One of the most frustrating things I encountered back when I practiced law was just how often I would see small business owners in my office, in trouble, because they had bad information.

Example: One fellow decided that, in order to be friendly, he would ask job candidates about their holiday plans — “So, what are your family Christmas traditions?” or “Hanukkah eh? That’s interesting. How do you celebrate that exactly?”

Now, I knew the guy. He didn’t have a malicious bone in his body. But the Christian woman who didn’t get the job didn’t know that; she was convinced that she wasn’t hired due to religious discrimination. Even though she was incorrect, she seemingly had “proof.” It cost my client a pretty penny to learn the hard way that you cannot ask religious questions when hiring.

That experience is but one reason why the most recent ComplyRight National Small Business Compliance Pulse Survey is so interesting. The survey surveyed owners, CEOs, and others charged with handling HR responsibilities at 300 small businesses (five to 100 employees) across the U.S. One of the first things that jumped out at me was that less than half of the small business owners surveyed said that they were “very confident” that they were aware of all federal, state, and local labor laws that could affect their businesses.

That’s really dangerous because the fact is, what you don’t know can hurt you.

And, what’s worse is that when they do want to learn more about employment law, small business owners often turn to sources that are not always the best:

• First, the survey found that entrepreneurs look to written notifications from federal and state agencies. The problem with this is that agencies rarely provide such notifications or updates.
• Next, small business owners look to their own lawyers, accountants, or other business advisors. The problem here is that many of these advisors have limited knowledge of labor laws due to the complexity and rapidly changing nature of the beast.
• Finally, respondents reported that they rely on the knowledge of friends and colleagues. No commentary is even necessary here.

So, the situation is this: Even though we’re in an era of increasing employment law intricacies, a time of ever-changing state, local, and federal regulations, many small business owners have no set processes in place for staying up to date with those changes, let alone learning what it is they need to know.

But even so, at least they have state-of-the-art processes for managing their HR issues, right?

If only.

Get this: Almost half of the small business employers surveyed (46%) rely on “pen, paper, and sticky notes” for their HR process. Indeed, only 17% have invested in contemporary HR systems — technology that can manage HR-related information in one place with one program. The problem with an analog process in a digital world is that not only can this lead to significant legal and financial problems, but it also translates into stress and reduced productivity among the employees who are managing compliance.

So, the question is this: What should small business owners and office and HR managers do to manage all of these regulations such that they are never forced to sit across from their own lawyer, lamenting their lack of HR savviness?

I would suggest that the best practice is actually fairly simple:

1. Take time to investigate, and invest in, up-to-date technology and processes such as web-based HR solutions
2. Choose compliance-minded vendors and partners who fully understand the importance of labor law regulations
3. Protect your company by regularly updating employee policies to cover and address new developments that have a direct impact on the business and employees

A well-structured HR system, supported by comprehensive HR services, can help you attract and retain top talent, improve employee performance, and create a positive company culture.

The bottom line is that the smart small business owner will invest in modern HR solutions, knowing that, in reality, it doesn’t cost; it pays.

The Importance of HR in Small Businesses

Human resources (HR) plays a vital role in the success of small businesses. As a small business owner, managing HR tasks can be overwhelming, especially when you’re already handling multiple responsibilities. However, neglecting HR can lead to decreased employee morale, increased turnover rates, and even legal issues. A well-structured HR system can help you attract and retain top talent, improve employee performance, and create a positive company culture. By investing in HR, small businesses can help ensure that their employees are motivated, productive, and aligned with the company’s goals.

Building a Strong HR Foundation

Building a strong HR foundation is crucial for small businesses. This involves creating a comprehensive employee handbook that outlines company policies, procedures, and expectations. It’s essential to include information on employee benefits, compensation, and performance management. A well-written employee handbook can help prevent misunderstandings, reduce conflicts, and help ensure compliance with federal employment laws. By clearly communicating what’s expected of employees and what they can expect in return, small businesses can foster a transparent and fair working environment.

HR Compliance and Risk Management

HR compliance and risk management are critical aspects of HR management. Small business owners must ensure they comply with federal employment laws, such as the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). Failure to comply can result in costly fines and penalties. HR professionals can help small businesses navigate complex employment laws and regulations, reducing the risk of non-compliance. By staying informed and proactive, small businesses can protect themselves from legal issues and create a stable and compliant workplace.

Performance Management and Employee Growth

Performance management and employee growth are essential for small businesses. Regular performance evaluations can help identify areas for improvement, provide feedback, and set goals for employee development. HR professionals can help small businesses create a performance management system that rewards employees for their achievements and provides opportunities for growth and development. By focusing on continuous improvement and recognizing employee contributions, small businesses can boost morale and drive long-term success.

Company Culture and Employee Well-being

Company culture and employee well-being are critical components of HR management. A positive company culture can improve employee morale, increase productivity, and reduce turnover rates. HR professionals can help small businesses create a more inclusive workplace culture that promotes employee well-being, diversity, and inclusion. This can include offering competitive benefits packages, providing employee training and development opportunities, and promoting work-life balance. By prioritizing employee health and well-being, small businesses can create a supportive and thriving work environment.

Steve Strauss is a senior small business columnist at USA Today and author of 15 books, including The Small Business Bible.

Employers have various legal obligations they need to adhere to each day, which can range from OSHA regulations to tax requirements. Running a company can ultimately be a minefield for legal breaches and health risks, which could severely impact your business.

