Under30CEO brings us 5 Tips for Finding the Right Idea for your new business. The two points I found most applicable to the entrepreneurs we’ve worked with are to always follow your interests and look to the current trends are in the market. And when you’ve secured the right idea for your new venture, be sure to contact a business attorney to help you get started.

Once you’ve got your business idea down, check out this Forbes article on where to start as a budding entrepreneur. When you’ve identified the problem you want to solve, it takes passion, persistence, and patience to see your business grow.

From there, you’re going to have to find new customers, and Inc.’s blog has you covered. In their post How to Prospect for New Customers, they detail the five key ways to increase your sales by connecting to potential customers, looking for signals indicating they’re ready to purchase from you, and closing the deal.

Finally, when your business is growing and its time to start looking for new employees, you should take a look at How to Grow a Small Team: Nine Hiring Best Practices. Always keep in mind though, even if you hire an employee who you think will be a perfect fit for your business, take those extra steps and hire an attorney to draft an employment agreement and employee handbook for your business.

Anonymity

While you may think the best policy is to hunt down those time-wasters so you can single them out for termination, a much better policy is to analyze the employee-tracking readouts in bulk to get a better feel for what your employees are doing on the whole—not necessarily individually. This way you can keep morale high since you’re not on a warpath to eliminate jobs, and you can avoid all kinds of wrongful termination suits that may spring up from disgruntled employees where terminated after you were spying on them.

Transparency

As with any company-wide policies—and especially ones with such negative connotations as employee-tracking—you need to be as transparent as possible when it comes to monitoring your employees. The more they know, the more at ease they will feel about the whole process. And the more at ease they feel, the more accurate the data you’ll be able to collect and analyze. And again, be clear with your employees you’re using that tracking information as a learning tool instead of a tool used to eliminate your staff based on their on the job browsing habits.

Good Judgment

Finally, the best way to properly institute an employee-tracking program is to make sure you use your best judgment. If something seems wrong, it probably is and you should not do it. Keep in mind whether you would like to be in the employee’s position and whether if you, in that position, would feel like your privacy was being completely violated by your employer’s actions. As long as you use your best judgment in implementing employee tracking, you’re already on the right track to staying out of trouble.

• In a tribute to Mother’s Day last weekend, Inc. had a post on the 10 Success Rules Your Mom Taught You.
• Along the same lines of successful qualities for business leaders, there are the Top 10 Qualities That Make A Great Leader.
• SCORE has recently created a new podcast specifically for small business owners. Only two episodes so far, but it promises to air monthly. SCORE Small Business Success Podcast.
• Finally, a list of the 7 Ways Washington May Affect Small Businesses This Year lays out some of the rumors regarding how the federal government’s actions may affect your small business this year (and into the next).

While there are a number of important factors to consider, this is a quick blog post—not a one-on-one discussion with a business attorney, accountant, or tax attorney regarding your company. Accordingly, we’ve distilled the numerous factors down to just two of the most important.

1. What is the Difference Between Electing S-Corp Status and Organizing as an S-Corp? The most important fact to keep in mind when considering an S-Corp election for your LLC is to remember that you are not reorganizing your LLC as an S-Corp—you are simply choosing a different tax treatment. The type of business entity you are organized as is a legal distinction while the type of entity you choose for taxation purposes is a tax distinction. So, if you have a single-member LLC without the S-Corp election, your business will be considered an LLC for legal purposes and a disregarded entity (or sole proprietorship) for tax purposes. Further, if you have a multi-member LLC without S-Corp election, your business will be considered an LLC for legal purposes and a partnership for tax purposes. Finally, no matter how many members your LLC has, if you elect S-Corp status, your business will be considered an LLC for legal purposes and an S-Corp for tax purposes.
2. What are the Tax Benefits to Electing S-Corp Status? Well, the tax benefits depend on the number of members you currently have in your LLC. Most prominently, for all LLCs, being classified as an S-Corp for tax purposes can mean you no longer have to pay individual self-employment tax, which can turn out to be big savings. However, choosing S-Corp status also reduces your tax flexibility for a multi-member LLC because the partnership style tax status multi-member LLCs enjoy gives the members a lot more leeway. If tax benefits are the main focus of your reason to elect S-Corp status for your LLC, which they should be, you have to consider your individual needs and definitely talk to an accountant or a tax attorney before making the election.

1. The Reason Why the Employee Was Terminated. I’m just going to jump right into the quagmire that scares a lot of employers. “Why include the reason for termination?” the employer asks. “Won’t that just subject me to liability for wrongful termination?” The answer is simple. You should include it because a well drafted reason for termination can go a long way to helping prove the reasons why the employee was terminated in the first place. However, be mindful not to go into too many details regarding the reasons for termination—but don’t be too vague either. If you try to be too specific, you may find you cannot possibly prove this reason in court if the employee does end up suing you for wrongful termination. And if you are too vague, you run the risk of damaging your credibility and looking as though the stated reason for termination is not the actual reason for termination.
2. The Date of Termination and the Last Day of Work. This really needs no discussion, but these dates should be included so as to document some of the most important dates in the termination process. Also include the date the terminated employee must return all of your belongings and supplies, if necessary.
3. Information About Any Prior Warnings Given. If you’re the type of employer who feels the need to give a number of prior warnings to employees before terminating them, you should include the dates you gave them and the reasons behind them. A well documented record of pas poor performance (for example), can go a long way in deterring any kind of wrongful termination suit.
4. A List of the Benefits the Terminated Employee is Entitled To. A number of employers give their employees the right to avail themselves of healthcare benefits, among other things, after they’ve been terminated. If your company is one that allows for such continued benefits, be sure to tell your terminated employee about it. And also don’t forget to include information about unemployment benefits.
5. Whether the Employee Was Discharged or Terminated. Pretty self-explanatory, all termination letters should state whether the employee was discharged or terminated.
6. Whether the Employee Could Have Appealed the Termination. The question of whether you should provide some kind of appeal system for employees who have been terminated is a topic for another blog post. However, if you do provide a system for the employee to appeal her termination, make sure you specify the proper method for appeal in your termination letter and if the time to appeal has already passed, then discuss whether the terminated employee took advantage of the appeal system.

