Rush on Business: Iowa Business and Corporate Law Blog

Rush on Business Moves to Its Own URL

2006-09-29T07:55:00.000-07:00

Rush on Business has moved to its own URL, www.rushonbusiness.com. Thanks for reading. Please subscribe to the feed on the new blog.

Forming an LLC in Iowa: Practical Advice from a Des Moines Iowa Business Attorney

2006-09-24T11:40:00.000-07:00

Forming an LLC in Iowa: Practical Advice from a Des Moines Iowa Business Attorney

The Limited Liability Company is a hybrid form of doing business that combines characteristics of the corporate structure and the partnership structure. It is a separate entity like a corporation and therefore carries liability protection for all of its members/owners, but is generally taxed like a partnership which has the benefit of flow-through taxation.

The owners are called members and can be virtually any entity including individuals, corporations, other LLCs, trusts, pension plans, etc. Some states, like Iowa, permit one-member LLCs, and others do not. If you are going to do business in multiple states, it may be wise to have at least two members of the Limited Liability Company. A husband and wife are considered two members for formation purposes.

The manner in which the Limited Liability Company will be operated is set forth in an operating agreement, which is an agreement between the members. The operating agreement for a Limited Liability Company is similar to the by-laws for a regular corporation. It is a good idea to have an Iowa business lawyer draft your Articles of Organization and Operating Agreement if you intend to form your business in Iowa.

The Articles of Organization are filed with the Iowa Secretary of State's office just like is required for a corporation. The filing fee is currently $50.00 for filing the articles. The LLC must also file a biennial report (which is new for 2006). The cost is currently $30.00 for online filing.

In many respects, a Limited Liability Company is very similar to a Sub-Chapter S Corporation. However, the Limited Liability Company provides much greater flexibility with respect to owners and the allocation of income to the owners. An S-Corporation may only have one class of stock, while an LLC may offer several classes of member ownership. Any number of entities or individuals may own interest in an LLC; however, ownership interest in an S-Corporation is limited to no more than 100 shareholders. Also, S-Corporations cannot be owned by C-Corporations, other S-Corporation, many trusts, LLCs, partnerships or non-resident aliens. LLCs are allowed to have subsidiaries without restriction, while S-Corporations are not allowed to own 80% or more of another corporation's shares.

Like a regular corporation, the primary advantages of forming a Limited Liability Company is the liability protection the corporate entity affords its members (shareholders with respect to a regular corporation). The members of a Limited Liability Company are not liable for the debts and obligations of the company. By comparison, in any Sole Proprietorship or Partnership, the owner's personal assets may be used to pay debts of the business. Another advantage relates to the on-going existence of the company. If an owner of the company dies or wishes to sell their interest, the corporation can continue to exist and do business. If an owner of a Sole Proprietorship or Partnership dies, generally the business or partnership also terminates.

Unlike a regular corporation, the wages paid to the members of a Limited Liability Company will be subject to self-employment tax; however, self-employment tax may be avoided on members who do not participate in management of the company. It is important to consult an accountant to determine which form of business provides the best tax advantages for your situation.

Click here for more information on forming an LLC from a Des Moines Iowa business attorney.

Small Business Incorporation in Iowa: Practical Advice from Des Moines Iowa Business Attorney

2006-09-23T08:26:00.000-07:00

Small Business Incorporation in Iowa: Practical Advice from Des Moines Iowa Business Attorney

If you are thinking about starting a corporation, here is a checklist of steps you might consider before starting your business:

1. Find out the availability of your corporate name. You can do a quick search on the Iowa Secretary of State's Web site to see whether your name is available. If the name is available you may want to reserve the name through the Secretary of State but you are not required to do so before incorporating. You may also want to consider whether any company outside Iowa has your corporate name. You can conduct a free search on the U.S. Patent and Trademark Web site. It is also a good idea to check whether someone has your proposed Internet domain name. In Iowa, your corporate name must have "incorporated", "corporation", "limited", or some abbreviation of such term.

2. Pick a Place to Incorporate. I am sometimes asked whether an Iowa company should incorporate in another state such as Delaware or Nevada. In general, an Iowa small business is probably better off incorporating here in Iowa. The filing fees are low and the ongoing fees for registering the business in Iowa are among the lowest in the country. (Only $30.00 every two years if you file your biennial report online).

3. Choose the Shareholders and Directors. Who will be the shareholders in the company? These are the owners of the company. Most of the businesses I represent have only a handful of owners. Determine how much capital you will need. Do you have enough capital or access to capital in order to start the business on your own? If not you may need to consider other investors.

In most cases the shareholders of the small business are also the directors. Do you want outside directors? There may be good reasons to have outside directors but think this over carefully before you elect to do so.

3. Create your Articles of Incorporation. The articles of incorporation act as a charter to start your new business in Iowa. The filing fee with the Secretary of State is currently $50.00. It is a good idea to have an Iowa business attorney prepare your Articles of Incorporation and other corporate documents.

4. Prepare corporate bylaws. The bylaws set out the operating standards and procedures the business corporation will follow.

5.Create meeting minutes, resolutions and agreements. It is a good idea to document the initial meeting minutes of the company including the meetings of the shareholders and directors. At this time, you will elect the officers of the company including the president, vice-presidence, secretary and treasurer. You will also issue stock certificates at this stage. If you have multiple shareholders you will also likely need a shareholder agreement.

6. Obtain your employer identification number (EIN). Your corporation will need to obtain an employer identification number from the IRS. This can be done through a convenient online application process.

7. Elect "S" corporation status. (This is optional). You should speak with your accountant to determine whether it is appropriate to treat your corporation as an "S" corporation or a "C" corporation. Most small business corporations choose to be "S" corporations. An S corporation lets you enjoy the limited liability of a corporate shareholder but pay income taxes on the same basis as a sole proprietor or a partner. The "S" corporation is a pass through entity where the owners report the profits on their personal tax returns. In a "C" corporation the company itself is taxed on business profits and the owners are taxed on the money they draw out of the business. This could lead to double taxation. However, an experienced accountant can help you minimize your tax and in certain situations a "C" corporation may be more advantageous. So the key is to follow the advice of your accountant.

If you elect "S" corporation status you must file a special form with the IRS upon starting your corporation.

8. Open a bank account. You will typically need the EIN and a banking resolution in order to do this.

9. Obtain any licenses and permits. You will need to check the federal, state and local regulations to determine whether you need and licenses or permits to operate your business.

10. Follow the corporate formalties of running a business. In Iowa, this includes registered your business every two years with the Secretary of State's office. You also need to do corporate minutes at least on an annual basis including the election of officers and directors. Sign all documentation using your title as a corporate officer. You will also want to minimize or avoid situations where limited liability is not an absolute.

Find out more about how to incorporate your business from a Des Moines Iowa business attorney.

Proactive Measures to Reduce Liability for Retaliation Claims

2006-09-21T11:01:00.000-07:00

Proactive Measures to Reduce Liability for Retaliation Claims

Employers are usually cognizant of discrimination and harassment claims. However, they are often blindsided by retaliation claims. The successful resolution of a discrimination or harassment complaint means you are only halfway home. Supervisors and employees must not retaliate against the employee who complained. This is even more important now because of a recent United States Supreme Court decision lowering the burden for employees to show retaliation.

Here are some proactive measures employers can take in order to avoid retaliation claims:

1) Make sure your employee handbook includes a policy prohibiting retaliation.
2) Always have alternative reporting avenues.
3) Conduct supervisor and management training on harassment, discrimination and retaliation.
4) Make sure supervisors and management have been asked the tough questions when it comes to employee discipline. Make sure the discipline has nothing to do with the complaints of harassment, discrimination or retaliation.
5) Periodically talk with the complaining employee to determine if anyone has retaliated against them. If performance is an issue for the employee be sure to bring this to the attention of the employee and make sure to document your conversations. Document! Document! Document!

Be sure to consult your employment lawyer for advice in specific situations.

Iowa Blawging Seminar Set for November 10

2006-09-19T20:05:00.000-07:00

Iowa Blawging Seminar Set for November 10

Lawpportunities has scheduled its Iowa Blawging Seminar for November 10, 2006 at the Hilton Garden Inn in Johnston, Iowa. Brett Trout and I invite any lawyer interested in blogging or blog law to join us for what we hope is a very interesting and timely conference.

The conference is approved for 7.0 CLE hours in Iowa including 1 hour of ethics. Click here for the outline of the Iowa blawging conference

Other Related Topics:
Lawpportunities, Iowa CLE, Rush Nigut, Brett Trout, Blawg

Iowa Association of Electric Cooperatives Human Resource Seminar

2006-09-17T10:42:00.000-07:00

Iowa Association of Electric Cooperative Human Resource Seminar

Rush Nigut is a featured speaker at the Iowa Association of Electric Cooperatives (IAEC) Human Resource Seminar this Tuesday, November 19, 2006 at the Wildwood Lodge in Clive, Iowa.

Rush's topics include defamation, wage and hour issues, retaliation and discrimination in the workplace.

Negotiating Franchise Agreement Terms

2006-09-14T20:14:00.000-07:00

Negotiating Franchise Agreement Terms

Yesterday I attended the Trade Regulation and Corporate Counsel Seminar sponsored by the Iowa State Bar Association. In his presentation on franchising, Mark Hamer of Meardon, Sueppel & Downer, P.L.C. confirmed a growing trend in franchising is that every clause is negotiable. This often includes some of the more troublesome issues for franchisees. This is a trend I have seen for some time.

Your ability to negotiate depends a great deal on your bargaining power. Is the franchisor new? If so, you probably have a great opportunity to negotiate terms. Are you financially solid? Are you buying multiple franchises? These are just some of the factors that may improve your bargaining position.

You may be told the franchise agreement is not negotiable by the sales representative. I would not let that deter you from attempting to negotiate certain terms of the franchise agreement. The key is to know what, when and how to negotiate franchise agreement terms.

Other Related Topics:
Franchise, Franchise Agreement, Franchise Attorney

Resources for Iowa Entrepreneurs

2006-09-11T19:36:00.000-07:00

Resources for Iowa Entrepreneurs

Today's Des Moines Register Business Section contained an article by Patt Johnson featuring the assistance provided by SCORE to local entrepreneurs. SCORE is made up of retired executives that mentor and counsel new entrepreneurs.

People generally think of SCORE in the context of their one day workshops for new entrepreneurs. However, it was also surprising to learn than SCORE also helps more experienced entrepreneurs who may have hit a roadblock, seek expansion or need to create a succession plan. Diana Kautzky of Deaf Services Unlimited discussed in the article how one meeting with retired clothier Paul Whitmore provided her with the insight she needed.

The local SCORE Web site also provides several helpful articles and Weblinks for business owners. The site also links to over 500 sample business plans.

Other helpful resources for Iowa entrepreneurs include:

Iowa Small Business Development Centers (SBDC)
BizStarts
Ewing Marion Kauffman Foundation (My personal favorite)
FranNet Franchise Consulting
Entrepreneur.com
Inc.com
Forbes.com
Small Business incorporation and LLC formation for Iowa entrepreneurs

Other Related Topics:
Small Business, Des Moines Register, Score, entrepreneur, Forbes

D.C. Court of Appeals Declares Tax on Emotional Distress Damages Unconstitutional

2006-09-07T19:29:00.000-07:00

D.C. Court of Appeals Declares Tax on Emotional Distress Damages Unconstitutional

In a decision described as a "blockbuster" and a "bombshell", the U.S. Court of Appeals for the District of Columbia has ruled the IRS may not tax emotional distress or professional reputation damage awards unrelated to lost wages or earnings.

The case began when Marrita Murphy sued the Department of Labor alleging that her former employer, the New York Air National Guard, had blacklisted her and provided unfavorable job references because she blew the whistle on environmental hazards at an airbase. Murphy received $70,000 in compensatory damages—$45,000 for emotional distress and $25,000 for injury to her professional reputation.

Murphy included the $70,000 award on her 2000 federal income tax return, then filed an amended return seeking a refund of more than $20,000, the amount of taxes paid on the $70,000 award. The Internal Revenue Service denied her request. Murphy then sued the IRS and the United States in federal district court. The federal district court rejected her claims and granted summary judgment to the government defendants.

On appeal, the D.C. Circuit reversed the lower court's decision. The panel agreed Murphy could not prevail based on federal law 26 U.S.C. section 104(a)(2), which was amended in 1996 to prohibit the exclusion of emotional distress damages (as opposed to physical injuries) from gross income calculations. Federal law provides that damages for personal injuries and sickness are not taxable; physical injuries are based in tort and not subject to calculation as gross income.

However, the D.C. Circuit delared section 104(a)(2) unconstitutional under the 16th Amendment.

The court agreed with Murphy that her $70,000 award for emotional injury and loss of reputation was not income within the meaning of the 16th Amendment. "As we have seen, it is clear from the record that the damages were awarded to make Murphy emotionally and reputationally 'whole' and not to compensate her for lost wages or taxable earnings of any kind," Chief Judge Douglas H. Ginsburg wrote for the court. "Under this analysis, therefore, the compensation she received in lieu of what she lost cannot be considered income and, hence, it would appear the 16th Amendment does not empower the Congress to tax her award."

