The Importance of Maintaining Good Corporate Records

There are many situations when a business will need to prove its books and records are in proper order.  These include government agency audits, inspections and investigations; financing transactions such as loan, grants and investors; and corporate due diligence involved with mergers, separations, sales and joint ventures.

Here is a list of documents you should keep in one location (usually at your place of business) for access on demand by various agency officials:

  • Certificate/Articles of Incorporation or Organization and filing receipts (certified copy as filed with the relevant Secretary of State), including all filed amendments
  • Bylaws and all amendments
  • “Foreign” Filings (registrations to do business in states other than the state of incorporation)
  • Organizational consents and organizational meeting minutes by the incorporator and initial stockholders and directors that, among other things, appoint initial Board members, adopt the Bylaws, appoint initial officers and authorize any other actions that require formal approval such as issuance of shares to founders
  • Founder Vesting Agreement, voting agreements, shareholder agreements, operating agreements, and any other agreements among owners, voters or key employees
  • Copies of minutes from all Board meetings and stockholder (member) meetings
  • Copies of all Board and stockholder resolutions, adopted either at meetings or by written consents
  • Stock Ledger and Option Ledger listing status and ownership of all shares and options
  • Copies of all issued stock certificates (member unit certificates)
  • IP Assignments (trademark, copyright and patent)
  • Evidence of IP filings/registrations (for any trademarks, copyrights, patents and domain names)
  • All contracts, leases and amendments, including NDAs, non-compete agreements, employment agreements and contractor agreements (fully signed and complete copies)
  • Option or equity incentive grant documentation (including Board approvals)
  • Financial statements, tax records and documents related to value of the company
  • Annual or biennial reports or statements of information filed with the state and any other government agency
  • Appraisals of stock value or key asset/property values
  • Deeds or title documents to important business assets
  • Permits and licenses for operating

Online reviews or content disparages your brand reputation. How do you decide whether to take countermeasures?

Your first step is to determine if this review or story will natural fade away or is likely to snowball and cause lasting damage to your reputation in the marketplace. You must give the situation a non-emotional evaluation and in light of the fact that the overwhelming majority of online content is never read.

If you decide defensive action is warranted, you may want to consider options such as these:

  1. DIY approach: Asking a social network or web host to remove content that infringes on your IP rights or violates on the site’s terms and conditions relating to defamatory content
  2. Involving a lawyer: A cease and desist demand, injunction, or lawsuit against the writer alleging defamation, unfair competition, breach of contract, copyright or trademark infringement or other legal causes of action

I Recommend Income 180 Conference

Earlier this month, I attended the Income 180 Live Event 2014, with Nancy Roberts and Chris Kenney.  I had two goals for this 2½ day conference: learn how I could do better in conveying the benefits I provide to people so I would have the opportunity to work with more business owners, and secondly, to learn some business building techniques I could convey to my clients to help improve their business and its bottom line.

My opinion: This experience is very affordable and well worth the time investment.  Here are a few highlights of my 3 days:

  1. I now have a better understanding of the psychology of the buying process and how it affects the way potential clients interact with me (and my clients).
  2. I have some techniques my clients and I can immediately use to improve client relationships.
  3.  I learned how to improve my initial consultation with a potential client to make it more customer-centric.
  4. I left energized and re-invigorated- something we all need to have (that fire inside us to do our best work).

The material was presented in an interactive and easy to understand manner.  That is crucial.  Since some of the lessons are taught by an experiential exercise, your understanding goes to a depth you never before felt when you are put in your customer’s shoes.  The lessons will never be forgotten and will forever impact how I see certain situations.

Who will benefit most?  I believe people in a service or consulting type business will have the most profound experience.  However, the experience will benefit any entrepreneur.  Nancy and Chris offer professional coaching in a more personalized basis and I have no doubt this is a sound investment.  Consider this coaching as your “MBA” in profitably operating your own business.  Instead of spending money one time for marketing or pay-per-click advertising, invest in you for a lifelong results and return on investment.  They convey real world, real time experience to teach you how to do it right.  The investment is substantial for private coaching but with real results you’ll earn the cost back in months, not years.  You’ll wonder why you didn’t do it sooner.