If you want to deal with multiple challenges throughout your company’s lifespan effectively, learn more about the following on-site problems that pose a risk to your employees.

Understanding Workplace Hazards

Workplace hazards are situations or conditions that can cause harm or injury to employees in the workplace. These hazards can be physical, chemical, biological, or ergonomic in nature and can have serious consequences if not identified and addressed. Understanding workplace hazards is crucial for maintaining a healthy work environment. By recognizing and mitigating these hazards, employers can help ensure the safety and well-being of their workforce, thereby fostering a productive and positive workplace.

Types of Hazards in the Workplace

There are several types of hazards that can be present in the workplace, including:

• Safety hazards: These are hazards that can cause physical harm or injury, such as slips, trips, and falls, or being struck by an object.
• Biological hazards: These are hazards that can cause illness or infection, such as exposure to bacteria, viruses, or other microorganisms.
• Chemical hazards: These are hazards that can cause harm or injury through exposure to chemicals, such as toxic substances or flammable liquids.
• Ergonomic hazards: These are hazards that can cause physical strain or discomfort, such as repetitive motion injuries or poor posture.
• Physical hazards: These are hazards that can cause physical harm or injury, such as loud noises, extreme temperatures, or radiation.

Understanding these common workplace hazards is the first step in creating a safer work environment. Each type of hazard requires specific strategies for mitigation and control to help ensure occupational health and safety.

Occupational Safety and Workplace Hazards

Federal law entitles every U.S. employee to work in a safe environment each day. Hazard identification is a crucial step in recognizing and documenting safety risks in the workplace. It is, therefore, a business owner’s responsibility to remove potential safety hazards that could impact a worker’s health and well-being.

For example, if you run a construction firm, you could eliminate slips, trips, and falls by removing debris and unnecessary material on-site. To do so, you may need to rent or buy transfer trucks to collect and dispose of any potentially hazardous materials.

Intoxicated Employees and Workplace Safety

Inebriated employees are not only a danger to themselves, but they can also impact the health and safety of everyone on-site, especially if they’re required to operate heavy machinery, such as a forklift truck, excavator, or drive a company vehicle.

Common signs an employee has been drinking can include:

• A loss of balance
• Slurred speech
• Coordination issues
• Irrational behavior
• The smell of alcohol on their breath

If you suspect an employee has been drinking, you must talk to them in a non-confrontational, calm manner regarding the issue. If they’re intoxicated, you should refer them to an employee assistance program.

You can also prevent staff from driving a company vehicle by introducing an ignition interlock device. Every staff member that sits behind the wheel will need to provide a three-second breath sample to unlock an ignition. It promotes road safety and can prevent accidents.

Lack of Training and Safety Hazards

As mentioned, employers are legally required to provide their teams with a safe environment. That’s why it’s imperative to ensure your staff have the appropriate health and safety training for their roles, which can minimize the chances of a health and safety issue in the workplace.

Sadly, if an employee has not received the necessary training, they could operate heavy machinery that could lead to a fatal or non-fatal injury. Protect your staff at all costs and ensure your business is never liable for compensation by investing your company’s time and money into OSHA and on-the-job training. Conducting regular hazard assessments to identify and assess hazards is crucial.

Creating a Safe Working Environment

Creating a safe working environment requires a proactive approach to identifying and addressing potential hazards. This can involve:

• Conducting regular hazard assessments to identify potential hazards
• Implementing safety protocols and procedures to mitigate hazards
• Providing personal protective equipment (PPE) to employees
• Offering training and education on safety procedures and protocols
• Encouraging employees to report hazards and near-misses
• Maintaining a healthy work environment through regular cleaning and maintenance

By taking these steps, employers can create a safe and healthy work environment that protects employees from workplace hazards and promotes overall well-being. A comprehensive health program and commitment to occupational safety are essential for fostering safe workplaces and ensuring the long-term success of any business.

Conclusion

Running a company is not without its challenges, as business owners will have multiple responsibilities they will need to juggle each day. Yet, few aspects of your business are more important than your employees’ health and well-being.

For this reason, you must aim to create a safe working environment for everyone, tackle individual issues head-on, and provide your team with the appropriate training for their job role.

Business Resources:

FAQ – Federal Tax ID Numbers EIN and FEIN Guide

Generate New Business Ideas for your Next Startup – Business Idea Generator

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If you’re thinking of incorporating yourself as a consultant, then you might find yourself wondering if it’s worth the effort. There are many reasons to consider starting a corporation for your consultancy. Granted, corporations aren’t right for everyone, but they’re definitely worth considering.

In this guide, we’ll cover the basics of forming a corporation for a consultant business, including what a corporation is, its benefits and drawbacks, and an alternative structure if a corporation doesn’t seem like the right fit.

What is a corporation?

A corporation, sometimes called a profit corporation or business corporation, is a popular business entity structure in the United States and abroad. It’s owned by shareholders and governed by a board of directors. Many corporations also appoint a CEO, president, and other officers to handle the day-to-day management of the business.

Business directory scams are a growing concern for small business owners around the world. These scams typically trick business owners into paying for directory listings or services they didn’t agree to, or they steal sensitive information under the guise of legitimate business dealings. For small businesses, falling victim to these scams can mean financial losses, damaged reputations, and wasted time. 

According to the Better Business Bureau, scams targeting businesses, including directory fraud, cost companies millions of dollars annually. Protecting your business against these schemes starts with understanding how they work and staying vigilant against suspicious activity.  