This decision could have a favorable impact on employees and employers alike. Employees will obviously benefit because they will pay less taxes on their settlement or judgment. Employers benefit because plaintiffs may accept less in settlement.

If the case is appealed to the U.S. Supreme Court, plaintiffs nationwide could avoid the tax if the Court rules favorably. However, many tax experts think the Supreme Court will reverse in the event the IRS appeals.

See the D. C. Circuit Court ruling.

Justice Marsha Ternus Named Iowa's First Woman Chief Justice

2006-09-06T05:35:00.000-07:00

Justice Marsha Ternus Named Iowa's First Woman Chief Justice

Justice Marsha Ternus has been named Iowa's First Woman Chief Justice. She takes over for the departing Louis Lavorato. Former Iowa Governor Terry Branstad appointed Ternus to the Court in 1993. She earned her law degree, with honors, from Drake University Law School in 1977.

Before joining the Iowa Supreme Court Ternus worked for the Bradshaw Law Firm in Des Moines. She practiced as insurance defense lawyer until her appointment in 1993.

Ternus has an excellent reputation among Iowa lawyers for her fairness and intellectual integrity. She will make an excellent Chief Justice.

Rush on Business Celebrates 100th Blog Post

2006-09-04T14:04:00.000-07:00

Rush on Business Celebrates 100th Blog Post

I am excited to announce that today is the 100th Blog Post of Rush on Business. Thank you to all the readers who have made this blog a success. I appreciate the favorable comments from many people who have enjoyed and learned from the articles on different aspects of small business law including incorporation and LLC formation, employment issues and franchise law.

I have a couple of exciting projects in the works. The first is the Entrepreneur's Guide to Starting a Business in Iowa. This project should be done before the end of the year. A second project includes a blawg seminar for Iowa lawyers with Brett Trout. The date is tentatively set for November 10, 2006 in Des Moines. Stay tuned for more details.

My blogging has also introduced me to Mike Sansone and Sandy Renshaw. Mike's site, Converstations, is filled with good ideas related to blogging. With Mike's help I plan on taking Rush on Business to its own URL and adding many helpful features.

Please feel free to comment on articles. However, I have a few rules. The first is that all comments must not ask for legal advice in a specific situation. Our legal ethics rules only permit Iowa lawyers to provide information in a blog setting for general purposes only. Second, all comments must identify the author. I will also not allow any person to defame another person or company on my site.

I also encourage people to subscribe to my RSS feed. You may subscribe to the feed by clicking on the orange icon in the Sidebar of this site. By subscribing you will automatically receive updates for the new posts.

Please feel free to let me know about legal issues of interest. I will write about them in future posts.

New Iowa Supreme Court Rule Requires Lawyers to Protect Clients' Personal Information

2006-09-02T06:14:00.000-07:00

New Iowa Supreme Court Rule Requires Lawyers to Protect Clients' Personal Information

A new Iowa Supreme Court rule requires lawyers to protect clients' personal information in an effort to combat identity theft. Rule 1.422(1)(a)(2) of the Iowa Rules of Civil Procedure states it is the responsibility of counsel and the parties to ensure that protected information is not included or redacted from court documents. The Clerk of Court will not review documents or materials to make sure personal information has been omitted or redacted.

Protected information includes:

1. Social security numbers.
2. Financial account numbers.
3. Personal identification numbers.
4. Other unique identifiers.

If a social security number is required only the last 4 numbers should be used. If financial account information is required only incomplete account numbers should be included.

Counsel is not required to omit or redact protected information from materials or cases deemed confidential by the Iowa Supreme Court: however, omission or redaction is required in proceedings that are initially confidential but which later become public such a divorce proceedings.

A party may also omit other personal information unless it is material to the proceedings or unless disclosure is required by law including:

a. Other personal identifying information such as driver's license numbers.
b. Information concerning medical treatment or diagnosis.
c. Employment history.
d. Personal financial information.
e. Proprietary or trade secret information.
f. Information concerning a person's cooperation with the government.
g. Information concerning crime victims.
h. Sensitive security information.
i. Home addresses.
j. Date of birth.
k. Names of minor children.

The new rule is effective November 1, 2006.
_________________

Rush on Business celebrates its 100th blog post in the next post.

Employers Must Protect Employees' Social Security Numbers

2006-08-31T19:29:00.000-07:00

Employers Must Protect Employees' Social Security Numbers

In a recent newsletter update from the Krupin O'Brien employment law firm, attorney Natalie Cantor Gros wrote an informative article regarding the importance of employers protecting the Social Security numbers of employees.

The article points out that a Michigan employer paid $275,000 settlement to group of 911 operators whose Social Security numbers were stolen when a labor union employee brought home documents containing Social Security numbers and the employee's daughter use the information to make unauthorized purchases.

Michigan has passed a law designed to protect employees' Social Security numbers and other states are following. With about 9 million victims of identity theft in 2005 it is critical that employers take adequate steps to protect employees' Social Security numbers.

Employers should be particularly careful of allowing employees to have such confidential and private information on laptops. I have read over and over again about the loss of sensitive information on stolen laptops. Will employers ever learn?

The Use of Comp Time in Place of Overtime

2006-08-30T19:18:00.000-07:00

The Use of Comp Time in Place of Overtime

Some employers decide to provide employees comp time instead of paying overtime. Under the law, employers are usually not allowed to provide only one hour of comp time for each hour of overtime. Instead, an employer may be able to give compensatory time if the overtime premium is included. This means an employee is entitled to 1 1/2 hours of comp time for each hour of overtime worked, as long as the employee takes the time off during the same pay period as the overtime work. (This is often a misunderstood fact by employers).

If you have questions concerning the use of comp time in lieu of overtime please consult an employment lawyer or contact the Iowa Workforce Development.

How to Name Your Iowa Business

2006-08-29T18:51:00.000-07:00

How to Name Your Iowa Business

The first step in naming your Iowa business is to make sure it is available for use. This requires a little homework. You need to make sure you are not infringing someone else's business name.

To stay out of trouble you should first see if the name is available through the Iowa Secretary of State's Web site. You can perform a search of a database containing the names of all the registered corporations and limited liability companies (LLCs) registered for business in Iowa. Another option is calling the Iowa Secretary of State's Office at 515-281-5204 to see if your name is available.

The next step is to make sure your business name is not registered as a trademark. It is possible for businesses to trademark their names in Iowa but a federally registered trademark offers more protection for the owner. In order to check the federally registered trademarks you can perform a free search on the U.S. Patent and Trademark Office Web site. Conducting a search this way is not always complete so you may want to consider contacting an Iowa trademark attorney or a company which specializes in trademark searches. Another great way to protect yourself is to conduct a Web search of Google, MSN, Yahoo or other search engine to find out if a business shows up with the same name. You better be careful and consult an Iowa trademark attorney if you intend to use the same name as someone else.

Why is a trademark so important? If you choose a business name that is too similar to a competitor's name, you might find yourself accused of "infringing" a trademark owner's rights. The trademark owner then may be able to force you to change your business name and also receive money damages from you.

Be sure to contact an Iowa business attorney or Iowa trademark attorney if you have questions about how to name your Iowa business.

Exceptions to Limited Liability for Corporations and Limited Liability Companies

2006-08-26T11:29:00.000-07:00

Exceptions to Limited Liability for Corporations and Limited Liability Companies

One of the main reasons for incorporating or forming a limited liability company (LLC) is protection from personal liability for business debts and claims. While corporate and LLC owners enjoy this limited liability in many situations it is important to realize that limited liability is not absolute. A corporate shareholder or an LLC member may be held personally liable if he or she:

1) Personally and directly injures someone;
2) personally guarantees a bank loan or other business debt and the company defaults;
3) fails to deposit taxes withheld from employees' wages;
4) intentionally engages in fraud or illegality which causes harm to the company or someone else;
5) mixes business and personal assets and does not maintain separate accounts for the business and personal finances.

Business insurance may be helpful in certain situations to protect you if limited liability does not apply but many insurance policies contain exclusions for intentional acts.

The best advice for running your corporation or LLC is to make sure you keep your personal guarantees to a minimum, pay applicable taxes and keep all business dealings separate from your personal accounts.

Start-up Businesses Should Develop Solid Relationship with Business Attorney

2006-08-23T19:44:00.000-07:00

Start-Up Businesses Should Develop Solid Relationship with Business Attorney

It is a good idea for start-up businesses to develop a solid relationship with a business attorney. Hiring an attorney is usually not as expensive as entrepreneurs imagine. In many instances entrepreneurs may try to set up their own incorporations through online resources but boilerplate article of incorporation, bylaws or shareholder agreements may not meet your needs. A business attorney can also help you consider other issues which may further protect your interests. This article from Entrepreneur discusses how to develop a solid relationship with your business attorney and the reasons why you should hire an attorney from the outset of your business.

Click here for information on Iowa small business incorporation and LLC formation services.

John Wellman Remembered: The Consummate Lawyer

2006-08-20T17:48:00.000-07:00

John Wellman Remembered: The Consummate Lawyer

Upon my return from vacation I was saddened to learn John Wellman passed away last Friday. Wellman, a long-time public defender, was blinded in a hunting accident at the age of 17. He overcame his adversity to earn a law degree from Drake University and a Masters in Law from Yale. He was 64.

His son Gregg was my position coach at Simpson College. Wellman attended our games and later told me at the courthouse that he always enjoyed "watching" our team. He was one of the lawyers in the first trial I watched at the courthouse. He represented an obviously guilty man who had been caught on video tape robbing the cash register at a convenience store. Wellman joked with the prosecutor out of the presence of the jury that he would simply argue the man was trying to put the money back and that the camera had it wrong.

Guilty or not John Wellman represented his client to the best of his ability. He used his laser-like ability to pinpoint deposition testimony to impeach a witness whose trial testimony conflicted with previous statements under oath. Wellman did not refer to the deposition itself. Instead he recited the page and line immediately off the top of his head without missing a beat. An amazing gift indeed.

He delivered his closing as he leaned on his walking stick. Methodically explaining in plain language why the jury should acquit his client. Nothing fancy but a brillant closing nonetheless.

I worked in a case against a Plaintiff's class action lawyer that told me with regret that he did not have any "real" clients. I know Wellman had no such regrets. As explained in the book, Season of Life, Wellman was truly "a man built for others."

He lived with integrity and not only when it was convenient to do so. Always.
He sought justice. Because it is often hidden.
He encouraged the oppressed because they are always discouraged.
He made a great impact on the world because he asked the simple question: "What can I do for you?"

John Wellman did not worry about getting the biggest bank account or the fanciest car. (I guess he could not have driven the car anyway). He concentrated on what truly mattered. I am better for knowing him and I thank him for his fine example of what a lawyer should be and more.

Look Before You Leap With Blogs

2006-08-14T06:08:00.000-07:00

Look Before You Leap With Blogs

I read this interesting article entitled, "Blogs Raise Copyright, Other Legal Issues" from The Business Journal of Milwaukee. The article discusses the legal issues raised by blogging including copyright infringement, defamation and privacy issues.

For lawyer bloggers there are a whole host of ethical issues to consider including confidentiality, lawyer advertising, unauthorized practice and ex parte contacts.

Companies considering a corporate blog should consider seeking advice from in-house counsel and/or outside counsel with a good understanding of technology and blog law.

eDiscovery Law Resource

2006-08-13T08:25:00.000-07:00

eDiscovery Law Resource

The law firm of Preston & Gates has developed a searchable database currently containing over 500 cases relating to eDiscovery. This helpful resource for litigators contains over 100 eDiscovery cases that were decided in 2006. Click here for the eDiscovery Database.

Thanks to Francis G.X. Pilegge of the Delaware Corporate and Commercial Litigation Blog for pointing out the resource.

Employers Face Overtime Lawsuits

2006-08-10T15:26:00.000-07:00

Employers Face Overtime Lawsuits

According to Business Law Today and the Washington Post lawyers for big businesses around the country are working overtime to protect corporate giants facing lawsuits for failing to pay overtime to rank-and-file employees.

As discussed in an article by Stephen Franklin of the Chicago Tribune, cases against State Farm Mutual Insurance and Allstate Insurance led to payouts of over $100 million for each.

This is also a significant problem for smaller businesses. In my experience it is not uncommon for small employers to misclassify employees. The U.S. Department of Labor has upped its enforcement of federal overtime standards. According to the Business Law Today article, the department saw a 26 percent increase in back wages won for workers and an 11 percent increase in the number of workers it was able to help last year.

A human resource audit can help you determine whether you are classifying workers properly.