Using SS-8 as a self-audit for employers

There are many government forms that I look at to understand their real use. The SS-4, for example, is a form to allow an individual, company or corporation (or their appointed attorney or representative) to apply for an employment identification number (EIN or Tax ID). The information on the form is used by government officials to go through the EIN program in their system to obtain the EIN. If you have ever called the IRS to get your EIN, you will probably notice that the questions they ask you go along with their system to allow them to file your application. In addition to the EIN, the answers you provide will assist them in classifying your company in the appropriate category for tax and census purposes.

What the SS-4 is to the EIN, the SS-8 form is to the determination of a worker’s status. As discussed in Employee or Independent Contractor? – That is the question, the IRS uses a 20-factor common law test to determine whether or not a worker is an employee. When the status of a worker is in question, the IRS may request the employer/worker to complete an SS-8 to confirm his status as an independent contractor or demonstrate that the worker is in fact an employee.

Some employers use this form as an internal audit to make sure their employers and independent contractors are properly identified and taxed, as well as to identify their responsibility and liability to their different workers.

After requesting basic information (name and information on the employer and worker), the form presents questions formulated around the 20-factor test to help determine the worker’s status as an employee or independent contractor.

Below you will find some of the questions taken from the SS-8 form and how they are used to determine employee or independent contractor status.

PART I, Question 4

Usually, when a worker obtains their job by bidding for the contract, they are independent contractors.

PART I, Question 9

When you are asked to explain why you believe that a worker is an employee or an independent contractor, you should be able to provide a reason that incorporates one of the factors that the IRS deems part of its common law test. Using one or more of the factors will help guide your answer. If you have trouble supporting your claim that your worker is an independent contractor, chances are, they are an employee.

PART II, Question 1

If specific training or detailed instruction was provided to the worker (how, what, and where to work) he is probably an employee.

PART II, Question 6

If the worker’s daily routine is repetitive and determined by the employer, then he is probably an employee.

PART II, Question 10

If assistants/helpers are hired by the employer, then the worker is probably an employee. Independent contractors usually hire their own apprentices/assistants.

PART III, Question 1

If the firm provides a majority or all of the supplies, equipment, materials or other work-related property, then the worker is probably an employee.

PART IV, Question 2

If the worker can be terminated or terminates his employment without liability or penalty (i.e. breach of contract) then he is probably an employee.

When using the SS-8 form to assist with an internal audit, understanding the 20 factors that the IRS uses is necessary in order to understand how the answers indicate whether or not the worker is an employee or not. These factors can be found at Employee or Independent Contractor?– That is the question.

To understand the consequences of misclassifying a worker as an independent contractor, you can also refer to Can my servers and bartenders be independent contractors?

Employee or independent contractor? – That is the question

One of the more difficult concepts to grasp for many employers and those new to the business world is the difference between an employee and an independent contractor. The differences between these roles can greatly affect the taxes of the worker and the liability/responsibility of the employer. For a better understanding of the difference between the two roles, I have outlined the factors that the IRS uses to determine which category a person falls under for tax purposes. This test can be used as a general guideline for employers, employees and independent contractors to ensure that they maintain their roles and understand their responsibilities both on the job and with the IRS.

The IRS has a list of 20 factors that it uses to determine whether or not a worker is an employee under the Tax Code. The three most important factors are:

  1. Instructions: requiring a worker to follow your instructions as they pertain to the work they are doing. This includes where they do the work, when they need to do the work/have it completed, and how to complete the job (either specific instructions or a set schedule of the different stages of work required).*minor instructions such as what hardware to use when installing your kitchen cabinets, is not enough instruction to create an employer-employee relationship*
  2. Training: Requiring work to be done in a specific manner by offering training that teaches the worker how to complete different tasks required by the position usually indicates an employer-employee relationship. Whether these trainings be weekly meetings, shadowing a senior worker or attending a mandatory training before becoming employed, these activities all give the employer control over how the worker should do their job and therefore indicate an employer-employee relationship.
  3. Profit/loss: An employee receives a salary to do the work they were hired to do day in and day out. They are susceptible to being fired, promoted or disciplined based on their job performance. An independent contractor has a financial stake in the work and if their work is not up-to-par, they may not get paid; if they take too long, they may not realize any profits, or even suffer a loss.

