Financial Advisor
HomePCBy Marie D'Amico
In a survey done in the spring of 1991, GTE estimated about 30% of our nation's work force will labor at home by the year 2020. Perhaps you're one of them. Maybe you relish wearing pajamas while typing at your PC. Don't let your cozy comforts, however, lull you into lax legal and business behavior. You should always retain an accountant and an attorney for your business with whom you can consult. A load of legal titles now are available to help you resolve or reduce the cost of those everyday legal issues which every business faces.
To Incorporate or Not to Incorporate?
If you've got a home-based business, you can operate it as a sole proprietorship, partnership, or corporation. Each structure has its own pros and cons. For sole proprietorships and partnerships, the pro is simplicity. You obtain a business license from your county's city hall and file a fictitious name statement, and for partnerships, execute a partnership agreement, and you're finished. The cons are inflexible tax planning and personal liability. Your company's income is reported on you, and your partners', individual tax returns. You can't distribute income or accumulate it when it's advantageous, as you can with a corporation. You, and your partners, are personally liable for all the debts, taxes, and liabilities of your business. This means your personal assets can be confiscated and sold to pay off company debts. In a corporation, only the amount you actually invest is subject to claims from your creditors.
As a lawyer, I don't recommend sole proprietorships or partnerships because of unlimited personal liability. If you like them however, Agreement Builder, Kiplinger's Small Business Attorney, LEGAL LetterWorks, or Nolo's Partnership Maker provide the necessary documents. Partnership Maker has a dated DOS and text-based user interface but the inch-thick legal guide, which can be purchased separately for $24.95, is a real value. Agreement Builder and LEGAL LetterWorks both provide an array of partnership agreements in an easy to use, fill-in-the-blank format, which can also be edited in your word processor. LEGAL LetterWorks provides online explanations in a split-screen window format whereas Agreement Builder embeds its comments within the document. It may be personal style, but I found LEGAL LetterWorks' format easier to read and use. Small Business Attorney provides one partnership agreement.
If you decide to incorporate, you can use Agreement Builder, Incorporate! 3.0, or How to Form Your Own Corporation. Agreement Builder provides basic incorporation papers only for California. How to Form Your Own Corporation supplies documents only for Delaware, but it's an interactive CD-ROM filled with practical video help from the author and extensive explanations of the rationale and reasons behind incorporation as a mode of doing business. If it allowed incorporation everywhere, it would be the absolute winner. Incorporate! 3.0 furnishes incorporation documents for all 50 states. It also supplies scads of helpful hints Agreement Builder doesn't, such as filing fees, where to mail papers, who to call, and how to speed the process from Alabama to Wyoming.
What Happens Afterwards?
After you incorporate, to retain limited liability, you must adhere to rules and regulations or a court can "pierce the corporate veil." Piercing subjects the shareholders (that's you) to personal liability for the company's debts. To prevent piercing, follow certain formalities. Hold regular shareholder and director meetings, elect directors and officers, issue stock, open bank accounts, pay debts with corporate checks (not your personal checks), and ensure the directors approve all the various corporate transactions, such as consulting and employment agreements.
Sound time consuming? Not with titles like LEGAL LetterWorks, MinuteMan, or Form Your Own Corporation. All include templates for bylaws, minutes of meetings, and shareholder ledgers. Form Your Own Corporation has the best online help of all three titles but its documents are specific to Delaware. LEGAL LetterWorks and MinuteMan's documents are statewide generic. Small Business Attorney provides documents for initial meetings, but none to satisfy your continuing reporting duties. No title cross-checks the accuracy of meeting minutes against information previously provided. For example, if in your Bylaws you specify the annual election of directors must occur on December 31st, no program prevents you from electing directors on a different day. You must ensure you've accurately dated documents yourself or have an attorney briefly review your work.
How Do I Hire Personnel?