Des Moines Business Blog Expert Offers Free Seminar

2006-08-10T15:19:00.000-07:00

Des Moines Business Blog Expert Offers Free Seminar

Have you thought about starting your own business blog? Des Moines business blog expert Mike Sansone is offering a FREE two hour business blogging workshop on August 17, 2006. The workshop will cover topics like:

1)How to follow the conversations using social media search tools.
2)Why your company should engage in these conversations.
3)What are the differences between blog sites and (cob)web sites.
4)Questions to answer before you begin blogging.

If you are interested, you can register here. But you should hurry because the workshop is limited to the first twenty five registrants.

Top Ten Steps for Business Start-Ups

2006-08-09T05:55:00.000-07:00

Top Ten Steps for Business Start-Ups

In her column this week Rhonda Abrams, a nationally syndicated small business consultant, sets out the top ten steps for business start-ups.

Abrams says this is what most entrepreneurs ACTUALLY do:

1. Choose a business name.
2. Get business cards.
3. Search the Internet for information and advice.
4. Envision how much money you'll make. (This is almost always wrong).
5. Set up a place to work.
6. Set up some basic financial accounts.
7. Look for customers.

Instead, Abrams advocates that entrepreneurs MUST DO the following:

1. Talk to an attorney and/or accountant. (I advise you definitely should do both).
2. Objectively check out the competition.
3. Get a domain name and/or email address.
4. Get all necessary business licenses, permits and certifications.
5. Contact an industry trade association.
6. Get a business bank account and set aside one credit card for business use.
7. Develop at least a simple budget.
8. Get bookkeeping software.
9. Develop a business plan.
10. Develop a marketing plan and go for it!

It is important for entrepreneurs to talk with an attorney and accountant first. You should consider the type of business entity (corporation, limited liability company, sole proprietorship, partnership, etc.) and whether there are any contracts you will need in your business. Further, it is important to understand the tax implications of your business upfront.

Abrams' advice is right on the money.

Be Careful When Deducting From Last Paycheck

2006-08-06T12:15:00.000-07:00

Be Careful When Deducting From Last Paycheck

Employees are often issued laptops, cell phones and other technologies. Unfortunately employees will often fail to return equipment when they leave the company. When that happens many employers want to deduct the value of the equipment from the employee's last check. Iowa employers must familarize themselves with Iowa Code Chapter 91A.5 concerning deductions from wages. This chapter prohibits an Iowa employer from withholding or diverting all or a portion of an employee's wages unless permitted by state or federal law or a court order. An employer may be allowed to deduct wages if the employer has written authorization from the employee to deduct for a lawful purpose that benefits the employee.

Consequently an employer may want to consider a written agreement with the employee upon issuance of the equipment. The agreement should authorize the employer to deduct the value of the equipment from wages if the equipment is not returned. With the appropriate language an employer may be allowed to deduct from the last paycheck.

Please be sure to consult a lawyer for specific advice concerning your circumstances.

Does Your Employee Manual Cover Sexual Orientation?

2006-08-01T19:45:00.000-07:00

Does Your Employee Manual Cover Sexual Orientation?

Did you know that several cities including Des Moines,Iowa now have laws or ordinances prohibiting workplace discrimination based on sexual orientation? Even though no federal prohibition exists, there is a trend toward enacting legislation in this area.

Under these laws, it is generally unlawful to use sexual orientation to:

Refuse to hire a job applicant.
Terminate an employee from a job.
Discriminate in compensation or in other terms or conditions of employment.
Print, circulate, or use any discriminatory statement, advertisement, publication, or job application form.
Make any inquiry that is discriminatory in connection with prospective employment.

If an employee or a job applicant feels that his or her rights have been violated and files a lawsuit, the possible damages a company may face include payment of back pay, reinstatement of the employee, a training requirement to eliminate the discriminatory practice, and payment of damages for emotional distress.

Be aware of your local regulations. Although discrimination based on sexual orientation is not yet prohibited by federal legislation, this is a hot issue. You may need to carefully consider your policies if you have one location in Des Moines and the other outside Des Moines. Do you want or need two policies that are separate and distinct regarding sexual orientation? However, even if this local regulation does not apply to your company, it is prudent to recognize this trend to avoid claims of wrongful termination in violation of public policy.

If your company is in Des Moines or another city that has a similar regulation you should review your Employee Handbook and any other written policies regarding harassment and discrimination. These policies may need to be re-written to include sexual orientation as a protected class. This may include several sections and policies within your Employee Handbook such as Equal Employment Opportunity, unlawful discrimination and harassment, and personal appearance policies. You should also review any documents that include your Equal Employment Opportunity policy such as employment applications, Affirmative Action plans and employment advertisements for open positions.

Iowa Family Law Blog

2006-07-31T20:10:00.000-07:00

Iowa Family Law Blog

Jennifer Jaskolka-Brown has started the Iowa Family Law Blog. Jennifer is a shareholder with Sullivan & Ward, P.C., a law firm located in West Des Moines, Iowa. She maintains a general practice which includes an emphasis on family law and litigation.

For more information please visit the Iowa Family Law Blog.

Blawg Seminar Coming Soon

2006-07-27T19:50:00.000-07:00

Blawg Seminar Coming Soon

Brett Trout and I will be presenting a blawg (law blog) continuing legal education seminar this Fall in Des Moines, Iowa covering the nuts and bolts of getting your law firm's blog up and running. The seminar will include not only getting your blawg up and running quickly, but also tips on how to generate quality content to generate a base of avid readers and how to rank #1 in the Google Search rankings. For more information, email me at rnigut@sullivan-ward.com or watch this site for more information on the date, place, curriculum and special blog reader pricing.

Iowa Ranks 4th in Judicial Fairness

2006-07-25T17:40:00.000-07:00

Iowa Ranks 4th in Judicial Fairness

According to an annual survey released by the U.S. Chamber of Commerce, Iowa's legal system ranks No. 4 in the nation. Iowa has ranked in the top five each of the last three years.

The five top states for overall legal fairness according to the survey are Delaware, Nebraska, Virginia, Iowa and Connecticut.

The survey shows that Iowa is a great place to do business. New business owners from Iowa often ask me whether they should incorporate in another state. Unless there are compelling reasons to do so I generally encourage them to incorporate right here in Iowa. Another major reason to incorporate in Iowa are the low fees necessary to maintain a corporation in Iowa. If you file using the convenient online process, it only costs $30.00 every two years to register with the Secretary of State. When you compare those fees with many other states, including highly regarded Delaware, Iowa is quite the bargain.

The study, released by the Chamber of Commerce's Institute for Legal Reform, is a benchmark by which companies, policymakers and the media assess the fairness of legal systems in the 50 states. The more than 1,400 attorneys who participated in the poll were asked to judge a number of factors, including overall treatment of tort and contract litigation, treatment of class action suits and mass consolidation suits, judges' impartiality and competence and juries' predictability and fairness.

A full report and state-by-state results are available at the Institute for Legal Reform or by calling the U.S. Chamber of Commerce at (202) 463-5682.

Small Business Incorporation in Iowa

2006-07-24T05:30:00.000-07:00

Small Business Incorporation in Iowa: Practical advice on incorporating your small business

Are you looking to incorporate your Iowa small business? My first word of advice is to speak with an accountant to determine which form of business best suits your tax situation. Your choices likely include the "S" corporation, "C" corporation or you could choose to form a limited liability company.

Some people are inclined to choose an online service to incorporate your business. Many of these companies hook you in with a low cost advertisement for the incorporation but the other necessary documentation is offered for a significantly higher cost. Further, these organizations are often unaware of specific legal situations and local laws. It is wise to choose a business lawyer to incorporate your business. You want to make sure your lawyer practices primarily in business law. Choosing a lawyer that is not familar with business law may have serious consequences and may increase the costs because the lawyer may learn on your dime. By analogy, you would not want a plastic surgeon operating on your heart.

Find out how to affordably incorporate or form a limited liability company for your business. Click here for more on small business incorporation.

Small Business Myths Revealed

2006-07-20T19:46:00.000-07:00

Small Business Myths Revealed

If you are in the process of starting your own business or interested in starting one I suggest reading the following Entrepreneur article entitled Small-Business Myths Busted.

Man Who Looks Like Mike Wants $832 million

2006-07-17T18:33:00.000-07:00

Man Who Looks Like Mike Wants $832 million

Mike Downey of the Chicago Tribune reports that a man has filed a lawsuit seeking $832 million against Michael Jordan, Nike and Nike chairman Phil Knight because the man looks too much like Michael Jordan. The 51-year-old man stands 6 foot tall (Jordan is 43 and 6'6") and apparently does play pick up games at his local YMCA. Allen Heckard's lawsuit alleges Nike and Phil Knight made Jordan one of the world's most recognizable figures in the world - which causes significant problems for him. He has apparently sued Jordan because he is in fact Michael Jordan.

If the Plaintiff wins this one the flood gates will open for celebrity look-alikes everywhere.

Read the full story here.

Is Your Team Dysfunctional?

2006-07-16T13:27:00.000-07:00

Is Your Team Dysfunctional?

One of the best business books I have read recently is Five Dysfunctions of a Team by Patrick Lencioni of The Table Group. In an easy-to-read format he diagnoses symptoms of teams in trouble:

1. Absence of Trust
2. Fear of Conflict
3. Lack of Commitment
4. Avoidance of Accountability
5. Inattention to Results

My guess is the flaws of malfuntioning teams may hit home for many businesses and law firms. This book is definitely worth the read.

Attempt to Steal Coke Recipe Proves Point

2006-07-12T18:57:00.000-07:00

Attempt to Steal Coke Recipe Proves Point

Three people are facing federal charges for trying to steal Coke's trade secret information and offering to sell it to rival Pepsi. Apparently, Pepsi immediately notified Coke about this offer, who in turn notified the FBI. One of the defendants is reportedly an administrative assistance to a Coke executive.

This proves the point of a recent blog post. (See "Employees Pose Biggest Threat to Data Security" - posted July 6, 2006). Employees present the biggest threat to security in companies. While significant dollars are often spent on keeping out hackers and other outside threats, companies generally ignore the need to prevent employee fraud.

Fortunately for Coke their rival acted honorably. Can you be sure your rival will act the same way?

Employers Will Face More Retaliation Claims

2006-07-10T19:50:00.000-07:00

Employers Will Face More Retaliation Claims

Employers are expected to face more retaliation claims due to a recent United States Supreme Court decision which adopted a broader definition of anti-retaliation provisions Title VII of the Civil Rights Act of 1964. The act forbids an employer from firing, demoting or harassing employees that complain about discrimination on the job.

Under the ruling the provision now applies to any "employer actions that would have been materially adverse to a reasonable employee or job applicant".

For more information read the following article from Inc.com.

Employees Pose Biggest Threat to Data Security

2006-07-06T17:56:00.000-07:00

Employees Pose Biggest Threat to Data Security

A recent audit by Palisade Systems of Ames, Iowa found that the biggest threat to a data breach or theft comes from employees or consultants that do not property secure the data they are entrusted with. Companies may spend millions to keep out hackers but only 2% of companies have monitoring and content filtering technology in place to prevent future misuse or theft of sensitive data from employees.

Click here for more information on how employees pose the biggest threat to data security.

Basic Rules for Buying a Business

2006-07-03T07:01:00.000-07:00

Basic Rules for Buying a Business

I recently read an article from AllBusiness. The article states that buying an existing business is less risky than starting a new business. The article says there is a lot to say for a proven idea and existing customers.

But watch out when buying an existing business. An existing business may not be worth the asking price. You need to carefully investigate the business and evaluate what you are being told by the business broker or the owner. For example, if a business is primed for growth why isn't the existing owner growing? If a business needs a sales person to spur growth why hasn't the existing owner hired a sales person? How are you better equipped to run the business than the existing owner?

Do not get caught up in the emotion of buying the business. Perform your due diligence and do not move forward unless it is the right business for you and your pocketbook. There is always another deal out there.

Set Up a Corporation or LLC Before Buying an Iowa Business

2006-06-29T04:39:00.000-07:00

Set Up a Corporation or LLC Before Buying an Iowa Business

When you buy a business you should consider setting up a corporation or limited liability company (LLC) to buy the business. You should avoid signing any contracts, loan agreements and leases in your personal name. In certain cases you may be required to personally guarantee the loan or other debts but it is still recommended that you place those agreements in the company name. It is often surprising how your start-up documents may impact litigation issues down the road. If those agreements are in the business name it may help you avoid personal liability in the future. One of the main purposes of a corporation of LLC is to protect your personal assets from the risks of the business. It is smart to start right from the very beginning.

Click here for more information on setting up a corporation or LLC for your Iowa business.

30 TouchPlay Businesses Sue State of Iowa

2006-06-27T04:39:00.000-07:00

30 TouchPlay Businesses Sue State of Iowa

Thirty TouchPlay businesses have sued the State of Iowa claiming the state breached its contract with the businesses when the legislature banned the TouchPlay lottery machines earlier this year. The lawsuit does not request specified damages but the businesses will be seeking millions. Earlier this year five businesses unsuccessfully fought for an injunction to stop the state's ban. Legislators are confident they will again prevail in this latest legal fight.