Imagine receiving an urgent invoice from a supposed directory service warning that your business listing will disappear if you don’t pay immediately. It looks official, even referencing your company by name — but you’ve never heard of the service. 

Stories like this are common, and with more scammers targeting businesses through email, phone, and mail, it’s critical to recognize the warning signs. Let’s explore how these scams operate and how to protect your business.  

Business Directory Scams Explained  

Business directory scams involve deceptive practices where fraudsters pose as directory services to trick businesses into paying for listings, services, or renewals they never agreed to. These scams often target businesses of all sizes, but especially small and midsized businesses that may not have the time or resources to carefully scrutinize every invoice or email they receive. Scammers prey on trust, making it vital for businesses to stay alert to fraudulent claims and suspicious communications.

The harm caused by these scams goes beyond financial loss. Businesses can face reputational damage if customers discover their involvement in fake directories or if their information is misused. Additionally, scams can waste valuable time as owners and employees work to resolve the fallout.

Scammers often offer unnecessary services to exploit businesses, creating a false sense of urgency around regulatory compliance. These scams often fly under the radar, but knowing the warning signs can save you from unnecessary headaches. Recognizing the tactics scammers use is the first step toward protecting your business.

Types of Business Directory Scams Used by Scam Artists

The scary thing? There’s more than one type of business directory scam. But knowing what some of them are can help you spot — and ultimately avoid — these tricky scams. Let’s walk through some of the common ones.

Fake Invoice Scams  

One of the most common business directory scams involves sending fake invoices for services that were never provided. These invoices are often designed to look like they’re from legitimate directory companies, complete with logos, official-sounding language, and references to your business. Scammers hope that busy business owners will pay these invoices without questioning their validity.

For example, you might receive an invoice claiming that your business owes a fee for a directory listing you don’t recall signing up for. Scammers often assert that you owe money for these services and may include an urgent deadline or threats of additional fees for late payment. This pressure is a deliberate tactic to push you into paying before verifying the claim. Taking the time to double-check unfamiliar invoices can help you avoid falling for this scam.

Fraudulent Directory Listings  

Another common scam involves fake directories that offer to list your business in exchange for a fee. These directories may exist solely to trick businesses into paying, without any real audience or purpose. Some scammers go a step further, creating online directories that appear professional but offer no actual visibility or benefit for your business. Website directory scammers may even threaten businesses with the loss of their website URL if a fee is not paid promptly.

Paying for a listing in a fraudulent directory doesn’t just waste money — it can harm your reputation if customers discover that your business is associated with a scam. Always research directory services before agreeing to list your business with them, and look for red flags like poor online reviews or lack of transparency about their services.

Misleading ‘Renewal’ Scams  

Misleading renewal scams trick businesses into paying for the renewal of a directory listing they never signed up for. These scams often involve official-looking notices that mimic legitimate companies, complete with fake customer service numbers and professional branding.

The urgency of these renewal notices is a key tactic. Scammers use phrases like “renew now to avoid interruption” or “last chance to maintain your listing” to create panic. You might even find that someone demands payment through unconventional methods like wire transfers, cryptocurrency, or gift cards. If you receive a renewal notice, take the time to confirm its authenticity before making any payments.

Phishing Schemes Related to Directories  

Phishing scams are another method scammers use to steal sensitive information. A scammer might send an email claiming to be from a directory service, asking you to “confirm” or “update” your business information. These emails often include links to fraudulent websites designed to collect your login credentials, financial details, or other sensitive data.

Phishing scams can also target bank accounts, leading to account takeovers where fraudsters gain access to online banking credentials. It’s crucial to monitor bank accounts regularly to detect unauthorized transactions and use anti-fraud measures provided by banks.

Falling victim to a phishing scam can have serious consequences, including unauthorized charges, identity theft, and compromised business accounts. Always be cautious when clicking on links in emails, and verify the sender’s legitimacy before providing any information.

How to Spot Red Flags in Directory Scams  

Knowing what the most common scams are is one thing. Another is spotting them quickly enough to avoid them. Let’s talk through some of the most common red flags in scams. 

Look for unsolicited communications  

Unsolicited emails, letters, or phone calls are a common way scammers initiate contact. If you receive a communication from a directory service you don’t recognize, it’s worth investigating further. Be wary of messages that seem overly aggressive or claim that your business owes money for services you never signed up for.  

Scammers often use official-looking materials to appear legitimate. However, small details — like misspelled words, generic greetings, or inconsistencies in the company name — can signal a scam. Even if the so-called business proofread their materials correctly, it’s worth checking their information against the Better Business Bureau as well. 

In short: if something feels off, take the time to verify the source before responding.  

Watch out for pressure tactics  

Pressure tactics are a hallmark of scams. Messages demanding immediate payment or threatening penalties for nonpayment should raise red flags. Legitimate companies rarely pressure customers in this way, so take these demands as a warning sign.  

For example, a scammer might send an email claiming that your directory listing will be removed within 24 hours unless you pay a renewal fee. This sense of urgency is meant to push you into acting without thinking. Always pause and evaluate such requests before taking action.  

Verify authenticity  

Verifying authenticity is one of the most effective ways to spot fake directories. Start by searching for the company online and reading reviews from other businesses. If the company has no web presence or multiple complaints about scams, it’s best to avoid them.  

You can also contact the company directly using official contact information found on their website. Avoid using phone numbers or email addresses provided in the suspicious communication, as these may lead you straight to the scammers.  

