their files. It's a very valuable piece of information that most people don't seem to know.

Just be patient. The notices will stop. Someday.

Best wishes,

Your TaxMama-ga

Google Answers: Closing down a california S-corp

My response to the client, who had hoped this answer proved that dormant California corporations would be dissolved automatically and that the corporate veil could never be pierced to provide for personal liablity to the shareholders for California corporate tax obligations:

Dear [Client]:

1 – There is no indication that the answerer is an attorney or accountant. What are their qualifications to be giving legal or tax advice? There are reasons why attorneys and accountants have to meet certain educational, training, and licensing standards.

2 - The annual report fee referred to in the answer is actually $25, not $20.

3 – While not invalidating the law as precedent, it is worth nothing that the case refers to tax year 1980, and to a California code section that no longer even exists (R & T Code Section 25701(a)).

4 – The answerer does not claim the corp. will be dissolved automatically by the state, only that the back taxes won’t have to be paid.

MOST IMPORTANTLY, THOUGH…

5 - Contrary to what the answerer, who apparently did not read or understand the case, the shareholders of the corporation in the cited Ralite case were found personally liable and ordered to pay the franchise taxes. See paragraph 2 of page 29 of the case cited: “the shareholders are liable for Ralite’s [the corporation’s] tax.”

However, this result was because of fraudulent transfers by the shareholders; otherwise, the case does indeed provide that shareholders will not be personally liable for corporation franchise tax non-payment. But (A) without the assistance of an attorney and tax advisor, fraudulent transfers may inadverdently be made by shareholders closing down a corporate business and (B) it is possible California's legislature will change the law on this at some point. Until that time, it is true that many shareholders walk away from their corporations and allow them to become suspended and continue to accrue franchise taxes, penalties, and interest. This is not the proper or legal way to do things, however, and I believe the majority of business attorney or tax advisors would not routinely counsel a client to do this.

6 - Note that the person asking the question comments at the bottom of that they consulted their tax professional, and their tax advisor told them to pay the tax and dissolve the corporation properly.

7 - A tax clearance certificate is no longer required to dissolve a corporation, so there is little reason not to dissolve the corporation, to stop the tax clock from ticking, even if taxes are owed and cannot or will not be paid by the corporate shareholders.

This is a perfect example of the legal misinformation and half-truths that are all over the Internet and a good reason why you should take “advice” like this with a grain of salt and consider its (unknown) source, as well as the the fact that the law may have changed, or the one person's circumstances may not match yours....

Gramm Leach Bliley Act and the Mortage Crisis

Ok, I will have to admit that this is about to be somewhat unfair to congressional men and women that passed GLB, since I have the benefit of hindsight. Nonetheless, I think I can safely say I have been on record since the beginning in condemning the repeal of the Glass Steagall Act by GLB.

Given that Birmingham is such a big banking town, I think we in Jefferson County have a sometimes unrecognized unique perspective. First off let me say I love banks, they have been great for our area and many individuals in our community. However, one of the reasons I love banks as an investment vehicle is due to their semi-protected status. Banks are so vital to our economy that they have to be protected, sometimes (such as is now clearly evidenced by the current mortgage crisis) from their own bad decisions. As such, it is appropriate for them to have additional oversight to minimize the risk of a necessary public bailout. GLB goes against that grain and allows many additional opportunities for companies with cross sector exposure to get into trouble, even while following all the rules. This is true even if you want to ignore the obvious enhanced risk for acting on conflicts of interest.

Applied to our current mess, GLB's repeal of the restrictions on cross ownership in the financial services sector likely would not have prevented the current mortgage crisis, but it may have added a few more barriers and thus created more opportunity to catch bad decisions before they got completely out of hand.

Nonetheless, even if Glass Steagall wouldn't have prevented the current situation it should scare the heck out of everyone. By allowing consolidation, GLB has opened the door for single source disasters to shut down or significantly damage our entire financial system. Banks are simply too important to our economy to allow the additional unnecessary risks created by GLB.

If our congressional elects have their wits about them hopefully they will see the current liquidity crisis as a shot across the bow and move to place some meaningful segregation of financial services back into the system.

Leverage your Private Equity

I periodically have companies seeking private equity or venture capital funding that need LOTS of funding. Such companies are quite often in the industrial services or products realm, but can come in almost any industry.

Companies that have viable business models, but capital requirements that exceed what typical PE or VC funding will provide have additional and sometimes prohibitive hurdles to overcome in order to make their visions a reality.

If a company is to make the leap from great idea to business reality, then the management team is going to have to strategize a way to leverage the PE or VC funding in order to reach even greater sources of capital. Those other sources of capital could be a public-private partnership, public debt or even a private-private partnership, but in any case there will need to be substantial thought given to the source of that second round of financing because the quality of the plan for realizing the second round will likely play a large role in whether or not the company gets the first round of financing.

Don't forget Uncle Sam

After reading Jeff McIntire-Strasburg's recent post titled: "Ecopreneurist: How to Approach a Venture Capital Firm with a Cleantech Business Idea" I was struck by the thought of a company I am working with at the moment in the Green Technology world.

One of our early conversations centered around their financial projections and pro-forma statements in which the company president proudly said "our figures don't include any tax based income or incentives, these are straight numbers." Of course, I wanted to see the non-tax based numbers in an overall evaluation of the business, but one of the things that really makes the green industry potentially above average regarding investment returns is the proliferation of numerous tax and government incentives and our management team was really missing the boat on potential tax strategies that could have a dramatic effect on both capital requirements and overall returns of the business.

Thankfully, we have now begun an analysis of the available tax strategies and we have already uncovered federal benefits that will significantly add to our bottom line.

So the moral of the story is...don't forget Uncle Sam.