Buying an Iowa Business: Due Diligence Checklist

2006-06-26T05:41:00.000-07:00

Buying an Iowa Business: Due Diligence Checklist

If you are interested in buying an existing Iowa business you should take a look at this due diligence checklist provided by Kauffman eVenturing and developed by finance expert Corey Schwartz. Using a due diligence checklist can help you compile the necessary information to investigate a business and negotiate effectively.

For more information regarding the legal issues involved with buying an Iowa business please contact Rush Nigut of Sullivan & Ward, P.C.

Iowa Secretary of State to Host Notary Conference

2006-06-24T13:49:00.000-07:00

Iowa Secretary of State to Host Notary Conference

The Iowa Secretary of State's Office is hosting the 1st Annual Iowa Notary Conference on Friday, September 15, 2006 at the Iowa Events Center in Des Moines. This one day conference will cover several topics of importance to Iowa Notaries including:

* Immigration Law
* Health Documents
* Notary Signing Agents
* Electronic Notarization
* Combating Fraud and Theft

More details about the conference will be posted on the Iowa Secretary of State's website later this summer at www.sos.state.ia.us/notaries.

Sullivan & Ward Practice Highlight: Rural Electric Cooperative & Public Utility Law

2006-06-23T06:16:00.000-07:00

Sullivan & Ward Practice Highlight: Rural Electric Cooperative & Public Utility Law

For over fifty years, the Sullivan & Ward law firm has represented rural electric cooperatives and generating electric cooperatives in the state of Iowa, as well as several electric cooperatives from across the country. Our attorneys, including John Ward and Michael Joynt, have gained national recognition for their expertise in the area of rural electric cooperatives and public utility law and are often speakers for various seminars throughout the country. Sullivan & Ward also represents many telephone and water cooperatives throughout Iowa.

In its capacity as general counsel for these organizations Sullivan & Ward advises companies and their boards on issues of corporate governance, general business functions, employment matters and litigation. The firm has extensive experience with matters unique to electric cooperatives including formation and organization, voting rights, tax issues, FERC issues, RUS programs and other regulatory matters.

Click here for more information concerning Sullivan & Ward's rural electric cooperative and public utility law practice.

Employers Use Google to Find Scoop on Employees and Applicants

2006-06-21T18:52:00.000-07:00

Employers Use Google to Find Scoop on Employees and Applicants

Seattle, Washington lawyer D. Jill Pugh recently wrote an interesting blog post regarding the fact employers are increasingly using Google to find out information about employees and applicants. Employers are able to find out all kinds of information on the Internet including the sorts of information that are illegal to ask in an interview. (Such as age, marital status, whether or not the individual has children, arrest record, value of your home and more).

Pugh raises a valid point that it would be difficult for an applicant to prove that the decision maker did an online search or that the information influenced the decision. She recommends that job seekers should keep tabs on their online "profile" - especially if it contains embarassing or false information.

To find out more please visit Pugh's Employment Law Blog and the article she cited from Business Week.

Iowa Secretary of State Biennial Report Revocation Deadline

2006-06-20T05:57:00.000-07:00

Iowa Secretary of State Biennial Report Revocation Deadline

If you have not filed your biennial report with the Iowa Secretary of State the revocation deadline is fast approaching. If you fail to comply with filing the report your Certificate of Authority to operate your business in Iowa will be revoked on August 7, 2006. This year limited liability companies are required to file biennial reports for the first time. Many unsuspecting LLC owners may not be aware of the requirements.

If you have any questions please make sure to contact the Iowa Secretary of State's office. The online filing method is easy and less expensive. It costs only $30.00 to file the online report as opposed to $45.00 for the paper filing. You will need a corporation number and a pin number for the online filing which can be obtained through the Iowa Secretary of State's office.

Your (Law Firm) Management Sucks

2006-06-16T04:42:00.000-07:00

Your (Law Firm) Management Sucks

I recently read Your Management Sucks by business consultant Mark Stevens. It's a great book that I highly recommend. (It is the sequel to Your Marketing Sucks which I also recommend). In his latest book Stevens advises that you should declare war on your business management philosophy. Here is his seven-point declaration of war:

1. Unleash the Power of a Personal Philosophy: Don't just rock the boat of your business, be prepared to capsize it.

2. Challenge the Oxymoron of Convential Wisdom: The so-called smart thing is all too often stale thinking masquerading as truth.

3. Take a Good Look in the Mirror . . Do You See a Leader? The worst damn thing in the world you can do is copy a success. Be an original.

4. Develop Your Personal Killer App: Become greater than the sum of your parts.

5. Unleash Your Manhatten Project: Implement the plan that will change your world and life.

6. Capture Ideas with a Butterfly Net: Seek out what you need to know and use it for personal growth.

7. Apply C+A+M, the Universal Equation for Perpetual Growth: Win customers and make them deliriously happy.

So that got me thinking. How do lawyers rate in this equation? Do lawyers and law firms suck?

Does your law firm:

Return phone calls promptly?
Send personal notes to thank clients for their business?
Give clients anything to acknowledge their loyal patronage?
Invite your clients to anything that doesn't involve charging a fee?
Do anything fresh, powerful and unique?

If not, your law firm missing the opportunity to stand out. So take Mark Stevens' advice - declare war on how you practice law today. For more information about Mark Stevens and his books you can visit his Web site at www.msco.com.

Rush on Business Included in the Taxonomy of Legal Blogs

2006-06-15T18:24:00.000-07:00

Rush on Business Included in the Taxonomy of Legal Blogs

Rush on Business was recently included in the Taxonomy of Legal Blogs. This worthwhile and ambitious project is the creation of Ian Best who is a recent graduate from the Moritz College of Law at Ohio State University. Ian's work was recently mentioned in an American Lawyer article and has obtained significant notoriety.

Rush on Business is listed as a speciality blog in the Taxonomy of Legal Blogs under business and corporate law.

SIX QUESTIONS TO CONSIDER BEFORE FIRING EMPLOYEE

2006-06-14T04:47:00.000-07:00

Six Questions to Consider Before Firing an Employee

You should consider the following in deciding whether to fire an employee:

1) Do you have documentation of the employee's poor performance and/or poor behavior? What is in the employee's personnel file? You should also conduct a thorough investigation of the events in question including the employee's version of the events. Consider whether a judge or jury would find the employee's version plausible.

2) Does the employee deserve to be fired? Again, consider whether a judge or jury woulod find it reasonable for the employee to be fired.

3) Is the decision to terminate the employee inconsistent with the previous actions of the company? Review whether the employee recently received a favorable performance review, promotion or pay increase. If so, is the current issue severe enough to warrant termination?

4) Have you followed your progressive discipline policy? If you have a progressive discipline policy the judge and jury will expect you to follow it unless the employee's actions are so severe at to warrant immediate termination. You need to make sure you follow your handbook in these instances. Judges and juries want to know that you are being fair.

5) Is the employee a member of a protected class or recently made complaints? Consider whether the employee is 40 or over, a woman, minority or in another protected class. Did the employee recently make any complaints where you could be accused of retaliation if you fire the employee?

6) How have you handled similar situations in the past? Consider whether you have terminated other employees for similar infractions. Are you consistent? Make sure you treat employees in a protected class in the same as employees outside the protected class.

For advice in a particular situations where you are firing an employee please be sure to contact your lawyer.

REVIEW STUDY BEFORE PURCHASING AN IOWA FRANCHISE

2006-06-12T06:25:00.002-07:00

Review Study Before Purchasing an Iowa Franchise

In our last blog post we discussed the fact that there is no longer any validity to claim that franchised businesses are less likely to fail than independent businesses. Now the International Franchise Association (IFA) President recommends that all potential franchisee review a comprehensive study profiling the franchise industry.

For more information concerning the study go to the Franchise.org Web site and click on the Profile of Franchising before purchasing an Iowa franchise.

No Validity to Claims that Franchised Businesses are Less Likely to Fail

2006-06-09T19:52:00.000-07:00

No Validity to Claims that Franchised Businesses are Less Likely to Fail

I recently read an article in Trial Magazine entitled, "Litigating Fraud Claims for Franchisees" by lawyer Jeff Haff of Minneapolis. It is an excellent article. One of the more interesting points in that there is no validity to the claims that franchised businesses are less likely to fail than independent businesses. In fact, many franchisors stopped making this claim after the International Franchise Association (IFA), an organization compromised of mainly franchisors, issued a letter urging members not to use this sort of data to sell franchises. You should beware if a franchise salesperson still attempts to use this claim in order to sell a franchise.

Click here to see the full text of the IFA President's letter regarding the lack of validity to claims franchised businesses are less likely to fail.

Iowa Corporate & Business Attorney to Write "The Entrepreneur's Guide to Starting a Business in Iowa"

2006-06-08T18:58:00.000-07:00

Iowa Corporate and Business Attorney to Write "The Entrepreneur's Guide to Starting a Business in Iowa"

Des Moines,Iowa corporate and business attorney Rush Nigut is currently working on an online handbook entitled, "The Entrepreneur's Guide to Starting a Business in Iowa". The handbook will appear on the Web site of Sullivan & Ward, P.C.(a law firm located in West Des Moines, Iowa) and the rushonbusiness blog. The guide will aid entrepreneurs in the formation of their Iowa business and will include the following information:

1) Choosing a structure and forming your business;
2) Iowa state requirements for officially forming your business;
3) Nonprofit corporations;
4) Selecting your business name and how to protect it;
5) Iowa state responsibilities for maintaining your business entity;
6) Key terms and information for your business;
7) Iowa tax information;
8) Small Business Development Center information;
9) Financing your Iowa business;
10) Duties as an Iowa Employer;
11) Writing a business plan;
12) Human resources management;
13) Insurance issues;
14) Iowa state licensing issues;
15) Governmental regulations;
16) Environmental issues;
17) Successfully marketing your Iowa business.
18) Iowa Business Resource Links;

Click here for more information if you are interested in forming an Iowa business entity.

U.S. SUPREME COURT LIMITS WHISTLEBLOWER RIGHTS

2006-06-07T19:38:00.000-07:00

U.S. SUPREME COURT LIMITS WHISTLEBLOWER RIGHTS

A recent United States Supreme Court ruling limits protections for government workers who blow the whistle on official misconduct. New Justice Samuel Alito cast the deciding vote in the 5-4 decision.

Critics have said the ruling silences millions of workers who fear retribution for reporting corrupution or problems with government preparedness.

Supporters believe the ruling will protect governments from frivolous lawsuits filed by disgruntled whistleblowers.

The ruling was also the first sign of a shift in the Supreme Court's balance since the departure of Justice Sandra Day O'Connor. Last year, O'Connor wrote an opinion encouraging whistleblowers to report sex discrimination in schools. The decision in the most recent case split along traditional conservative-liberal lines.

In the ruling, Justice Kennedy said that exposing government misconduct is important but he rejected the notion that the First Amendment shields from discipline the expressions employees make pursuant to their professional duties.

The ruling overturned an appeals court decision that said Los Angeles County prosecutor Richard Ceballos was constitutionally protected when he wrote a memo questioning whether a county sheriff's deputy had lied in a seach warrant affidavit. Ceballos had filed a lawsuit claiming he was demoted and denied a promotion for exposing the lie.

Kennedy said the prosecutor's superiors could discipline him if they thought the memo was inflammatory. "Official communications have official consequences, creating a need for substantive consistency and clarity. Supervisors must ensure that their employees' official communications are accurate, demonstrate sound judgment, and promote the employer's mission," Kennedy wrote.

NUMBER OF FRANCHISES GROWING IN IOWA

2006-06-06T19:18:00.000-07:00

NUMBER OF FRANCHISES GROWING IN IOWA

A Des Moines Business Record article discussed the growing number of franchises in Iowa. The article also discusses some of the pros and cons of franchising. A critic of franching described it as "indentured servitude by contract". He stated that some franchisees have a tough time continuing in the business after the end of the franchise relationship. While the criticism does have some validity most franchises are agreeable to extending the franchise beyond the initial term if the franchisee is not in default.

The pros of franchising include access to a network of similarly situated business owners. You can also gain market share quickly with an established name. Many frachisors will also provide marketing and management support.

The key is to thoroughly investigate any franchise opportunity. You need to talk to as many franchisees as possible to determine if the franchisor will keep their word. I usually tell clients to keep talking to franchisees until you hear something bad (that way you can avoid mistakes and get an honest assessment of the opportunity). Review the UFOC and franchise agreement carefully. It is a good idea to have the UFOC and franchise agreement reviewed by an experienced franchise attorney. A franchise is a substantial investment so do not take the decision lightly.

Click here to read the franchising article at The Des Moines Business Record's Website.

SPAMMER REINVENTS HIMSELF: MOVIE TO FOLLOW?

2006-06-05T19:42:00.000-07:00

SPAMMER TO REINVENT HIMSELF: MOVIE TO FOLLOW?