How to Protect Your Small Business from Scams

The best way to avoid scams is to be proactive. Here are some of the best strategies to protect yourself from business scams. 

Train your team to recognize fraud  

Fraud detection starts with awareness. Training your team to recognize red flags in emails, invoices, and phone calls can prevent scams from succeeding. Share examples of common scams and encourage employees to report any suspicious communications.  

Regular training sessions can also keep fraud prevention top of mind. Make sure your team knows how to escalate concerns and verify the legitimacy of any questionable claims. A well-informed team is one of your best defenses against scams.  

Validate directory listings through official channels  

When approached by a directory service, always validate the offer through official channels. Look for contact information on the company’s official website and reach out to confirm the legitimacy of the request. Never rely solely on the information provided in unsolicited communications.  

This step is especially important for renewal notices. Before making a payment, check your records to verify whether your business is already listed in the directory. If you can’t find evidence of a previous agreement, the renewal request is likely a scam.  

Use secure payment methods  

Using secure payment methods can protect your business if you do fall victim to a scam. Credit cards, for example, often offer fraud protection and chargeback options; you can, in many cases, get your money back if it turns out the charge was a scam. 

As much as possible, avoid using payment methods like wire transfers, which are harder (if not impossible) to recover once the transaction is complete.  

Monitor your business’s online presence regularly  

Regularly monitoring your online presence can help you spot unauthorized use of your business name or fake directory listings. Set up Google Alerts for your business name to track mentions and catch any suspicious activity early.  

Steps to Take If You’ve Been Scammed  

If you find yourself working through a scam, don’t panic. With the right steps, you can minimize the damage, help prevent other people from falling prey to it, and avoid future issues. 

Stop payments or contact your bank

If you realize you’ve paid a scammer, act quickly to stop any further losses. Contact your bank or credit card provider to explain the situation and request a stop-payment order or chargeback. Acting promptly can increase your chances of recovering lost funds.  

You should also review recent transactions to help ensure no other unauthorized charges have been made. Taking these steps can help you contain the damage and prevent additional losses.  

Report the scam to authorities  

Reporting scams to the appropriate authorities is essential for business fraud recovery. In the United States, you can file a complaint with the Federal Trade Commission (FTC) or contact your state’s attorney general’s office. A government agency will track scams and may provide guidance on next steps.  

Reporting the scam also helps protect other businesses from becoming victims. If possible, provide detailed information about the scam, including any communications or documents you received.  

Protect your information by reviewing security protocols  

If sensitive business information was shared during the scam, take steps to protect your accounts and data. Change any compromised passwords, monitor your bank account for suspicious activity, and update security protocols to prevent future breaches.  

Recovering from a scam takes time, but by acting quickly and implementing stronger protections, you can help minimize the impact and safeguard your business moving forward.

Conclusion

In conclusion, avoiding business directory scams requires a combination of verification, education, and protocol. By developing a verification process for directory listings, educating employees on common scam tactics, and establishing a protocol for handling suspicious communications, you can protect your business from falling victim to these scams. 

Remember to be cautious when receiving unsolicited communications, and never pay for services or products that you didn’t order. If you suspect that you’ve been targeted by a scam, report the incident to the relevant authorities, such as the Federal Trade Commission, and take steps to protect your business.

FAQs and Common Misconceptions

Are all business directories scams?

No, not all business directories are scams. Many legitimate directories can provide valuable exposure for your business, helping customers find you more easily online or locally. However, scammers often create fake directories that mimic real ones to deceive business owners. To avoid falling for scams, research any directory thoroughly before paying for a listing, and look for signs of legitimacy such as customer reviews, transparency about their audience, and a clear track record.

What should I do if I accidentally pay a scammer?

If you accidentally pay a scammer, take immediate action to minimize the damage. Contact your bank or credit card provider to stop the payment or request a chargeback if possible. You should also report the scam to authorities like the Federal Trade Commission (FTC) or your local consumer protection agency. Additionally, review your security protocols to protect sensitive information and monitor your accounts for suspicious activity.

How can I verify if a directory is legitimate?

To verify if a directory is legitimate, start by researching the company online and reading reviews from other businesses. Look for red flags like a lack of contact information, poor online presence, or a history of complaints. If you receive a communication from a directory, contact them directly using information found on their official website — not the contact details in the communication. A legitimate directory will be transparent about its services, pricing, and audience reach.

What are the most common signs of a directory scam?

Common signs include unsolicited communications, urgent payment demands, vague descriptions of services, and poorly designed websites or materials. If anything feels rushed or overly generic, it’s worth investigating further.

Writing an employee reference letter for a former employee and don’t know what you should say? Here’s how to make sure your letter of recommendation doesn’t get you sued.

Forget for a moment the legal pitfalls you can see. Let’s look at one you might not know exists. It’s hidden in something you may have done multiple times in the past. If you’re not careful, your legal woes could come from multiple sources as a result of this.

How often have you written a letter of reference? Most of the time, writing that letter comes with little risk. Maybe somebody you know applied for a scholarship and asked you as a present or former employer to write a letter for consideration by the committee? You have little to worry about, but what if you offer to write an outgoing employee a letter of reference for use in a job search? That’s when you have to cover yourself.

We asked a few attorneys to weigh in on how to protect yourself when writing a reference letter.

