NOTE: This blog post was developed from my notes for a recent presentation to the Public Relations Society of America International Conference titled “Keys to Agency Management.” The presentation included a number of back to back Ignite style presentations. This portion focused on legal concerns.
“You don’t want the truth because deep down in places you don’t talk about at parties, you want me on that wall, you need me on that wall. You want the truth about the legal aspect of running a business?” – Colonel Nathan Jessup (as played by Jack Nicholson)
The movie “A Few Good Men” gives us insight to the legal realm. While Tom Cruise is an actor playing attorney. I am Tom Garrity, a public relations firm owner who is not an attorney. My late grandfather, whom I am named after was a very successful attorney, judge and an admitted lawyer to the United States Supreme Court.
If he was alive today, he would discourage me from giving this presentation, asking that I leave it to an attorney. However, in his spirit, let me reiterate that I am a public relations firm owner and NOT an attorney.
In that same vein, I am also not an accountant. However, I have attorneys and accountants on retainer. I also have a core group of advisors providing me insight and counsel. You should do the same.
How should you set up your company? Sole practitioner, LLC, S-Corp, C-Corp… it all depends how much legal protection you want and how you want to be taxed. I started as an S-Corp and am now an LLC.
When I talk about “level of legal protection” I am talking about what attorneys call a “veil” that protects you personally from what happens in your work/professional life. Only the sole proprietor does not provide that protection.
What an LLC, S-Corp and C-Corp provides is a “veil” of protection between your business and your person. You have to protect that veil by keeping your business and personal affairs separate.
That means getting a business credit card, business checking account, business savings account, etc. There are ways to set up your company and you should consult an attorney and accountant who has experience. Again, I am not an attorney or an accountant only someone who has run their business for the past 16 years.
Once you decide, you want to set up a business, register with your City, County, State and Federal Government. Where I live I need a city business license, a state identification number and a federal tax-ID number.
Other key documents you will need include a “Letter of agreement” with clients. This will include their contact information, term of agreement, services you will provide, how much and how you will charge for services.
The letter of agreement will identify what happens when they are late paying or don’t pay. It also should provide indemnification if you are relying on them for information. And yes, be sure they sign it!
On the employee side, the I-9 immigration form and W-4 wage and information form are two documents that are mandated by the federal government. Include it as a part of your process bringing on a new employee.
On the topics of new employees, a letter of offer that states the date of hire, wage, exempt or non exempt, salary, vacation and other items like “at will” employment. This provides peace of mind to everyone.
Exempt vs Non-exempt. This is a classification by the Labor Department that identifies what jobs are available for overtime and which ones are “exempt” from paying overtime. Exempt = Salaried, Nonexempt = Hourly
Have an employee policy manual that includes information about conduct, benefits, employment practices like timekeeping, overtime, reviews. Lots of things to include here; resist the temptation to use cookie cutter manuals.
Finally, educate yourself about all of these things but don’t self diagnose. Choose an accountant a tax attorney and a business advisor to provide insight and counsel and have conversations with other PR firm owners. A safe place for these types of conversations includes the Counselors Academy annual spring conference this May 4-6, 2013 in Key West, Florida. Peer discussions, best practices and details behind the numbers.