I have broken down the factors the IRS uses to differentiate between employee and independent contractor into 3 different categories: Employer responsibility – what the employer should control; Financial responsibility – who pays for what; and Miscellaneous – who makes the decisions that cannot be categorized.

Employer Responsibility

Where the employer is responsible for a majority of the decision making, then an employer-employee relationship is probably set in place. The following decisions, when made by the worker, would create an independent contractor rather than employer-employee relationship:

  1. When, where and how the work is done;
  2. When, how and what training is required;
  3. Hiring, supervising and paying assistants/helpers;
  4. Determining work schedule;
  5. Requiring full-time work (40-hour weeks);
  6. Determining order/sequence of work;
  7. Deciding when to terminate work; and/or
  8. Requiring the worker to work at the office/company premises when work can be done elsewhere (from home or a satellite location).

Financial Responsibility

While many employees pay for a lot of their employment expenses (gas, brief-case, toolbox etc.), there are certain expenses and financial decisions that, when left to an employer, create a different relationship than when they are the decisions of the worker. The following decisions/responsibilities, when made by the employer, create more of an employer-employee relationship:

  1. Pay schedules determined by hourly, weekly or monthly pay-rates. (commission payments would reflect more of an independent contractor status);
  2. Reimbursement of travel expenses or other business expenses associated with a job paid by the employer;
  3. Providing the required tools, equipment and materials at the job-site for workers to use to complete the job;
  4. Providing, maintaining and paying for a work facility, job site or office for the employee to work in;
  5. Realization and/or distribution of profits;


  1. Part of the business: When the work that the workers are employed to do is an inherent part of the business, typically, the workers are considered employees. Their work is directly related to the business, requiring them to do their work in a specific manner, repeatedly, each day.
  2. Personal services: While workers who are employees are assigned specific tasks and confined to their roles, independent contractors are able to expand their personal services to whichever area they like and offer different services to different jobs.
  3. On-going relationship: Typically, when a worker has a working relationship with one company, they are considered to be an employee. However, there have been many independent contractors who have multiple on-going contracts with the same business that could indicate an employer-employee relationship. One thing that may assist in differentiating the two is that an employee is contracted for their role, while an independent contractor may be contracted for a series of tasks. 
  4. Status reports: While independent contractors typically provide updates on their projected schedules, the IRS looks to see if a worker regularly provides written/oral reports to determine their relationship. Daily, weekly, or monthly reports usually indicate an employer-employee relationship.
  5. Multiple Companies: When a worker has jobs/responsibilities to several different, unrelated companies at the same time, they are likely independent contractors. In addition, the independent contractor can decide who to offer their services to without requiring permission from the employer – they are available to the public.
  6. Ability to discharge workers: When there is an employer-employee relationship, the employer has the ability to discharge the employee at any point in time. In contract, an independent contractor usually works under a contract and cannot be discharged without liability to the employer if the discharge is not permitted under the contract.

While this list can seem rather intimidating, it is essentially what the SS-8 form found on the IRS website reflects. The application to determine “employee work status for purposes of federal employment taxes and income tax withholding” is used by many employers as a self-audit to make sure they are in fact acting as employers.

It is also important to understand that a worker need not have all the factors in their favor to be considered an employee, but a majority in one direction is best in order to qualify one way or another under the tax code.

Whatever category you fall under, it is important to understand why you are classified under that role. Knowing your responsibilities and the liability that accompanies your employment is crucial to ensuring that you not only do your job to the best of your ability, but that you understand the results of your actions, both good and bad.

Have the entrepreneurial bug?

Have you been considering launching a new business? You probably are wondering if this is a good time to take the leap. Business ownership is a lifestyle choice. Are you needing to change your lifestyle to achieve your personal or professional goals? People start businesses at all phases of life. According to Global Entrepreneurship Monitor, new business were started or operated by:

  • 6% of all adults 18-24 years
  • 18% of all adults 25-54 years
  • 6% of all adults 55-64 years

More businesses are started by men, but the gap is decreasing. While only 80% of the U.S. entrepreneurs are women, they make up the majority of new entrepreneurs in the age 55-64 group. If you offer a service to startup businesses, you should focus on this target market. Common reasons women launch a business at this phase of life are second careers after raising a family and a desire to get out of the rat race in favor of more control over career, quality of life and a retirement income. The competing family and financial demands are less in their late 50’s and early 60’s. Confidence in entrepreneurial ability is greater for women at this age as well.