Understanding the Purpose of a Reference Letter

A reference letter is a powerful document that serves as a recommendation for a former or current employee, typically written by a colleague, manager, or supervisor. Its primary purpose is to attest to the employee’s skills, accomplishments, and character, providing valuable insights to potential employers, academic institutions, or other organizations. A well-crafted reference letter can significantly influence an individual’s career prospects, making it crucial to understand its purpose and importance. By highlighting the employee’s strengths and achievements, a reference letter can help them stand out in a competitive job market.

Benefits of Writing a Reference Letter

Writing a reference letter can offer numerous benefits for both the employee and the writer. For the employee, a strong reference letter can:

• Enhance their job prospects and increase their chances of getting hired
• Provide a competitive edge in the job market
• Showcase their skills, achievements, and character
• Demonstrate their value and potential to future employers

For the writer, crafting a reference letter can:

• Strengthen their relationship with the employee
• Enhance their professional reputation
• Provide an opportunity to support the employee’s career growth
• Demonstrate their commitment to the employee’s success

By taking the time to write a thoughtful and detailed reference letter, you can play a pivotal role in helping a former employee advance their career while also reinforcing your own professional standing.

Types of Reference Letters

There are several types of reference letters, each serving a specific purpose:

• Employment Reference Letter: Written by a former employer or supervisor to recommend an employee for a new job opportunity. This type of letter focuses on the employee’s job performance, skills, and professional achievements.
• Character Reference Letter: Written by a personal acquaintance, such as a friend or family member, to attest to an individual’s character and personal qualities. This letter highlights the person’s integrity, reliability, and other personal attributes.
• Academic Reference Letter: Written by a teacher, professor, or academic advisor to recommend a student for academic programs or scholarships. It emphasizes the student’s academic performance, potential, and contributions to the academic community.
• Professional Reference Letter: Written by a colleague or supervisor to recommend an individual for a professional opportunity or certification. This letter underscores the person’s professional skills, work ethic, and suitability for the specific role or certification.

Understanding the different types of reference letters can help you tailor your writing to meet the specific needs of the recipient.

Preparing to Write a Reference Letter

Before you start writing a reference letter, it’s essential to prepare thoroughly. Here are some steps to guide you:

• Gather Information: Collect details about the employee’s skills, achievements, and character. This information will form the basis of your letter.
• Review the Job Description: Understand the employee’s job responsibilities and how they performed in their role. This will help you provide relevant examples.
• Identify Specific Examples: Think of specific instances that demonstrate the employee’s skills and qualities. These examples will make your letter more compelling.
• Understand the Purpose: Know the purpose and requirements of the reference letter. Whether it’s for a job application, academic program, or certification, tailor your content accordingly.
• Obtain Consent: Ensure that you have the employee’s consent to write the reference letter. This is not only courteous but also necessary for legal and ethical reasons.

By preparing adequately, you can write a reference letter that is both accurate and impactful.

Writing an Effective Reference Letter

To write an effective reference letter, follow these tips:

• Use a Professional Format and Tone: Start with a formal salutation and use a professional tone throughout the letter.
• State the Purpose Clearly: Begin by stating the purpose of the letter and your relationship with the employee. This sets the context for the reader.
• Provide Specific Examples: Use specific examples to demonstrate the employee’s skills and qualities. This makes your letter more credible and persuasive.
• Highlight Achievements: Emphasize the employee’s achievements and accomplishments. This shows their value and potential to future employers.
• Be Concise and Clear: Use language that is concise, clear, and free of jargon. This helps ensure that your message is easily understood.
• Proofread Carefully: Review the letter for any errors or inconsistencies. A well-proofread letter reflects professionalism and attention to detail.

By following these guidelines, you can write a reference letter that effectively supports the employee’s career aspirations while protecting yourself from potential legal issues.

Make sure the employee reference letter is consistent with the employee’s personnel file

Consider this scenario: You have an employee who is average at best who you plan to let go. They weren’t a detriment to the team; you just want to go in another direction. Throughout their time at your company, you’ve kept a record of each time you talked to the person about issues like lateness, poor performance, and their job title.

You tell them that you’re letting them go and offer to write a recommendation letter for them. You leave out the negatives and focus on the positives, giving the person a better chance of finding a new job quickly. Then, a few weeks later, you get notice that the ex-employee is suing you for wrongful termination.

Washington, D.C., attorney Tom Simeone says, “…being a nice guy and providing a good reference for a not-so-good employee can come back to haunt an employer by contradicting the evidence they may have justifying their termination or sanctioning of the employee.”

In other words, the employee could say, “If I was as good as you said I was in the reference letter, why was I fired?” If the suit is filed, the ex-employee’s attorney will likely ask to see the employee’s personnel file. If the letter and the file don’t align, that could be bad news for you.

Related: How to Avoid Hiring Bad Employees

The new employer could sue you, too, for a former employee

It’s not just your former employee who could have it out for you; it could be their new (or most recent ex-) employer. If you write a letter that isn’t entirely accurate and the employer hires the person based on your reference letter, you could be sued if the contents of the letter turn out to be false or misleading. Simeone says, “The firm to whom an employer provides a reference may have a claim if the information is incorrect. While it may not amount to fraud — since that requires intent to defraud and mislead — it could lead to negligent misrepresentation, which only requires negligence or a failure to act reasonably.” Additionally, always include accurate contact details to facilitate any necessary follow-up inquiries.

A No-Win Situation

If you provide information in your letter that is false, such as exaggerating the employee’s skills, the former employee could sue you for defamation. For that reason, San Diego Attorney Samuel Brotman says, “You generally want to avoid recommendation letters for employees that were either fired or laid off.”

