Some things to think about during business formation

Preparing to open up a business in Georgia? There are a lot of things to think about and decisions to be made during the business formation process that can affect the company's overall success. Here are a few things up and coming business owners need to thing about before they open shop.

Small business owners who are new to the scene need to understand that there are certain regulations that must be followed. If they are not, company owners may find themselves subject to fines and legal fees that can devastate their bottom lines. Many of these regulations have to do with handling employees.

Before starting the hiring process, one must decide if employees are exempt, nonexempt or deemed independent contract workers. Exempt employees, also known as salaried employees, get paid the same amount every pay day, regardless of the number of hours they work. Nonexempt employees would then be hourly employees. These individuals must be paid for their time -- which may include overtime -- and must be given breaks. Finally, if an employee is technically an independent contractor, he or she cannot collect anything other than pay from his or her employer -- no benefits, no workers' compensation and no paid time off.

Another area business owners need to think about is employee termination. May seem counterproductive when just getting a company up and running, but not understanding when it is okay to fire someone and how to best go about doing it can have significant legal consequences. It is okay to fire someone who violates company policy or is failing to properly perform the functions of his or her job. It is not okay to fire someone as a form of discrimination, as retaliation or while he or she is utilizing FMLA benefits. Business owners are also prohibited from withholding final paychecks following an employee's termination.

Why does all of this matter in terms of business formation? Failing to abide by regional, state and federal regulations can just open up a can of worms with which no business owner needs or wants to deal. Understanding these regulations is a must and can help company owners in Georgia, and they craft policies and procedures during the business formation phase. An experienced business law attorney can help them with this.

Source: CBS New York, "Employment Law & Your Business", March 7, 2018

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