Your first step towards entrepreneurship should be to prepare a business plan. This will guide you as you launch the new business and help provide targets and benchmarks to measure progress. Consulting with a business attorney can help you identify steps you will need to take for regulatory compliance, potential risks and mitigation options, and alternatives for business structure. Armed with this information, you can create a realistic business plan with appropriate costs and timelines.


Basic differences between a Franchise and a License Agreement



Elements A Franchise, at its very basic state, has these elements:

  •   Common   Brand
  •   Common   Operating System AND
  •   Payment   of either an initial fee or ongoing fees from Franchisee to Franchisor
A License agreement is usually missing one of the Franchise   elements. The most common form of  a   license agreement has the following elements:

  •   Common   Brand and/or
  •   Payment   of a fee to Licensor
Agreement Typical Agreements include:

  •   Training
  •   On-going   Mentoring
  •   Technical   Advice from Franchisee
License agreements do not get much ongoing support from licensor
Relationship Close Relationship between Franchisor/Franchisee Loose relationship with minimal communication
TM/Logo and Territory Franchisee has the rights to use the Trademark and/or logo of parent   company (Franchisor) and are typically given territorial rights Licensee is not given the right to use the parent company   Trademark or logo; they are expected to market their own brand and build   their own presence/identity in the marketplace.

How to dissolve your DBA with New York State Department of State

At some point during the life cycle of owning your business, you may find that you no longer have use for the trade name (assumed name, DBA, or ‘doing business as’) that you registered with the New York Department of State (NYDOS), Division of Corporations. It may be that you are quitting the business or selling it, or that you decide to operate under a different name. Either way, you are going to need to get rid of the current trade name. This is known as ‘discontinuing an assumed name’ – the term that the NYDOS uses for a DBA. Another term for this process is ‘dissolving a DBA.’

Dissolving your DBA can be a very quick and easy process. In order to file the dissolution paperwork, you will need:

  1. The “Fillable Certificate of Dissolution Form” from the NYSDOS.  The appropriate form can be found at: ;
  2. $25 Filing Fee paid by check made payable to the New York State Department of State (or  if you are faxing the form, the fee will be submitted via credit card on the Credit Card Authorization Form found at: ); and
  3. Information on the date of filing of both the initial corporation as well as the DBA (Certificate of Assumed Name).

If you are dissolving the DBA for a business transaction and require a filing receipt of the dissolution, I recommend that you elect to pay the additional expedited fee of $25.00 as the NYSDOS is usually backed up 3-6 weeks in its processing of un-expedited filings.

Fill out the Certificate of Dissolution Form and provide a check for the filing fee and mail to: New York Department of State, Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231.

If you are faxing your dissolution, you will also need to complete the Credit Card Authorization Form and submit both via fax to the NYSDOS at (518)474-1418.

You must make sure to keep the information in the form consistent with NYDOS records, as the NYSDOS will reject the Certificate if you make any errors. You can check the online business entity search to ascertain some of the details of the official record of the Corporation at .

Here is an example of the completed Certificate of Discontinuance of Assumed Name and Credit Card Authorization forms as a reference.

Are you an entrepreneurial personality?

A recent ABA article talked about attorneys as entrepreneurs. The economy and quality of life concerns have both given rise to more attorneys “hanging out a shingle” as more attorneys, either unable to get a job in a firm or were laid off by firms forced to downsize, were drawn to starting up their own practice. The article had one interesting insight about a quality of most entrepreneurs: “Entrepreneurs do not like risk. They seek to minimize risk in pursuit of their idea.” I gave that some pause because we generally think of entrepreneurs as risk-takers, people who throw caution to the wind. However, I work with entrepreneurs every day. They come to me to understand the potential pitfalls and to manage the perceived risk. They are willing to take risk if they see a reward for their effort and they feel there are steps they can take to control or minimize the risk. This is where an attorney can do their best work and provide significant value and return on investment (ROI). An ounce of prevention is worth more than a pound of cure.