I recently read an article about the The State of Texas and Microsoft filing a lawsuit against one of the world's worst purveyors of spam, Ryan Pitylak. Pitylak apparently admitted to sending out 25 million spam emails a day at the height of his business operation. Pitylak was fined $1 million and has been forced to sell his house and BMW. Things would not seem to be going his way, right? Not so fast.

In taking a page out Frank W. Abagnale's book (you remember the movie, Catch Me If You Can)Pitylak is reborn as an anti-spammer and is offering is services to Internet companies so they can stop folks like himself. If he's lucky maybe there will even be a movie made about him.

Only in America.

BIG BROTHER IS WATCHING

2006-06-04T07:59:00.000-07:00

BIG BROTHER IS WATCHING

Tech companies are getting ready for a big fight. The Bush administration is calling for Internet and telephone companies to keep detailed records of customers' online activities for a period of at least two years. Frankly, that is scary.

The government wants more than just terrorism and child porn searches. According to the experts the government is saying keep everything on everyone and we will sort it out later. Companies such as Google and Qwest have been resistant to such requests. I hope other companies will follow suit.

In my opinion, the chances of exploitation are considerable. Fighting criminal activity and terrorism is one thing but opening up everything to the government is going too far.

BUYING AN IOWA FRANCHISE: SHOULD YOU HIRE A LAWYER EVEN IF THE FRANCHISE AGREEMENT IS NOT NEGOTIABLE?

2006-06-01T19:28:00.000-07:00

BUYING AN IOWA FRANCHISE: SHOULD YOU HIRE A LAWYER EVEN IF THE FRANCHISE AGREEMENT IS NOT NEGOTIABLE?

It is a common misperception that franchise agreements are not negotiable. Often the franchisor will negotiate on certain terms and conditions. You may, however, run into a franchisor who will not negotiate the terms and conditions of its agreement. Is those instances should you still hire a lawyer to review the agreement? The answer is . . . (you probably guessed my response) yes.

Even if the agreement is not negotiable it is important that you fully understand your legal rights and your responsibilities under the franchise agreement. Most franchise agreements contain a significant amount of legalese that may be difficult for non-lawyers to understand. Further, there are important franchise laws in Iowa which you should become familar with to help you deal with a franchisor. (See Iowa Code 523H) Some of these Iowa laws are pro-franchisee and may be particularly helpful in the event you have a dispute with a franchisor. A lawyer can help you understand these laws.

An experienced lawyer who reviews franchise agreements and Uniform Franchise Offering Circulars (UFOC) frequently may also be able to assist you in determining whether the agreement is fair - even if it is not negotiable. The lawyer should be able to tell you whether the agreement and the UFOC complies with applicable laws and whether it contains the information franchisors are required to provide to franchisees.

Click here for more information about franchise UFOC and agreement review services.

DES MOINES UTILITY FRANCHISE TAX CASE HEADED TO TRIAL

2006-05-31T10:54:00.000-07:00

DES MOINES UTILITY FRANCHISE TAX CASE HEADED TO TRIAL

Last week, the Iowa Supreme Court reversed a lower court ruling on a franchise tax issued by the City of Des Moines on utilities. Des Moines had been sued in District Court by Lisa Kragnes seeking to declare the utility franchise tax illegal. She won in district court when the judge granted her motion for summary judgment. The City of Des Moines appealed and the Iowa Supreme Court reserved the summary judgment decision.

The Supreme Court reversed the case because it ruled a geniune issue of material fact exists as to whether all or part of the franchise fees are reasonably related to the City's administrative expenses. The Court ruled there is no question the grant of the franchises to the utility causes the City to incur some ongoing administrative expenses in the exercise of its police power. These expenses would include the reasonable costs of inspecting, supervising and otherwise regulating the gas and electric utility franchises.

The Court has now remanded the case to the district court for a trial on the merits. The critical issue is whether the fees charged by the City of Des Moines bear a relationship to the cost to the City of the utility's occupancy of public areas in the City. The Court said the case record is replete with references that the City of Des Moines used a portion of the franchise fees for purposes other than administrative expenses. The Supreme Court, however, ruled that this fact alone does not mean Des Moines is not using other streams of revenue to cover the administrative expenses it incurs as a result of granting MidAmerican the gas and electric utility franchises.

The upcoming trial will determine if the franchise fees are in fact reasonably related to the City's administrative expenses. If not, the district court will then issue an order disallowing the franchise fees as contained in the ordinances. If the franchise fees are reasonably related to the administrative expenses, the court shall enforce the ordinances up to an amount equal to the fees reasonably related to the City's administrative expenses in exercising its police power.

FACTORS IN FORMING YOUR IOWA BUSINESS

2006-05-29T15:09:00.000-07:00

FACTORS IN FORMING YOUR IOWA BUSINESS

You are considering forming an Iowa small business. What type of business structure should you choose? In Iowa, your choices generally are a sole proprietorship, S corporation, C corporation, or a limited liability company.

Some of the factors to consider in choosing a business structure are:

1) Personal liability protection;
2) How profits are taxed;
3) Ability to take advantage of fringe benefits;
4) Ease in raising capital.

A sole proprietorship is the easiest to set up (you generally do not need to take legal action) but you have unlimited personal liability. In today's sue happy society it is probably a good idea to consider a form of business that provides you with personal liability protection like a corporation or LLC.

Traditionally, most small business owners selected the S corporation as their form of business. The S corporation is often a good choice because it provides you the limited liability you need but you avoid double taxation because all business profits are taxed to you as an individual. The limited liability company has become popular over the past decade and also provides you limited liability and avoidance of double taxation.

The C corporation has traditionally been used for larger businesses but accountants will often recommend it because the owners can take advantage of certain fringe benefits. Also if you need outside capital, a C corporation may make it easier to attract investors.

So which business structure should you choose? Before choosing a business structure it is wise to talk with an accountant. The accountant can review your financial situation with you and advise you on the best strategy for your business. In my view the choice of a business structure usually boils down to tax treatment. So talk to your accountant first and then go to the business lawyer to set up the business entity.

Click here for more information on forming your Iowa business.

Importance of Trademarks

2006-05-24T19:50:00.000-07:00

Importance of Trademarks

Des Moines Iowa patent and trademark attorney Brett Trout recently wrote three good articles on the importance of trademarks. With the Internet, even the smallest of companies should become familar with trademark issues in order to protect their business names and logos.

Go to http://blog.bretttrout.com for more information.

Buying a Franchise in Iowa: Franchise UFOC and Agreement Review

2006-05-23T18:55:00.000-07:00

Buying a Franchise in Iowa: Franchise UFOC and Agreement Review

Are you looking to purchase a franchise business in Iowa? If so, you should consider having the Franchise Uniform Offering Circular and Franchise Agreement reviewed by an attorney to make sure the documents comply with applicable federal and state laws. There are a number of specific Iowa law provisions relating to transfers, jurisdiction, application of state law, renewal and selling your franchise which are often not contained in typical out-of-state franchisor agreements. A review can help point out those applicable Iowa franchise law provisions which may be helpful if you end up in a dispute with a franchisor.

A common misperception is that franchisors are unwilling to negotiate their franchise agreements. In fact, many franchisors are willing to negotiate certain terms with prospective franchisees. A review by an experienced franchise attorney can point out the areas for possible negotiation with the franchisor.

Overall, a franchise attorney review can also help give you a better understanding of your obligations as a franchisee and the duties of the franchisor. It is good idea to fully understand these issues before making the substantial investment required by most franchisors.

Click here for more information about franchise UFOC and agreement review when buying an Iowa franchise.

ASSET PROTECTION IS NOT JUST FOR THE RICH

2006-05-20T14:33:00.000-07:00

ASSET PROTECTION IS NOT JUST FOR THE RICH

There is a often a misperception that asset protection is only for rich. This is not the case. Every business owner should give consideration to asset protection. In fact, asset protection strategies are generally inexpensive compared to the potential liability.

The best time to consider asset protection is when you start your business. The first way to protect your assets is through insurance. Two typical and necessary business policies are general liability insurance and workers' compensation insurance. In certain instances you may need other coverages, endorsements or riders depending on your particular situation. On the personal side you may also want to consider an "umbrella" policy in addition to your home and auto insurance.

The second way to protect your business is through business structures such as a corporation, limited liability company (LLC) and limited partnerships. These business structures are generally afforable for almost every business owner. In fact, if you cannot afford to set up a limited liability structure for your business you should perhaps give a second thought as to whether you have enough capital to be in business. Certain advantages these structures provide include:

1. Protect Your Personal Assets From Business Liabilities

You can conduct your business while protecting your personal bank accounts, home and other personal assets from claims against the business. Sole proprietorships and partnerships do not offer such protection.

2. Protect Your Business From Personal Liabilities

You can also protect your business from personal liabilities. Imagine you lost a significant personal judgment. Having a business structure with limited liability will separate your business assets from your personal finances. This makes it more likely that you will be able to continue your business operations without interruption even though you have a personal judgment. Without a limited liability business structure in place your business assets are left open to the creditors of the personal judgment.

Please click here for more information on protecting your assets by incorporation or LLCs.

RULES OF BUYING A BUSINESS: RULE NO. 3 - WRITE A CAREFUL OFFER

2006-05-18T18:28:00.000-07:00

RULES OF BUYING A BUSINESS: RULE NO. 3: WRITE A CAREFUL OFFER

Once you have decided to move forward with buying a business you should write a careful offer. First, I recommend you consult a lawyer to assist you in writing the offer. The cost is often not as much as people might imagine and it could help you from making a major mistake. For example, do you want an asset or stock purchase? There is a big difference in the legal and tax consequences between the two types. Second, you will want to draft the offer with certain contingencies in mind. A nonexhaustive list of such contingencies may include:

1) Due diligence including, but not limited to, financial review, taxes (income, sales and employment), corporate structure review, inventory issues, asset lists, lawsuits, real estate or lease issues, contracts review, employment matters, etc.;

2) Financing;

3) Necessary approvals from governing or regulatory bodies;

4) Environmental issues (if applicable);

5) Obtaining agreements on non-competes for owners and key employees;

6) Representations and warranties;

7) Continuation of the normal operation of the business with no material changes;

8) Penalty provisions in case the owner sell or negotiates with another person after accepting the offer;

9) Other issues specifically related to the situation.

I also highly recommend contacting an accountant before making an offer. It is important to gain enough financial information up front in order to make a reasonable offer based upon your own financial situation. Keep in mind that if you have a loan or other debt you may need a significant cushion to make the payments and support yourself too. DO NOT BUY ON EMOTION - SEE RULE NO. 1. Unless you are a financial expert you should have the accountant review the financials in order to help you understand how much you can reasonably pay for the business.

RULES OF BUYING A BUSINESS: NO. 2 - BECOME AN EXPERT

2006-05-17T19:17:00.000-07:00

RULES OF BUYING A BUSINESS - RULE NO. 2: BECOME AN EXPERT

Buying a business at a great price takes work and preparation. If you are not currently an expert in the industry you are considering you should become one. Interview several people in that industry, read books and articles or take classes. Perhaps you should even consider taking a temporary or part-time job in the industry.

Taking the time to understand the industry could help you avoid a major mistake. For example, are there any trends or regulations that mean the business may experience declining sales in the future? Perhaps the current owner realizes these factors and sees the opportunity to cash out.

If you are considering a franchise I recommend you interview as many current franchisees as possible in order find out all you can about the industry and the business. I am amazed by the number of franchisees you fail to do this and some regret it later. Why else would they put all those names in the offering circular? Make sure to take advantage of the available information.

Also, do not be afraid to find someone in the industry who will mentor you. Many business people are more than willing to help out business owners who are just getting started.

Casey Blake Taking the Majors by Storm

2006-05-16T20:11:00.000-07:00

Casey Blake Taking the Majors by Storm

As my loyal readers know I am a huge baseball fan. I follow the box scores every morning of Indianola, Iowa native Casey Blake. As of this morning, Casey was leading the American League in hitting. He also now owns a 13 game hitting streak while hitting .366 with 7 home runs. He is putting up All-Star numbers indeed.

Go Tribe!

Franchise Seminar This Thursday

2006-05-16T06:16:00.000-07:00

Franchise Seminar This Thursday

Joe Cooney of Frannet will hold a seminar for those interested in franchising. The seminar is this Thursday, May 18, 2006 from 6:00 to 8:00 p.m. The seminar is located at the Mid-Iowa - SBDC office at 10861 Douglas, Suite B, Urbandale, IA 50322. The telephone number for reservations is 515-331-8954.

Topics covered will include:

- How to know you can get into business safely;
- How to find a business asset you can afford;
- How to identify the right business for your personal talents, skills and lifestyle needs

For more information email Joe Cooney at jcooney@frannet.com

RULES OF BUYING A BUSINESS: NO. 1 - DO NOT BUY ON EMOTION

2006-05-15T19:01:00.000-07:00

RULES OF BUYING A BUSINESS: NO. 1: DO NOT BUY ON EMOTION

Many of us dream of owning our own business and making a fortune. Instead of starting from scratch many people opt to buy an existing business. While it may be less risky to buy an existing business you still need to carefully consider what you are buying.

