Common Legal Pitfalls To Avoid When Starting A Business In Indiana: Don’t Make These Mistakes!

In this article, you will discover:

• How to make sure your business complies with Indiana state regulations
• How to choose the correct legal structure for your business
• The most common mistakes new business owners make

How Can I Ensure My Business Complies With Indiana State Regulations?

Almost every business requires at least some type of compliance with state regulations. Many state agencies provide classes for business owners on how to comply. Depending on how regulated the business is, there could either be a lot of regulation (e.g., the financial industry) or a little (e.g., retail).

There are three main ways you can ensure your business complies with the Indiana State regulations:

1. Identify the relevant industry for filing. If you are required to have a license, you need to file it with the appropriate State department.
2. Keep apprised of new regulations. You can track all new regulations as they are promulgated, released, discussed and interpreted.
3. Work with an attorney. Work with an attorney from the inception of your business so they can make sure you comply with all relevant regulations.

How Do I Choose The Right Legal Structure For My Business?

Choosing the proper legal structure for a business is a fact-intensive inquiry. It depends on:

• The business’s operations
• How many owners the business has and how they want to be taxed
• Whether the owners or separate management will run the business
• Whether the owners are employed by the business and how they are compensated
• Whether the business intends to sell ownership to raise money

That’s why it’s essential to work with an attorney from the very beginning of the business relationship to identify those concerns and come up with the proper structure for your business.

What Is The Importance Of Trademarking My Business Name?

The most significant advantage to trademarking a business name is that other businesses or people can’t legally use your business’s trademark. Obtaining and enforcing trademarks requires specific expertise. We can refer you to a trademark attorney who can facilitate the speedy registration of your trademark.

Attorney Jared Schneider is an experienced lawyer based in Bloomington, IN, who has helped countless clients just like you navigate the intricacies of business law. With more than a decade of experience, he is prepared to assist you with making sure your business complies with state regulations so you can run your business smoothly and successfully.

Still have questions? Ready to get started? Contact Schneider Law, P.C. today to schedule an initial consultation.

What Are The Consequences Of Misclassifying Employees?

Although common, it’s messy and risky to treat an employee as an independent contractor. Many business owners don’t want to pay the taxes associated with having an employee. For this reason, they will instead classify an employee as an independent contractor instead of an employee.

The problem is, if the Indiana Department of Revenue or Department of Workforce Development audits your business and discovers you should have paid independent contractors as employees, there can be taxes and penalties owed that accrue from the date of first employment. If your business is planning to pay people who work for it, it is worth your time to speak with a knowledgeable, experienced attorney about whether those people are properly considered employees or independent contractors.

What Tax Obligations Should I Be Aware Of As A New Business Owner In Indiana?

For a new business owner, especially in an unfamiliar industry (or unfamiliar state), tax issues can raise a daunting undertaking. While many people are familiar with the “big” taxes, like income, social security, and real estate property taxes, modern regulatory states, including Indiana, frequently tax goods and services counterintuitively. Many law firms, including this one, know just enough tax law to be extremely dangerous. You are strongly encouraged to locate an accountant or lawyer qualified to practice tax law.A lawyer can not provide tax advice, and you should work with an accountant who has experience in tax.

What Is The Most Common Legal Mistake You See New Business Owners Make, And How Do You Help Them Correct It?

There are two common legal mistakes I see new business owners make.

The first mistake is failure to obtain written agreements with vendors or other people with whom they do business, especially if there’s a large amount of money changing hands. Everyone’s duties, obligations and requirements need to be laid out in the contract ahead of time because it’s difficult to get someone to sign a contract after the business relationship has started.

In situations that are not already controlled by a written contract, I often work with the business owner to get the other party to sign a memorialization of their prior (unwritten) agreement. There are sometimes ways we can use subtle leverage (never force) to make that happen. It just depends on the situation. If the other side is reluctant to sign an agreement, it could indicate potential trouble.

The second mistake I see is treating an employee as an independent contractor. Depending on which agency is making the determination, different tests are used. In general, the government is going to look at the level of control the business has over the worker. The more control the business has, the more likely the worker will be considered an employee. It is crucial to talk with an attorney about the specific needs of the business.

Suppose an employer requires someone to work specific hours for a job and provides that person with supervision and feedback. In that case, that person is generally going to be classified as an employee. If an employer hires someone for a job and leaves it up to the person how that job gets done, the government will probably look at that more as an independent contractor relationship.

A specific example: If you hire someone to paint your house and specify a price, they’re probably going to be an independent contractor. If you’re hiring someone to paint houses, and you pay them an hourly rate, provide all the materials and supervise the work, then you’ve probably hired an employee.

If our review of a worker-classification issue leads us to believe that an employee is improperly classified as an independent contractor, there are really only two options: either treat the person as an employee or materially alter the relationship structure to make them an independent contractor. Talking with a competent attorney will allow you the opportunity to put your best foot forward.

What Advice Do You Give Clients To Ensure They Don’t Repeat These Mistakes?

As soon as you think you need a lawyer, work with one. It’s much easier (and ultimately less expensive) to work with an attorney at the business’s inception, before there are any serious issues, than to bring them up to speed after the bottom has fallen out. At that point, the business owner has to pick up the pieces from whatever the dispute is.

Still Have Questions? Ready To Get Started?

For more information on Common Legal Pitfalls To Avoid When Starting a Business in Indiana, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (812) 758-4888 today.