On the other hand, if you refuse to write a letter, that could be a problem, too. Attorney Moseley Matheson of the North Carolina-based Matheson Law Office says, “A former employee may also raise a claim for not providing a reference at all if they can demonstrate it has impeded their ability to find employment in that field.”

Confirm only the basics in the reference letter

The best and only way to reasonably protect yourself when writing employee reference letters is to make sure all of the information you provide is based on verifiable facts. Also, don’t provide any more information than is necessary. Chicago-based attorney Pamela Belyn says, “The general rule is to only confirm the basics, dates of hire, title, last salary, eligibility for rehire (yes or no). It is the cleanest way to avoid future litigation.”

Whatever you commit to paper (or email) becomes evidence. Don’t speak of the employee in a personal capacity, and keep the reference short.

The law isn’t universal

Wouldn’t it be nice if every state operated under the same rule of law? It doesn’t, and that’s why if there is any question about what you should include in a reference letter, consult an attorney in your area. The above represents basic guidelines that are applicable to most state statutes, but nothing beats the advice of a trusted attorney who knows your individual case.

This article provides general information only. If you need specific legal advice, you will need to contact an attorney.

The fast-paced, high-stakes drama of “Law and Order,” “Suits,” or even “Daredevil” might make being a lawyer sexy, but the legal sector is a demanding place to operate. It takes a special type of person working under pressure to elevate themselves from the competition. Often it comes down to easy-to-understand attributes applied with creativity and distinction.

If you’re looking for the best of the best in a lawyer or you’re a lawyer wanting to graduate to elite status, these are the features to pursue:

Staying Passionate and Knowledgeable in Legal Knowledge

The legal sector is not a place for the fake-it-till-you-make-it types. The best lawyers, including aspiring lawyers, love the law, from learning it to applying it. There are no exceptions to this as the passionate lawyer continues studying long after graduating from law school, and the thirst for learning is never quite quelled.

Having a burning passion is what keeps your lawyer working on your case long after business hours. If a lawyer doesn’t have passion, how do you know they will do everything in their power for you?

Exemplifying Trustworthy Judgment and Analytical Skills of Successful Lawyers

Making the right call at the right time is utterly paramount for a lawyer. Each and every day, high-level lawyers are required to draw logical conclusions from available data and use that in persuasive arguments. While this sounds purely based on trial or hearing experience, it undoubtedly permeates every facet, from contract negotiations to research and due diligence.

Demonstrating Compassion

The legal industry garners a reputation for being cutthroat, but this doesn’t paint a fair picture of the foundation of lawyering — compassion. Often overlooked, compassion is the driver of representing a client who we believe needs fair assistance under the law. Appreciating one’s unfortunate circumstances is a major asset to personal motivation and delivering a high standard of client care. Clients need to feel heard and cared for to truly trust their lawyers. Practicing law requires not only legal expertise but also a deep sense of compassion to serve clients effectively.

Stay technology savvy

The industry of law has been mired in tradition for centuries. The occurrences of innovation were typically reserved for the application of precedence and case law, but the infusion of technology is changing that. Legal document software, automation, AI, and new digitally augmenting software require lawyers to have strong technical skills. While inefficiency may not always have been a cause for concern for legal firms, a shift in client expectations means tolerance for outdated practices has diminished.

Growing law firms, recently graduated lawyers, and anyone looking to gain a competitive advantage need to use the technology solutions available on the market today. The American Bar Association (ABA) approves new software options regularly, giving lawyers hours of time back for billable work. Few skills will be as important as enhancing service through the use of technology going forward.

Always be organized

Organization is critical in everything a lawyer does, from managing legal documents to court appearances. Managing caseloads, disclosures, client files, meetings, knowing everything there is to know about the United States Code — and the list goes on. The reputational and embarrassment risks can directly impact the lawyer, client, and firm’s future. Furthermore, where a lawyer fails in an organization, lasting impressions can be left with judges, clients, and opposing counsel. It may seem over the top to characterize an organization in such terms but it is one skill that can be damaging in the long term.

Clear and Concise Communication with Effective Communication Skills

Being the most brilliantly educated mind with compassionate tendencies is largely moot without effective communication skills. The role of a lawyer hinges on this ability. Communication underpins the construction of cases and delivery of persuasive arguments and, in turn, is a hallmark of the most successful lawyers. However, communication isn’t just the ability to talk. It’s also the ability to listen and hear. From registering client concerns to finding weaknesses in opposing arguments or depositions, lawyers need to be incredibly acute listeners. Effective communication is essential for navigating the complexities of the legal system.

Perseverance

If you have graduated from law school, you likely know a thing or two about perseverance. Again, perseverance is one of the common denominator attributes found in successful lawyers. The willingness to endure and not give up the fight can be the bedrock of winning many cases. Late nights, overturning seemingly lost causes, or going to the ends of the earth for your clients is a trademark of any good lawyer.

Foresight

The pandemic dented the confidence of the forward planners among us, but the experience had a lot to teach us. First, change happens all the time in the world of law. New evidence is uncovered, and opposition actions are levied. Foresight and keeping on your toes are valuable characteristics to crafting bullet-proof arguments and ensuring you never get blindsided.

Secondly and on an organizational level, the ability to see sectoral change coming is essential. Law firms have just navigated the most disruptive change in recent memory as the need for digital offices grew out of nowhere. Keeping an eye on the future helps lawyers find that legal document software or AI that drives up profitability and competitive advantage. Those who refuse to be forward thinkers are often the casualties of obsolescence.