Many individuals are so excited about the dream they forget about reality. Do not fall in love with the deal itself. Make sure to take a step back and take the emotion out of the deal. Talk with an accountant to determine if you are getting a fair price or maybe even a discount. A first step towards success is to make sure you buy the business at an attractive price.

Sounds easy, right? If so, why do the majority of businesses fail?

So be a good shopper. Buy at a discount if possible. Be patient and wait for the right opportunity.

Rush on Business Blawg to Allow Comments

2006-05-12T17:13:00.000-07:00

Rush on Business Blawg to Allow Comments

One of the things that makes blogs unlike traditional Web sites is that readers can leave comments and stimulate discussion. Up to this point Rush on Business has refrained from leaving comments. Well, I have decided to give it a try. But there are a few ground rules:

1) All comments must be clean;
2) No defamation;
3) Any questions or request for legal information must be general in nature and the editor specifically disclaims any attorney/client relationship unless there is a fee agreement between the parties. The editor will not answer questions governing specific circumstances on this blog.
4) Brett Trout can only comment once per day.
5) No spam.
6) These rules may be revised without notice.

How to Hire the Right Attorney for Your Business

2006-05-12T05:47:00.000-07:00

How to Hire the Right Attorney for Your Business

There are four professionals that your business will likely need for start-up and beyond.

1) Attorney,
2) Accountant,
3) Insurance Agent, and
4) Banker.

Recently I read article which quoted fitness video guru Billy Blanks as saying he learned how it important it was to hire the right lawyer after his law firm committed malpractice and cost him millions. So how do you hire the right lawyer for your business?

First, lawyers have become highly specialized. Hiring an attorney that does primarily non-business work is probably not best for your business. A business attorney will likely have a better understanding of contracts and business organizations. In the beginning you will need a lawyer that can help you understand whether a corporation or limited liability company is right for your business.

Second, does your lawyer understand intellectual property issues? With the Internet, intellectual property is becoming increasingly important. Your business lawyer should at least have a basic understanding of these issues. Intellectual property is also a highly specialized area of the law but a good business lawyer should have a close working relationship with an intellectual property specialist.

Third, your lawyer should be able to understand and negotiate real estate leases and other related contracts. Having a business lawyer review your lease can pay big dividends. Many business owners assume leases are not negotiable but most landlords are willing to negotiate in some manner and often on key points.

Fourth, how experienced is your lawyer? Do not be afraid to ask your lawyer direct questions about their experience level. Has the lawyer previously peformed the work you need completed.

Fifth, is the lawyer and the law firm well-situated to handle many type of business law issues? Because of specialization no lawyer is able to handle every issue that comes up in your business. Your lawyer should be able to get you to the right person when different legal issues come up. You should not have to go looking for a new lawyer with each different issue.

Sixth, has the lawyer worked in your industry? It is helpful if the lawyer has worked with other businesses in your industry. At the very least the lawyer should be willing to learn about your industry. Better advice will come from attorneys that understand your industry.

Seventh, is the lawyer willing to educate you? Part of lawsuit prevention is education. Your lawyer should be able to train you to spot issues and enable you to implement preventative practices to avoid lawsuits and other problems.

Eighth, is your lawyer fair with billing practices? For routine matters is your lawyer able to quote flat fees. If not this may be an indication the lawyer does not have appropriate experience. In litigation situations the lawyer may not be able to quote flat fees but should be able to give you a range of the expected costs. If you are asked to pay money up front please make sure that lawyer first deposits the money into a trust account for disbursement to the lawyer only when the work is done.

Lawyers Beware!

2006-05-10T18:37:00.000-07:00

Lawyers Beware!

A recent Forbes article pointed out that lawyers are increasingly subject to lawsuits - not from their clients - but from third parties who may have been injured from the lawyer's legal advice. The article said, "It has become routine for lawyers to sue lawyers."

Traditional malpractice suits are holding steady although the awards appear to be growing. Many of the largest verdicts stem from conflict of interest cases.

The Equal Opportunity Commission even sued a 1,600 lawyer law firm claiming it demoted 31 shareholders because of their age.

The cloak is apparently off lawyers who were once treated as the gatekeepers of the courthouse. One thing is certain - lawyers will not receive any sympathy cards from doctors.

Sullivan & Ward, P.C. Celebrates Open House Tonight

2006-05-08T06:03:00.000-07:00

Sullivan & Ward, P.C. Celebrates Open House Tonight

The Sullivan & Ward law firm has an open house tonight for clients and friends to celebrate the move to its new location. The law firm consists of sixteen lawyers and maintains a general civil practice in state and federal courts--trial and appellate level. The firm primarily represents businesses and their owners.

The firm serves as general counsel for many of the rural electric cooperatives and their associations throughout the state. In addition, Sullivan & Ward acts as general counsel for a number of other businesses involved in technology, communications, manufacturing and retailing. In our capacity as general counsel we advise the companies and the boards on issues of corporate governance, general business functions and operations, labor relations and litigation matters. In the context of litigation we represent these entities directly or indirectly with their insurance carriers. In conjunction with their operations we represent them before various administrative and governmental entities on a variety of issues that include, among other things, compliance with statutory and regulatory matters.

Sullivan & Ward, P.C. is located at 6601 Westown Parkway, Suite 200, West Des Moines, IA 50266. The telephone number is 515-244-3500. Click here for more information about Sullivan & Ward, P.C.

Watch Out for Resume Fraud

2006-05-04T06:06:00.000-07:00

Watch Out for Resume Fraud

Recent news stories show resume fraud presents a big problem for your business. Recently, the Minnesota Vikings Director of Player Personnel was fired for inaccuracies on his resume. Iowa State University has had multiple cases where coaches and faculty have lied on their resumes. Could this happen to you?

Chances are it could. The numbers in a study I read are astounding:

44% of job applicants lied about work experience
41% of job applicants lied about eduation
23% fabricated credentials or licenses

Some things you might do to prevent resume fraud include:

1) Conduct background checks;
2) Have a fraud/ethics policy;
3) Communicate policy to employees and prospective employees;
4) Monitor compliance with the policy;
5) Enforce the policy consistently.

TouchPlay Dead

2006-05-03T06:22:00.000-07:00

TouchPlay Dead

Yesterday a Polk County District Court judge rejected Plaintiffs' request for an injunction in the TouchPlay lottery cases. A federal court judge previously ruled in a similar manner. The Plaintiffs had requested an injunction to lift the legislative ban of the machines which goes into effect today at 8:00 a.m. The court ruled the Plaintiffs were not likely to show that the legislature exceeded its authority. Further, the Court found there was nothing in any documents or agreements that bound the State of Iowa to maintain its business relationship with the TouchPlay vendors.

The legal battle may continue if the Plaintiffs' appeal but TouchPlay is apparently dead.

Are You Motivated?

2006-05-02T03:35:00.000-07:00

Are You Motivated?

Yesterday I attended the Get Motivated Seminar in Des Moines. Here are some sample tidbits from the seminar. Most are common sense but as someone once said, "Common sense is not all that common."

Here are five cornerstones of success as told by Suzie Orman.

1) Think Great Thoughts - have a positive mental attitude
2) Say Great Things - do not speak negatively.
3) Take Great Actions.
4) Wish Others Greatness
5) Love Yourself and Each Other.

Here are a couple of tips from Zig Ziglar.

1) People will not buy until they know how much you care.
2) If someone asks you how you are doing say, "Better than good!"

Phil Town - Successful Investor

1) The best tipoff that a stock is going up - "Insider Buying" (Peter Lynch)
2) The best tipoff that a stock is going down - "Insider selling" (Peter Lynch)
3) Warren Buffett's rules of making money - #1. Do not lose money. #2. See rule #1.

Peter Lowe

1) Our words control our mind.

Overall I enjoyed the seminar and would recommend it the next time it comes to Des Moines.

Are You Drug Testing Employees? Make Sure to Comply with Law

2006-04-29T14:54:00.000-07:00

Are You Drug Testing? Make Sure to Comply with Law

If you are a private Iowa company that drug tests your prospective or current employees it is important that you pay attention Iowa Code section 730.5. This statute sets forth the obligations of private sector employers involving drug testing in Iowa. I have dealt with several employers who were surprised by the requirements of Iowa Code 730.5. Does your company have a written policy specifically for drug testing? Do you conduct random testing? If an employee tests positive are you prepared to allow that employee to go for drug treatment? These are just a few considerations addressed in the statute.

Before deciding to drug test you should make sure you review the requirements of Iowa Code 730.5 with your lawyer. Performing drug tests may be necessary in your business but you need to make sure you are acting within the requirements of the law. Mistakes could be very costly and subject you to significant liability.

Click here for more information regarding human resource audits for businesses.

Articles of Incorporation or Organization Only Part of the Story

2006-04-27T18:06:00.000-07:00

Articles of Incorporation or Organization Only Part of the Story

Now for the rest of the story . . .

Imagine a client that becomes embroiled in a disagreement with a 50/50 business partner. The two formed a LLC through a lawyer who was unfortunately not a business lawyer. The lawyer set up a limited liability company and drafted articles of organization. The problem - no operating agreement or initial meeting minutes.

Unfortunately this happens all too often. Without an operating agreement it is very tough to settle potential disagreements. How do you value the company? Who has authority or management rights? How are disputes settled? All of these items could have been set forth in an operating agreement. Instead, the parties may be staring a judicial dissolution in the face.

When do you need a shareholder agreement (Corp) or an operating agreement (LLC)? It is important to have one even if you are the sole shareholder or member. It helps establish corporate formalities to insulate you from personal liability. However, it is absolutely imperative to have such an agreement if you have more than one shareholder or member. That is the case even if the shareholders or members are family or best friends. Having a well-written shareholder or operating agreement can help prevent significant problems down the road.

Click here to learn about forming a corporation or limited liability company.

ALJ Rules New York City Worker Can't Be Fired For Surfing Web

2006-04-25T18:36:00.000-07:00

A New York administrative law judge ruled that a city worker cannot be fired for surfing the Web. The judge said surfing the web is equivalent to reading a newspaper or talking on the phone, providing a combination of communication and information that most employees use as frequently in their personal lives as for their work. He added, "For this reason, city agencies permit workers to use a telephone for personal calls, so long as this does not interfere with their overall work performance. Many agencies apply the same standard to the use of the Internet for personal purposes."

Under the facts of this case, the administrative law judge ruled a only a reprimand was appropriate. But employees that think they now have a free pass to surf the Internet on the job should not get too excited. A well-written employment policy on Internet use would still allow employers to discipline employees if necessary for excessive Internet use. Those same policies would allow the employer to discipline an employee for excessive personal phone calls or reading the newspaper on the job. Overall, it is doubtful this decision will have wide-ranging impact in the private sector and employees should be careful to follow the written policies of the employer.

Corporate Minutes Help Maintain Limited Liability Shield

2006-04-24T19:54:00.000-07:00

Corporate Minutes Help Maintain Limited Liability Shield

Corporate minutes often seem unnecessary and mundane. Here's an article that discusses the importance of minutes and good record keeping in order to maintain limited liability in your corporation or limited liability company.

Click on the Inc article to learn more.

Writing Your Business Plan

2006-04-21T20:05:00.000-07:00

Over the past twelve years I have had the opportunity to work with well over one hundred businesses. Many of them have been successful but many of them unfortunately did not make it. The common thread among those that did not make it? You guessed it. No written business plan and in most cases no planning at all.

Where do you start in writing your business plan? I suggest reading the book, How to Write a Winning Business Plan by Joseph Mancuso. I noticed most recently you could get a used copy for $.02 on Amazon plus shipping. But don't be fooled by the price, this is an excellent book full of good examples and tips for writing a top notch business plan. I also suggest you visit the SCORE Web site. The Web site has loads of information for entrepreneurs. You should also follow SCORE's Five Tips for Making the Most of Your Business Plan.

To learn more about incorporating your business or setting up a limited liability company please visit Sullivan & Ward's Web site.

Thinking of Starting a Business? Consider Bizstarts

2006-04-20T19:13:00.000-07:00

Thinking of Starting a Business? Consider Bizstarts

Are you starting a business? Do you need financing? Have you developed a marketing plan? Do you know how to do a balance sheet or profit / loss statement?

If you need a little guidance in getting started with your business you should consider calling Monica Dolezal of Bizstarts. Monica has thirty years experience in the banking business and has probably worked with over a thousand small businesses during her career.

She provides seminars and works with entrepreneurs one-on-one. She serves as an advisor to help you in the start-up phase. Check out her Website at www.bizstarts.biz

Outsource Your Legal Work to Iowa

2006-04-19T19:57:00.000-07:00

Outsource Your Legal Work to Iowa:

I have recently read several articles concerning the outsourcing of legal work to India and other countries. In fact, outsourcing is becoming popular for high level legal work including mergers and acquisitions. I have often wondered - why don't companies outsource their legal work to Iowa? Relatively speaking we have lower hourly rates than larger metropolitan areas of the country and the quality of lawyers is excellent among the Iowa bar.