Are you thinking of starting a business? Do you have what it takes? There are other qualities that most entrepreneurs share. Ask yourself these questions to explore if you have an entrepreneurial streak deep down:

Do you see opportunities or constraints? Entrepreneurs see “probortunities.”

  • Are you optimistic? Tenacious? Entrepreneurs are willing to work hard, even in the face of challenge, because they see a positive outcome in the horizon.
  • Are you comfortable with ambiguity and uncertainty? Do you wake up wondering where the day will take you? Entrepreneurs are flexible and able to react to new situations without panic.
  • Do you like or dislike rules? Entrepreneurs dislike rules, while most people find the presence of rules comforting.
  • When presented with a crazy idea, do you look for value or dismiss it? Do you like to do things the orthodox way, or do you find yourself forging new paths? Do you question why things are done a certain way instead of just doing it that way because everyone else does?
  • Are you passionate about your product or service? If you believe in your mission, failure is not an option.
  • When things go wrong, is your first reaction to find blame or find a solution? Entrepreneurs are fixers, not blamers.

Consider these qualities and see where you stand. If you find yourself lacking in some of these areas, think about ways that you can cultivate them. It may be taking a class, reading a book, or consulting with successful entrepreneurs in your network. Consider it part of your professional development and make it a priority project.

What other qualities do you find in entrepreneurs? How do you find those qualities attributing to (or inhibiting) the success of the business?

8 Puzzle Pieces to Successful Advertising

By Mark Combs,

Aren’t you tired of the money you spend on advertising going out the window and never seeing it return with sales? What are the pieces that solve this advertising puzzle? Well, there are 8 puzzle pieces that make a great advertisement, let’s take a look.

  1. Audience – Who are you selling to? What problems do they have that you can solve? Sit down and write out 10 characteristics of your “perfect customer”. Write down their age, gender, profession, income, method of travel, hobbies, etc. In essence draw a mental picture of who you are speaking to. Remember, “everyone” is not a target market.
  2. Solution – What solutions do you offer to this “perfect customer”? Look at the list you just made, and write down 3 to 5 needs or problems that you can solve for them.  Rank them in order of biggest need to smallest. Decide which of these needs you want to focus on for this ad. It might be the one need you serve the best, or one that you want to serve more. Solve one problem for one customer in one ad.
  3. Message – You know who your perfect customer is, you know what problems they have that you serve best, now craft a message that speaks directly to that narrow niche.  Your message should identify the audience and the need as well as provide the solution.  Once you have this message polished, repeat it every time you advertise this solution. Create 10 ways to say the same message and use them over and over.
  4. Headline – Your headline is the stop sign in the brain of your perfect customer. Write a headline that will get their attention and support your message. It needs to grab their attention and make them want to read more. Rewrite it until you get it under 7 words. The fewer words you use the better, but make sure you keep supporting your message.
  5. Image – More and more we are becoming a visual society, so the image you pick for this ad needs to be a good one. I understand a tight budget, but there are plenty of online stock photo sites that you can get high quality photos for around $10. The impact a good photo makes is well worth the investment. Again make sure it supports your message and relates to your perfect customer.
  6. Sub-Head – The sub-head is like a secondary headline, it explains the headline more and entices the reader to read further.  You can use it to answer the question in the headline, but be sure the sub-head gives a bit more information and points the reader to the copy.
  7. Copy – This is it. Now is the time for that message to come through. You stopped them with a great headline, they relate to the image you picked, they are ready for your message. Write the copy of the ad so that it speaks directly to the need of the perfect customer. They really don’t care about who you are, or your history in the industry. They care about solving their problem, meeting their own needs.
  8. Call to Action – The whole point of you spending time and money on this advertisement is to get your perfect customer to take some sort of action. Hopefully this action includes them paying you for a solution to their problem. The action you call them to can be anything, visit a website, look for your product in the store, request more information or to contacted. Without a Call to Action your advertising is wasted. You can have all the other pieces to this puzzle and forget the Call to Action and your ad will not succeed.

It isn’t required to use every puzzle piece to have a successful ad, but you must use the corner pieces. You must know your perfect customer, give them a solution to their problem, have a message that speaks to them, and you must give them some action to take. If you follow these guidelines your advertising dollars will come back to you with friends.

If you need help with this advertising puzzle let us know at, we would be glad to help.