Creativity

The legally ignorant will question the place of creativity on this list, but I assure you that it belongs. Without the ability to think differently, you will always be outmaneuvered by your peers. Knowing the law is obviously essential, but applying it and problem solving relies on creative thinking. Simply put, you can’t prepare for every eventuality if you can’t think of unique ways your opposition can attack. Creativity is also essential for drafting well-reasoned legal documents that can withstand scrutiny.

Strong Work Ethic and Self-Motivation

A strong work ethic and self-motivation are the bedrock of any successful lawyer. These traits enable attorneys to stay focused and driven, even when faced with challenging cases or demanding clients. Self-motivated lawyers are proactive in staying up to date with changes in the law, attending professional development courses, and seeking out new opportunities to grow their practice. This dedication not only enhances their legal knowledge but also ensures they are always prepared to tackle new challenges.

A strong work ethic also plays a crucial role in effective legal practice. It helps lawyers manage their time efficiently, prioritize tasks, and meet deadlines consistently. By cultivating these qualities, lawyers build a reputation for reliability, professionalism, and excellence. Clients and colleagues alike recognize and respect a lawyer who demonstrates unwavering commitment and diligence in their work.

Continuous Learning and Professional Development

In the ever-evolving legal profession, continuous learning and professional development are non-negotiable. Successful lawyers understand that staying ahead of the curve requires a commitment to ongoing education. This means keeping abreast of the latest developments in their area of practice, attending conferences and seminars, and participating in online training programs.

Investing in professional development not only enhances a lawyer’s legal knowledge but also sharpens their skills and expertise. This continuous improvement allows lawyers to provide better services to their clients, ensuring they remain competitive in a crowded field. Moreover, a commitment to learning signals to clients and peers that a lawyer is dedicated to maintaining the highest standards of legal practice. In a profession where the stakes are high, continuous learning is a key differentiator for those who aspire to be successful lawyers.

Building Client Relationships

Building strong relationships with clients is a cornerstone of a successful legal career. Effective communication skills are paramount in this regard. Lawyers must be responsive to their clients’ needs, providing not only legal advice but also emotional support and guidance. By building trust and rapport, lawyers can create a loyal client base, generate repeat business, and attract new clients through referrals.

Good client relationships are essential for building a strong reputation and increasing client satisfaction. When clients feel heard and supported, they are more likely to recommend their lawyer to others. Prioritizing client relationships fosters a positive and supportive environment, which is crucial for long-term success in legal practice. Successful lawyers understand that their clients are their greatest advocates and that nurturing these relationships is key to a thriving practice.

Networking and Business Development

Networking and business development are vital skills for lawyers who aim to grow their practice and build their reputation. Successful lawyers actively build relationships with other professionals, attend industry events, and participate in online communities. By networking with other lawyers, judges, and industry professionals, they create opportunities for collaboration, referrals, and growth.

Business development goes hand in hand with networking. It involves identifying new opportunities, creating a marketing strategy, and promoting services to potential clients. Investing in these activities helps lawyers build a strong professional network, increase their visibility, and achieve long-term success. In a competitive field, the ability to network effectively and develop business is what sets successful lawyers apart from the rest.

In Closing…

Lawyers play an intriguing role within modern society. While many industries require definitive specializations in different fields, lawyers need to be experts in numerous areas.

Your field demands that you exude excellence in knowing the law inside out while being creative enough to apply it uniquely. You ought to be hardened enough to endure late nights of research and delivering firm, sometimes harsh counters while also being equipped with soft empathetic people skills. The legal field is uncompromising on the skills required, but knowing what begets success is half the battle.

You’ve come up with a great name for your product or business, and you want to be sure no one else uses it. Do you need to get it trademarked? Is registering a trademark something you can do on your own?

Or maybe you’ve just come up with a snappy product name, and you’ve decided you want to trademark it. What should you do next? Is it really as easy as the U.S. Patent and Trademark Office website says it is? Can you really do it without a trademark lawyer?

We’ll be honest; trademarks can be a bit tricky. In general, it’s helpful to get assistance from a lawyer even though it’s legal and possible to do it on your own. Here, we’ll walk you through the basics of what a trademark is, the protection it does and doesn’t give you, the gist of the trademark registration process, and more.

Getting paid when you work for yourself isn’t as simple as it may seem. Sole proprietors can follow these guidelines for paying themselves in a way that doesn’t land them in trouble with the IRS or other government agencies.

How do you pay yourself when you’re self-employed and haven’t incorporated your business? It ought to be simple, right? You sell something or do a service and get paid for it. That’s how self-employment works for freelancers, consultants, independent contractors, and other self-employed people, right?

If only it were that simple. When you’re self-employed, you’re running a business. That means you have to pay taxes on your income and abide by certain rules. For tax purposes, if you haven’t incorporated or formed an LLC and are the only owner of the business, the form of business you are operating under is called a sole proprietorship. 

As a sole proprietor, you don’t pay yourself a salary and you can’t deduct your salary as a business expense. Technically, your “pay” is the profit (sales minus expenses) that the business makes at the end of the year. You can hire other employees and pay them a salary. You just can’t pay yourself that way. The same rules for paying yourself in an LLC apply if you operate the LLC as a sole proprietorship or general partnership

You don’t have to wait until the end of the year to withdraw your profits, though. To pay yourself when you need money during the year, you take what’s called a draw on the profits. Taking a draw simply means taking money from the business account and giving it to yourself. You could take out cash or write yourself a check. You can do it once a week, once a month, or randomly, as needed.