So take note and send that business to Iowa.

Retaliation Claims Pose Threat

2006-04-18T19:07:00.001-07:00

Retaliation Claims Pose Threat

Iowa is known as an "Employment at Will" state. The mantra is that an employer may fire someone for "any reason" or "no reason at all" - as long as that reason is not discriminatory. However, there are exceptions to this rule. One of the major exceptions is when a termination violates the "public policy" of the State of Iowa. A violation of public policy often invokes a retaliation claim. You may need to worry about a retaliation claim under Iowa law if your reason for terminating the employee involves any of the following:

1) Filing a workers' compensation claim;
2) Filing a wage/hour claim;
3) Filing an IOSHA complaint;
4) Garnishment of wages;
5) Refusing to submit to a polygraph, except under law enforcement circumstances;
6) Participating in or refusing to participate in a labor union;
7) National Guard Duty;
8) Jury duty;
9) Taking time off to vote or voting for a particular candidate;
10) Deliquent child support payments / assignment of income;
11) Participation in a court-ordered drinking drivers course;
12) "Whistle Blowing" by public employees;
13) Request for the employee's personnel file;
14) Refusing to Commit an illegal act.

There are also federal laws which may give rise to retaliation claims.

It is important to keep in mind that a retaliation claim may be valid even if the original claim had no merit. It is important to establish a policy against retaliation and to faithfully follow it. If you have questions about whether you can terminate an employee please consult your attorney before doing so.

Avoiding Defamation Claims In Responding to Reference Checks.

2006-04-17T10:24:00.000-07:00

AVOIDING DEFAMATION CLAIMS IN RESPONDING TO REFERENCE CHECKS: Iowa Code Chapter 91B.2

A significant potential liability faced by employers is defamation. To defame someone is to make a false statement that injures the person's reputation. A written defamatory statement is known as libel. A spoken defamatory statement is slander. In order to have a legitimate defamation claim the false statement must be communicated to a third person either in writing or orally. Generally to be defamatory the statement must be one of fact. Usually statements of opinion are not considered defamatory.

Job references often present a problem relating to defamation. Section 91B.2 of the Iowa Code provides potential immunity for information provided by employers about current or former employees.

1. An employer or an employer's representative who, upon request by or authorization of a current or former employee or upon request made by a person who in good faith is believed to be a representative of a prospective employer of a current or former employee, provides work-related information about a current or former employee, is immune from civil liability unless the employer or the employer's representative acted unreasonably in providing the work related information.

2. For purposes of this section, an employer acts unreasonably if any of the following are present:

a. The work-related information violates a civil right of the current or former employee.

b. The work-related information knowingly is provided to a person who has no legitimate and common interest in receiving the work-related information.

c. The work-related information is not relevant to the inquiry being made, is provided with malice, or is provided with no good faith belief that it is true.

Rather than run the risks many employers have a no comment policy whereby they give only the dates of employment and positions held. This is not particularly helpful to a prospective employer and it may actually hurt the employee's chances of getting the position because enough information is not known. In a bizarre twist some employers have actually been sued by prospective employers for not providing pertinent information regarding the current or former employee.

One potential solution is to adopt a no comment policy but to make an exception where the current or former employee approves in writing the employer providing a reference and release the employer from any liability associated with issuing the reference.

Whatever policy is adopted be sure you communicate it in writing to employees in the company handbook and follow it faithfully. The policy should identify those in the company that are authorized to give references and it should prohibit everyone else in the company from doing so.

Talkin' Baseball

2006-04-14T18:59:00.000-07:00

Talkin Baseball:

Let's take time away from business and corporate law. Let's talk baseball.

One of the bright spots in the major leagues this year is the play of Indianola, Iowa native Casey Blake for the Cleveland Indians. Casey is hitting over .400 and currently ranks in the top ten in batting average and on-base-percentage. Could an all-star game be in his future? A great start is no guarantee but Casey has historically played his best ball after April and May. Let's go Tribe!

On the downside, it is Barry Bonds. Bonds may very well be the greatest hitter that ever lived. (My Grandpa is probably rolling over with that comment but I never saw Ted Williams). I once saw Bonds receive four straight intentional walks. Sixteen straight balls. Pitch number seventeen? Bonds hit it out of the park. Who else could do that? Despite the revelations in Game of Shadows there is no conclusive proof that Bonds knowingly took steriods. It is tough to defend Bonds but I find it hypocritical the way Major League Baseball has acted with Bonds, McGwire, Sosa et al. MLB glorified the pursuit of the single season home run mark and fans returned in droves to stadiums across the country. (Recall that baseball was practically dead before Sosa and McGwire did their magic). Then came Canseco and his book. Next, Congress put the pressure on several sluggers and now the target is Barry Bonds. MLB recently announced it plans to investigate Bonds to determine if he used steriods.

It appears Bonds may be prosecuted for perjury. Interesting. I recall Rafael Palmeiro testified before Congress that he did not take steriods - shortly before he tested positive for steroid use. Was he prosecuted? No. In fact, the President of the United States (and former Texas Rangers owner while Palmeiro played there) supported his friend 100 percent. Bush believed Palmeiro did not take steriods even after a positive test! Bonds? The guy could really use a friend.

Employer Personnel Files in Iowa - Part II

2006-04-12T09:39:00.000-07:00

Employer Personnel Files in Iowa - Part II

A typical personnel file may include the following:

-Employment application, along with supporting documents such as a resume, transcripts and interview notes;
- Recommendation letters and reference checks;
- Copies of non-compete agreements with any prior employer;
- Offer letters and/or employment contracts;
- Form I-9;
- Tax withholding forms;
- Job description;
- Copies of any required licenses or certificates required for the position;
- Receipt for the employee handbook;
- Testing materials, if any (Not drug tests or other medical related tests);
- Training records relating to safety, job competency, sexual harassment, etc.
- Evaluations;
- Awards and disciplinary actions;
- Pay records;
- Personal contact information - home address, telephone number, name of spouse and emergency contact
- Exit interview notes and/or form;
- Recommendation letters and notes of references given to prospective employers.

Employers should establish a records retention policy. When documents are required by law, the law usually specifies how long the document needs to be retained. In absence of a law, the applicable statute of limitations should be the guide. (A statute of limitations is a time period after which a lawsuit will be barred unless the claim is filed within the applicable time period.) Also look at your internal workings to determine if certain documents are needed in order to respond to requests for information.

If information is kept electronically, restrictions should be placed on who can access that information just like paper documents. Also back-up information needs to be kept off-site in order to protect against disasters or theft.

Employer Personnel Files in Iowa

2006-04-11T19:33:00.000-07:00

Employer Personnel Files in Iowa

Employers should maintain a separate personnel file for each employee. An employer should also maintain a medical file which is separate from the personnel file. Both sets of files should be secured or locked. Access to those records should be restricted to a need-to-know basis and designated individuals should be trained in how to handle such records. The files need not contain everything related to the employee. Instead, management should determine in advance what documents are, and are not, to be kept in the file. In addition, it is a good practice to organize the file into sections so particular items can be located easily. Files should be periodically reviewed in order to ensure compliance with your policies and procedures.

Next post ... what types of documents should be kept in the personnel file.

12 Things to Consider Before Franchising Your Business

2006-04-07T05:41:00.000-07:00

12 Things to Consider Before Franchising Your Business

Do you want to build the next Subway? Curves? or Jackson-Hewitt?

Ask yourself these questions in deciding whether you should franchise your business.

1)Are you making a good living in your business?
2)Have you operated multiple locations?
3)Do you have a proven system of operation?
4)Are the profit margins large enough for the franchisee to make a good living, support employees and pay you a royalty?
5)Do you have the time to devote to a franchise operation?
6)Do you have the skill set to promote a franchise operation?
7)Do you have start-up and operating capital?
8)Will franchisees be able to get financing from afforable sources?
9)Does your business have a unique selling proposition?
10)Does success of the business depend on skills people have or can quickly acquire?
11)Is the market stable enough to provide for growth over several years?
12)Are you able to support franchisees once you get them in business and do you have something to offer them beyond getting them in business?

If the answers to these questions are "Yes" then perhaps you are a candidate to franchise your business.

Click here for more information regarding franchise UFOC and agreement review services.

Considering a Franchise? Make sure to Interview Current Franchisees

2006-04-06T11:24:00.000-07:00

Considering a Franchise? Make sure to Interview Current Franchisees:

If you are considering a franchise you should conduct appropriate due diligence. One of the most important things you should do is contact as many current franchisees as you possibly can. For some reason this is often overlooked.

I strongly suggest you keep talking with current franchisees until you find someone who is willing to describe some problems or issues with the franchisor. Trust me - you will learn a lot more about the franchisor in that conversation than all the glorifying remarks put together. Because a franchisee has a problem does that mean you should look elsewhere? Not necessarily. It just means you are now able to make your decision with open eyes.

Click here for more information regarding franchise UFOC and agreement review services.

Is Franchising Right For You?

2006-04-05T05:19:00.000-07:00

Is Franchising Right For You?

Franchising is the most popular and fastest growing business model in the United States. There are thousands of franchises on the market. A franchise is a business "system" that allows people to share brand identification, a proven method of doing business and a successful marketing and distribution system. The selling point of franchising is that your assets are being put into a proven business. You may have the opportunity for a faster start up, developing a customer base more rapidly, and experiencing profitability with less risk.

With all opportunity there are pros and cons. The pros of franchises are that there is often a proven formula, owner training is available, and there is an ability to thoroughly review past records and company history. The cons of franchises are the royalty and national advertising fees are often significant and continue even though in some cases the ongoing support of the franchise is not stellar. A franchisor may get you into business but what they do after that is probably most important. If you pick a franchisor that does not have a proven system or good name identification what are you really buying? It may also be difficult to pick the right franchise or the right industry given the myriad of choices and sometimes financing options are limited.

If you are considering franchising a good resource to contact is Joe Cooney of Frannet. Joe is the Frannet consultant for Iowa and Nebraska. He routinely holds seminars in the Des Moines area and throughout Iowa. One of these seminars may help you decide whether franchising is right for you.

If you have any questions or need assistance reviewing a franchise agreement or Uniform Franchise Offering Circular you should contact a lawyer. Click here for more information regarding franchise UFOC and agreement review services.

Iowa Federal Court to Host Teflon Lawsuit Battle

2006-04-04T04:19:00.000-07:00

Iowa Federal Court to Host Teflon Lawsuit Battle

Numerous class action lawsuits filed against DuPont have been consolidated in the Federal District Court for the Southern District of Iowa for pretrial proceedings. Approximately one-third of the nation's population may be affected. The suits allege that DuPont knew for more than 20 years that Teflon and its component chemicals had the potential to make people sick - and hid that fact from consumers. DuPont contends the material is safe.

The class of potential plaintiffs could well include almost every American that has purchased a pot or pan coated with DuPont's non-stick coating. The lawsuits include six Des Moines residents who are represented by Des Moines lawyer Kimberly Baer of Wandro & Associates.

The lawsuits call on DuPont to:

-Pay damages to every member of the class to compensate them for purchasing replacement cookware.

-Create a fund for ongoing medical monitoring of consumers who purchased cooking products made with Teflon.

-Create a fund for independent scientific researchers to further investigate the potential for adverse health effects to consumers who used cooking products containing Teflon.

-Require that DuPont provide a warning label on cooking products regarding the potential adverse and harmful effects of Teflon.

This is sure to be one of the biggest legal battles of the next several years - and we get a front row seat.

Why Incorporate?

2006-04-03T06:23:00.000-07:00

Why Incorporate?

Here are three excellent reasons to incorporate:

1) Protect Your Assets

When you incorporate or form a limited liability company (LLC), you protect your assets including your money and home. As long as you follow the corporate formalities your company is legally separate from you as an individual so that any debts or liabilities do not put your bank account or home at risk.

2) Pay Less Taxes
There are often tax benefits to incorporating or forming an LLC that allow you to save money by paying less in taxes.

3) Enhance the Perception of Your Business

If you plan to have employees or seek investors incorporating or forming an LLC is usually a first step in enhancing the perception of your business and demonstrating that you are business savvy.

Click here to find out more about incorporating your business or forming an LLC.

No Good Deed Goes Unpunished

2006-03-31T06:16:00.000-08:00

No Good Deed Goes Unpunished:

When it comes to lawyers it appears that no good deed goes unpunished. After all, we are easy targets, right? Recently a Des Moines Register letter to the editor unfairly criticized some lawyers who had volunteered for junior high and high school mock trials. The letter said the lawyers made a "mockery" of our mock trial system because certain lawyers admitted to students that they had not read the materials before judging the contest. The writer further stated the lawyers gave the impression to the students that due diligence is not important within the Iowa bar.

