Joyce's Small Business Toolbox

Tips 1-5

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· Common Avoidable Costly Error Business Owner's Make…
For those of you that employ Subcontractors you will need to have proof that these subcontractors have worker's compensation insurance when you are audited by your insurance carrier or you will be billed by your insurance carrier for the worker's compensation for that subcontractor, based on the total amount you paid the subcontractor! This can be a substantial amount. In some industries worker's compensation premiums can be 25% and higher of the total payroll paid.

So don't get yourself a shock, be sure to put together an accurate system to monitor and file the worker's compensation information so that you are ready for your audit.

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Tip 2: Maintaining Your Corporate Books

· Don't forget to record stock transfers and the purchase doc stamps….
When you sell or transfer stock within your corporation you are required to document this sale or transfer.

· Common Avoidable Costly Error Business Owner's Make…
All stock transfers must be recorded in the Corporate Book and in most states you are required to pay tax on the sale or transfer. Check with you state department of Revenue or seek legal counsel

By not recording the sale or transfer of stock properly you are again putting yourself at risk and leaving an opening where the government or in the advent of a lawsuit, the Corporate Veil maybe pierced. (When the corporate veil is pierced…you are not afforded the protection of the corporation. This puts you personally and your personal assets at risk)

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Tip 3: Service Contracts

· Watch out for the Price Adjustment Clause in Service Contracts…
When you enter into long-term service contracts, you might find a clause detailing price adjustments to the contract.

· Common Avoidable Costly Error Business Owner's Make…
The price adjustment clause might read something like this: From time to time during the term of this agreement, Seller shall have the right to adjust the price charged for the product by giving Buyer written notice of such adjustment. In each such event, such adjustment shall become effective fifteen (15) days after the date of the notice. If within such fifteen (15) day period Buyer furnishes Seller with a copy of a bona fide firm written offer to Buyer from a responsible supplier offering to provide at a lower price than the adjusted price of Seller of like grade, quality, and quantity as provided …then you might get out of contract or get the Seller to hold the current price!

Don't put off checking out the competition, you only have 15 days to do your homework or you will be committed to the new price increase.

The price adjustment clause might state that there will be an increase at a certain percentage per year….

Don't be rushed into signing a contract. Take the time to do your research of the market and get quotes from other companies to be sure you are getting your best deal or seek legal counsel. Don't forget you can always alter the clause; you are still in the driver's seat…until you sign on the dotted line!!!

Remember, "Haste makes Waste!"

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Tip 4: Workers' Compensation

· Business owners' may be able to exempt themselves from workers' compensation expense…
In many states business owners', stockholders, and directors of companies are able to exempt themselves from workers' compensation by filing an exemption with their state.

· Common Avoidable Costly Error Business Owner's Make…
Discuss with your workers' compensation insurance carrier the laws of your particular state regarding policy exemptions. This will help to keep your workers' compensation insurance premiums down. Beware, if you elect to become exempt, that in the event of an injury, you have no insurance or income through the workers compensation fund during your recovery period.

Your insurance carrier can direct you to how to file with your state…so that you get credit at the end of the policy period.

Be sure to consider all the facts before making the decision to exempt yourself, partners, or etc. Talk to your insurance agent and if necessary seek legal counsel.

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Tip 5: Maintaining Your Corporate Book

· The Necessity to keep your Corporate Book Up-To-Date….
For those of you in business and incorporated, I want to remind you of the necessity to keep your Corporate books up-to-date. If your business becomes involved in an audit by a governmental agency or if your business becomes involved in a lawsuit, one of the first things asked for is your Corporate Book!

Just because you file your Annual Corporate Report and pay the fees to your state does not guarantee you protection of the Corporate Veil….

· Common Avoidable Costly Error Business Owner's Make…
You must also act as a corporation by keeping your Corporate Book up-to-date. One of the requirements is an annual meeting…and the written minutes of the meeting. Even if the corporation has only one stockholder.

Remember, you are putting at risk your self and your personal assets by not keeping your corporate books up-to-date.

The easiest way to keep your corporate book up to date is to make notes throughout the year of issues that need to be documented, then take the book and your notes to an attorney, or if your state allows, to a paralegal (who is generally much cheaper than an attorney) to generate the written record you need…then you just sign, date and put the papers in your Corporate book.

This will help protect you and the assets you have worked so hard for…

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