Even if you simply sit in your home office, you should hire consultants and employees with formal written employment applications, offer letters, and consulting or employment agreements. Employees should be suspended or terminated only via written documents. Most business legal titles provide the required documents. The Business Agreements Kit, for example, supplies the agreements, but it includes little, if any, explanation of the contracts and their clauses. The Complete Legal Collection is not specifically oriented towards business; rather it's Quicken Family Lawyer with some business agreements and a legal dictionary added. It's not suitable as your sole legal business source but the CD-ROM version has great video help from renowned law professor Arthur Miller. Agreement Builder, LEGAL LetterWorks, and Small Business Attorney have the broad range of business personnel documents and lots of explanatory help. LEGAL has the widest array of documents of all the titles, but Small Business Attorney's interactive CD-ROM has great online video tutorials.
What if I Need General Business Legal Documents?
Agreement Builder, The Business Agreements Kit, LEGAL LetterWorks, and Small Business Attorney all supply business agreements from contracts to leases to nondisclosure agreements. You can use them to resolve many simple business dealings and to reduce your legal cost with complex arrangements by helping you draft the document, and then you can have an attorney review it, if necessary. In general, The Business Agreements Kit's documents are not as substantive as the other titles' agreements, and the lack of help would hinder most laymen. You can legally use the provided documents, but you would lack a thorough understanding of them. Agreement Builder provides a basic background for many legal, business subjects but LEGAL LetterWorks has the widest range of documents of the four titles. Small Business Attorney has a medium range of documents but the interactive CD-ROM has great online video tutorials for those who like humans to help them through the process.
Finally, if you need attorney-like advice, Small Business Legal Pro is the title to buy. It contains a few forms and letters which are both legally accurate and well-written, but a bit informal. These forms can be completed using a fill-in-the-blank mode or edited in your word processor. Its real value lies in its word searchable explanation of a wide array of legal topics which affect both individuals and small business owners every day. If you've got a legal question, it's got an answer. Best of all, it doesn't charge by the hour.
Sidebar A: Shopper's Guide
Agreement Builder, Jian , (415) 254-5600 or (800) 762-2413, Macintosh, Windows diskette, $99 ($7 for shipping)
The Business Agreements Kit, Dearborn Financial, (312) 836-4400 or (800) 638-0375, DOS, Macintosh diskette with book, $19.95 (plus $5 for shipping)
The Complete Legal Collection, Parsons Technology , (319) 395-9626 or (800) 223-6925, $49 (plus $5 for shipping), DOS, Windows, Macintosh, PowerMac diskette or CD-ROM
How to Form Your Own Corporation (Without a Lawyer for under $75), Dearborn Financial, (312) 836-4400 or (800) 638-0375, Windows CD-ROM with book, $34.95, book and CD-ROM each separately sold for $19.95 apiece (plus $5 for shipping)
Incorporate! 3.0, Unabridged Software, Inc. , (713) 662-7630 or (800) 248-7630, $79 ($7 for shipping), Windows diskette
Kiplinger's Small Business Attorney, Block Financial Software, (913) 385-0217 or (800) 813-7940, $49 (free shipping), Windows diskette or CD-ROM
LEGAL LetterWorks, Round Lake Publishing , (203) 438-5255, $79.95 ($4.95 for shipping), DOS, Macintosh, Windows diskette
MinuteMan, Unabridged Software, Inc. , (713) 662-7630 or (800) 248-7630, $79 ($7 for shipping), Windows diskette
Nolo's Partnership Maker, Nolo Press , (510) 549-1976 or (800) 992-6656, $47.97 ($5 for shipping), DOS diskette
Small Business Legal Pro, Nolo Press , (510) 549-1976 or (800) 992-6656, $39.95 ($5 for shipping), Macintosh, Windows diskette or CD-ROM
Sidebar B: Useful Internet Sites
Loads of searchable resources, including decisions by the New York Court of Appeals and the Supreme Court, and the complete U.S. code
Plain English articles about laws that affect everyone every day
Legal information searchable by topic
Links to district and state court opinions and statutes
Links to legal topics worldwide and searchable index of counselors
Federal web locator for information about federal agencies
U.S. Copyright Office home page
U.S. Patent and Trademark home page
Software
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