How unfortunate these volunteers would be called out on the carpet. Lawyers across Iowa volunteer countless hours judging junior high, high school and university mock trial tournaments each year. These tournaments include local, regional, state and national tournaments. Each year lawyers leave their busy law practices and spend time away from their families to assist students. The mock trials occur during the middle of work day, in the evening and sometimes even on the weekend. The only compensation is knowing you have served your community. Due to tight schedules these lawyers may not always have time to read the case materials before volunteering. Does this mean they should not volunteer?

The reality is that every time a lawyer steps in front of a jury that jury is hearing the case for the first time. It is the lawyer's obligation to educate the jury about the facts of the case. Often judges may be unfamilar with the facts of a case before a bench trial. Again, the lawyer must educate the judge. I see nothing wrong with a mock trial judge that has not read the case still volunteering their time. Perhaps it is more realistic and less contrived.

Despite the writer's pot shot it is obvious these lawyers demonstrate each year that community service and assisting our youth is important. Is that such a bad example?

Settle Stubborn Business Disputes Like Lincoln: Mediate

2006-03-30T05:56:00.000-08:00

Settle Stubborn Business Disputes Like Lincoln: Mediate

In his Notes on the Practice of Law, Abraham Lincoln wrote:

"Discourage litigation. Persuade your neighbours to compromise when you can. Point out to them how the nominal winner is often a real loser - in fees, and expenses, and waste of time. As a peace maker, the lawyer has a superior opportunity of being a good man. There will still be business enough. Never stir up litigation. A worse man can scarcely be found than one who does this."

Abraham Lincoln would have been a big proponent of mediation. Mediation is a process in which the parties to a dispute, with the assistance of a neutral third party (the mediator), identify disputed issues, develop options, consider alternatives and work to reach an agreement. Sullivan & Ward, P.C. has an experienced group of mediators.

Larry McLellan is a member of the Iowa Academy of Trial Lawyers and has been recognized by his peers as one of the "Best Lawyers in America". Larry will graduate in May with an LLM in Alternative Dispute Resolution from the University of Missouri Law School. Larry is a Board Certified Mediator by the American Academy of ADR Attorneys and is a member of the Board of Directors of the International Academy of Dispute Resolution. He has been the mediator or arbitrator over the past decade in matters involving the following areas: Business and Commercial Law, Construction Law, Employment Law, Environmental Law, Family Law, Toxic Torts and Personal Injury.

Bob Holliday is also a member of the Iowa Academy of Trial Lawyers. Bob has completed mediation / arbitration training through the American of ADR Attorneys. He mediates cases involving Personal Injury, Business and Commerical Law, School Law and Family Law.

Click here to learn more about Sullivan & Ward's mediation services.

Lawlacart Offers Iowa CLE Online

2006-03-29T06:32:00.000-08:00

Lawlacart Offers Iowa CLE Online:

Lawlacart is a cheap and easy way to get Iowa CLE credit. Patent attorney Brett Trout started Iowa's first online CLE Web site. The credits are cheap, 1 hour for $20.00. Iowa lawyers are allowed to have up to six hours of CLE credit online. Don't miss this easy way to earn six hours of credit.

Forty under 40 Honored Tonight

2006-03-28T06:36:00.000-08:00

Forty of Central Iowa's best young business and community leaders are honored tonight at the Polk County Convention Complex by the Des Moines Business Record. The program is from 4:30-7:00 p.m. The cost is $20.00.

Rush Nigut of Sullivan & Ward, P.C. is among those honored in the 2006 class.

Basic Information Regarding Limited Liability Companies In Iowa

2006-03-26T07:33:00.000-08:00

Basic Information Regarding Limited Liability Companies In Iowa
Guest Blogger: Dennis Puckett of Sullivan & Ward, P.C. a West Des Moines business law firm.

The Limited Liability Company is a hybrid form of doing business that combines characteristics of the corporate structure and the partnership structure. It is a separate entity like a corporation and therefore carries liability protection for all of its members/owners, but is generally taxed like a partnership which has the benefit of flow-through taxation.

The owners are called members and can be virtually any entity including individuals, corporations, other LLCs, trusts, pension plans, etc. Some states, like Iowa, permit one-member LLCs, and others do not. If you are going to do business in multiple states, it may be wise to have at least two members of the Limited Liability Company. A husband and wife are considered two members for formation purposes.

The manner in which the Limited Liability Company will be operated is set forth in an operating agreement, which is an agreement between the members. The operating agreement for a Limited Liability Company is similar to the by-laws for a regular corporation.

In many respects, a Limited Liability Company is very similar to a Sub-Chapter S Corporation. However, the Limited Liability Company provides much greater flexibility with respect to owners and the allocation of income to the owners. An S-Corporation may only have one class of stock, while an LLC may offer several classes of member ownership. Any number of entities or individuals may own interest in an LLC; however, ownership interest in an S-Corporation is limited to no more than 75 shareholders. Also, S-Corporations cannot be owned by C-Corporations, other S-Corporation, many trusts, LLCs, partnerships or non-resident aliens. LLCs are allowed to have subsidiaries without restriction, while S-Corporations are not allowed to own 80% or more of another corporation's shares.

Like a regular corporation, the primary advantages of forming a Limited Liability Company is the liability protection the corporate entity affords its members (shareholders with respect to a regular corporation). The members of a Limited Liability Company are not liable for the debts and obligations of the company. By comparison, in any Sole Proprietorship or Partnership, the owner's personal assets may be used to pay debts of the business. Another advantage relates to the on-going existence of the company. If an owner of the company dies or wishes to sell their interest, the corporation can continue to exist and do business. If an owner of a Sole Proprietorship or Partnership dies, generally the business or partnership also terminates.

Unlike a regular corporation, the wages paid to the members of a Limited Liability Company will be subject to self-employment tax; however, self-employment tax may be avoided on members who do not participate in management.

Click here for more information on forming a limited liability company in Iowa.

Conduct Free Background Checks Using Iowa Courts Online Web Site

2006-03-23T15:37:00.000-08:00

Conduct Free Background Checks Using Iowa Courts Online Web Site

You can conduct a free background check of prospective employees by accessing the Iowa Courts Online Web Site. You should still have all prospective employees sign a release and authorization allowing you to conduct a background search. If you are conducting background searches of your employees you should also make sure to conduct the search before offering employment or make the offer conditioned upon the successful background check.

If you have any questions or need information concerning human resource audits please contact Rush Nigut.

Flu Pandemic Planning for Business

2006-03-23T15:04:00.000-08:00

Flu Pandemic Planning for Business - Alert
Guest Blogger: Mark Landa of Sullivan & Ward, P.C.

In a recent Boston Globe article highlighting the emphasis on corporations planning to meet the challenges to be posed by a flu outbreak, it was asked, "If a super-flu sweeps the globe, who will haul away the garbage? Keep the factories running, making cars and computers and tissues? Stock and sell groceries? Who will keep the electricity flowing?"

A survey of U.S. businesses has revealed that two thirds are not adequately prepared to protect themselves from an influenza pandemic and 39% say there is not much they can do anyway. A national preparedness plan issued by President Bush in November stated that, in a worst case scenario, the country will need about 750,000 ventilators. U.S. hospitals estimate there are 105,000 ventilators available today and 100,000 are currently in use. The nation's school, long recognized as being incubators for flu and other viruses are being told to plan for the possibility of a flu outbreak. Regardless of the planning for such an event, all federal and world health organizations have warned that we should be prepared to plan for a widespread flu outbreak as if a blizzard is coming - a blizzard that could last up to 18 months.

World and U.S. Health organizations have also concluded that vaccinations will not be available to protect us from the spread of influenza and that the only defense for at least the first six months of any true pandemic will be the health precautions that businesses, schools and churches take to prevent its spread among workers, students and congregations. All organizations are advised to establish a plan to prepare for the likelihood of flu outbreak whether it is limited to a local region or is worldwide.

The Iowa Department of Public Health has recommended that community planning be initiated as soon as possible and that this planning occur at the county level.

Consider Mediation Before Litigation to Resolve Disputes

2006-03-22T19:37:00.000-08:00

Business Owners Should Consider Mediation Before Litigation to Resolve Disputes:

A mediator can help business owners find ways to settle disputes on their own terms. Unlike an arbitrator, the mediator does not decide who is right or wrong. Rather, the mediator enables people to retain their decision-making power and use their creativity to find an acceptable solution for all parties.

Successfully mediated settlements commonly result in:

A cost-effective, speedy resolution
Reduced levels of stress and animosity among parties
Enhanced respect between the disagreeing parties
A sense of cooperation between parties
A feeling that the settlement is fair, reasonable, and cost-effective.

Click here to find out more about mediation to resolve disputes.

Tips to Protect Your Business and Customers from Identity Theft

2006-03-21T18:58:00.000-08:00

Tips to Protect Your Business and Customers from Identity Theft

If your business maintains people's information, you must protect that information from misuse. Here are some basic tips from the Better Business Bureau, National Cyber Alliance and Federal Trade Commission.

1. If you do not need the information, do not collect it. The more information you have, the more tempting it becomes to a thief and the more damaging it is to your customers if the information is stolen.

2. If you need it once, do not save it any longer. Companies sometimes collect information that's necessary to complete a single transaction, then file that information away (either in a paper file or in the computer file). For example, what about job applications for people you do not hire? These contain all sorts of information, including social security numbers. If you don't keep it, it cannot be stolen. You should also have well-drafted document retention policies regarding all company and employee documents.

3. If you have got it, but you don't need to save it, dispose of it carefully. A good deal of identity theft happens in the trash barrel or dumpster. Even the small business can afford an inexpensive paper shredder (preferably the cross-cut kind). Make sure you use the shredder to dispose of customer or employee records.

4. If you have to keep it, think security. First, make sure those paper records that contain personal information are kept under lock and key. Make sure computer terminals are password protected. Limit the eyeballs that have access to these records - only those who have an absolute need-to-know should have access to personal information. Don't allow customers or others to wander around the private areas of your business.

5. Do not broadcast personal information. How often have you stood in line at an office or store behind someone who was being asked to give his/her social security number, telephone number or birth date? How many times have you watched a company's employee pull up personal information on a computer screen that is visible to other customers? Or have you seen personal information on a file that was left open on a desk or counter? Instruct your employees to be sensitive to these issues. Turn computer screens so they can't be viewed by anyone other than the operator. Instruct employees who need to have personal information to have customers jot that information down, and do not repeat it out loud where it can be overheard by others. (Dispose of the writing with a shredder). Do not put personal information like account numbers in billings or letters where that information is visible through windows in the envelope.

6. Do not use Social Security Numbers as account numbers. This practice is just downright dangerous - to you and your customers.

7. Do not give out employee or customer information to anyone whose identity cannot be positively confirmed. Information thieves and stalkers tell authorities over and over how easily they were able to obtain all sorts of valuable information simply by calling small business owners or personnel departments and asking. Posing as government agencies or credit grantors or health insurance providers, these thieves have found that a well-crafted, believable story can often get you past the best locking file cabinets or pass-word protected computers. Your organization should have very strict policies on when and how employee or customer information is shared.

8. Locks and alarms are a real deterrent. If you have done everything suggested, you will be more secure during business hours. Make sure your business is just as secure when your business is closed. Make sure all vital records and offices are locked during non-business hours. Exterior doors should have deadbolt locks. Hinges on exterior doors should be secured to prevent removal. Exposed windows should have shatter-proof glass. Your business exterior should be adequately lighted from dark to dawn. Naturally, the business should be protected with an alarm system, preferably one that is monitored by a security company. Your business insurance company -- or, in some cases, your local police - may be able to assist you with a security assessment.

Governor Vilsack Signs TouchPlay Ban

2006-03-20T20:10:00.000-08:00

Governor Vilsack signed the bill today to ban the Iowa Lottery's controversial TouchPlay machines. The ban gives business owners 45 days to shut down machines. It appears as though investors in the machines and lawmakers are exploring ways to avoid a looming legal battle. Look for more on this issue if litigation unfolds.

Rush Nigut named to Des Moines Business Record's Forty under 40

2006-03-19T08:37:00.000-08:00

The Des Moines Business Record named Rush Nigut to its list of "Forty under 40" community and business leaders. Click here to see the entire list of Forty under 40 members and their biographies.

How to Avoid Incorrectly Treating a Worker as an Independent Contractor - Part II

2006-03-17T13:21:00.000-08:00

How to Avoid Incorrectly Treating a Worker as an Independent Contractor - Part II.

In yesterday's blog I decribed the factors which often demonstrate a worker is an employee. If you answer "Yes" to the following questions you probably have an independent contractor.

1. Does the worker furnish significant tools, materials and equipment?
2. Does the worker have a significant investment in facilities?
3. Can the worker realize a profit or loss as a result of his or her services?
4. Does the worker provide services for more than one firm at a time?
5. Does the worker make his or her services available to the general public?

A human resource audit may help you avoid incorrectly treating a worker as an independent contractor.