How does that differ from just taking money customers pay you and putting it into your personal checking account? Technically, you could do that. But it’s not wise. You’re going to need detailed, accurate records of your business income and expenses when you file your taxes.

Am I a sole proprietor?

Before you can start paying yourself and paying taxes, you need to be sure you understand what a sole proprietor is. According to the IRS, “a sole proprietor is someone who owns and operates an unincorporated business by himself or herself.” The business can have a name that’s different from your given name (or not — that’s up to you).

But even when the business has a distinct name, if you’re the only owner and haven’t incorporated the business, all the profits from the business pass through to you and are reportable on your personal income tax forms. You report the year’s profits (or losses) from your sole proprietor activities on IRS Schedule C, which gets included with your personal tax return, and pay income taxes accordingly.

As a sole proprietor (or self-employed individual), you’ll need to pay federal, state, and possibly local income taxes on all the profits and ensure you pay income tax accurately based on your business earnings. You’ll also need to pay self-employment tax deductions. (The self-employment tax is basically Social Security and Medicare taxes for the self-employed.) Since your “salary” when you are self-employed is actually the profit from the business, the self-employment taxes are calculated on the business profits.

Separate personal and business finances with a business bank account

As a business owner, you’ll need to keep accurate records of your income and business expenses. Doing that will be extremely difficult if you put all your business earnings into the same account you use for personal expenses. Commingling business funds with your personal account may also make it more difficult to prove expenses were strictly for business if they look like personal expenses.

To keep things simple for yourself, your accountant, and the IRS, open a business bank account to start (you can get a business bank account through ZenBusiness). If you aren’t using a business name, open the account in your own name, but be sure to use it only for the business. If you are using a business name (for example, Joe’s Clam House), the bank will usually require a copy of a DBA (“doing business as”) certificate (a certificate saying you’re doing business under a fictitious name) or a business license report, or both. (Check with your bank to find out what they’ll need. Some banks may require a DBA certificate for a business even if the business “name” is your name.)

Use this business account to deposit all income from the business. Checks, ACH deposits, credit card sales receipts, and any other income should all be deposited into this account. Pay all the business bills from this account, as well. Your bank statements, along with records you keep about income and spending, will give you and your accountant a clear picture of how much the business earned, how much it spent, and what its profits are. If there’s a business name on the account, it will also help your business look more established to customers.

If your business is home-based, consider a separate phone line for your business. You’ll be able to deduct the entire cost of the business phone — plus, you can then answer all calls with your business name so you sound more professional.

If you’ll be charging any business expenses, get a separate charge card for use by the business. Chances are the credit card will be issued in your name, not the business’s name, or if the business name is on the card, yours will be, too. Use this credit card only to buy products or services for your business. Don’t make any personal purchases with the card. That way, you’ll know that everything charged to that card is for the business.

Use an accounting program to record all the deposits and withdrawals from the business checking account. Use the accounting program to characterize the nature of the expenses as you pay them (for example, website hosting, office supplies, accountant’s fees, etc.) Doing so will let you see at any time what your profit (or loss) is. Tracking expenses like this in your accounting program will also make it much easier at the end of the year to categorize your spending for tax purposes. It will also help you budget for the next year and analyze your spending patterns.

Paying Yourself

As a sole proprietor, you can pay yourself whenever you want (and the business income allows). Ideally, you’ll do this on a regular basis. When you do pay yourself, you just write out a check to yourself for the amount of money you want to withdraw from the business and characterize it as owner’s equity or a disbursement. Then, deposit the check in your personal checking or savings account. Using tools like a pay stub generator can also help you track income accurately.

Remember, this is “profit” being withdrawn, not a salary. Therefore, no income taxes, Social Security, or Medicare comes out of your check. But you will have to pay all those taxes when you file your personal tax return, so remember to set aside money to cover the expense. Once the business is profitable, you’ll be paying these amounts quarterly in the form of estimated taxes. But, in your first year of business, you may not have to pay anything until you file your annual return.

If you have expenses that will ultimately be shared between personal and business accounts (for example, the cost of Internet use if your home business tax deductions uses the same Internet connection the family does), those costs won’t get recorded in your accounting program. You’ll calculate them at the end of the year when you prepare your taxes and take a deduction for them on the Expenses for Business Use of Your Home form.

Maintaining a Healthy Business

Maintaining a healthy business requires ongoing effort and attention. This includes regularly reviewing your business finances, identifying areas for improvement, and making necessary adjustments. Staying up to date with changes in your industry and adjusting your business strategy accordingly is also vital for long-term success.

Equally important is prioritizing your personal well-being. Managing stress and avoiding burnout are crucial for maintaining both personal and business health. Consider delegating tasks, taking regular breaks, and seeking support from colleagues, mentors, or professionals. By focusing on both your personal and business well-being, you can help ensure a healthy and sustainable business that thrives over time.

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Managing your finances as a sole proprietor requires careful attention to record-keeping, tax compliance, and maintaining a clear separation between personal and business finances. By understanding how to pay yourself through owner’s draws, keeping accurate financial records, and staying on top of your tax obligations, you can set your business up for long-term success. While the process may seem daunting at first, adopting sound financial practices and seeking professional advice when needed will help you maintain a healthy business and avoid common pitfalls.