The other article I found interesting this week was the Start-Up Hall of Shame (America’s 10 Worst States for Entrepreneurs) from Inc. Taking data compiled by the U.S. Chamber of Commerce, Inc listed the top 10 worst places to start a new business. Again, a couple came as a shock. Notably Tennessee and South Dakota, a couple of states that’ve been getting a lot of press lately for being major sites for business owners on an exodus from the west. Definitely worth taking a look at, and if you have a spare half-hour, the PDF is a fun browse.

But are those states really right for your business?

Any decision about where to form your new business entity obviously has to be made on a case by case basis. As an attorney, I’d be doing you a disservice to tell you that you absolutely must form your corporation or LLC in one particular state because, let’s face it, different business entities need different things and what works well for one company will be exactly the wrong thing for another.

What I can tell you, however, is to consider your home state as a frontrunner along with the usual top three choices. Our law firm is located in California—a state widely regarded to be, shall we say, less than friendly to small businesses. Except for tech startups. California is plenty friendly to those. In any event, California has high taxes, some foolish laws, and some courts have a penchant for trying to hold the officers and directors liable the debts of the business. Aside from all that—its a perfectly good place to incorporate your business.

So you’re a new business owner who wants to form a corporation. Say its a plumbing company. You live in California, you’re licensed in California, your employees all live and work exclusively in California, your shop is in California. You can see where this is going—you’re totally tied to California for your business. But you decide you want to incorporate your business in Delaware because a friend of a friend told you that’s the place to do it. Tax breaks, good law, whatever reason you have. If you decide you want to incorporate in Delaware, you’re going to have to pay for the incorporation there, file all of their paperwork, pay at least their minimum taxes, and so on. But, because you’re operating your business entirely in California, California is going to require you to register as a foreign corporation in California. Why? Because you’re transacting intrastate business here. And you’re going to have to pay for the registration here, file all of the paperwork, pay California’s taxes, and so on.

Sound like a good idea?

I didn’t think so.

That’s just one situation where it may be better to form your new corporate entity in the state where you’re actually conducting business. There are others, but that’s a topic for a one on one conversation with our clients. If you’re considering starting your own business and are looking for an attorney to help walk you through the process from start to finish, give us a call and we can put you on the right track—no matter what state you’re interested in.

Monitor Your Trademarks for Infringers and Diluters

Trademarks are susceptible to two major forms of attack from other businesses, and the general public. These are commonly known as infringement and dilution. The details of each are too broad for this post, but in general, infringement means the violation of your rights as a trademark holder and dilution means, well, the dilution or tarnishing of the trademarked brand. Nevertheless, you want to avoid both from happening to your mark.

But how do you stop trademark infringement and trademark dilution? Before you do anything, you’re going to have to find out where the attacks are coming from. And in order to find out who’s attacking your mark, you need to monitor what other similar businesses are doing. After all, in general, it will be these similar businesses who are most likely to start chiseling away at your trademark rights.

While the easiest way to monitor your trademark is to find a great trademark monitoring service, you can also watch your trademark yourself. The route you choose depends on whether your time or your money is more valuable.

In any event, if you decide you want to monitor your trademarks yourself, there are a few free tools available that can help you out. The first is the, widely regarded as very user unfriendly, trademark search through the United States Patent and Trademark Office (USPTO). TESS, as it is commonly known, allows you to search through the USPTO’s trademark registry with a variety of options. How often you choose to search is completely up to you, but the general recommendation is usually once a month.

The next tool at your disposal is to track social media and domain name registrations. See what people are talking about. Check out newly registered usernames that sound incredibly similar to your best-selling product. Should only take an hour. Or three. Or ten. Luckily, there is a tool out there that can help speed things up a bit. KnowEm, a social media and username search engine (with a very rudimentary trademark search function) can help you keep track of who is using what username on social networking sites as well as which domain names have been registered. This kind of information can go a long way to helping you sort out who may be trying to plunder your trademark.

Finally, we have the good old search engine search. Google, Bing, Yahoo, whatever your favorite search engine is, use it. Conduct a search every so often to make sure your mark isn’t turning up in places you don’t want it to. You can even use Google Alerts to notify you when new content with your trademark—or something highly similar to it—appears in Google’s search results.

Hire An Attorney Before You Send Out That Cease & Desist Letter

The cease and desist letter. Favorite document of all those who think they’ve found a trademark infringer. Sent to intimidate those who may be violating a business’s trademark into submission. But are they really all they’re cracked up to be?

Imagine this scenario. You think you’ve found an infringer. You’re absolutely livid that this guy is totally ripping off the name of your product you’ve worked years to perfect and spent hundreds of thousands of dollars to produce and market. So you decide to draft a cease and desist letter to tell this guy to put a stop to his actions. In your haste, you adopt a pugilistic tone in hopes of making him shake in his boots. You send it off, and a few weeks later you get a response from the guy’s attorney. He’s responded to your cease and desist letter with one of his own—except this time he’s telling you his client has a senior trademark and he wants you to stop selling your product and change its name to something that’s not infringing on his trademark.

Yeah. That’s not a situation you want to find yourself in. But it happens to some business owners. They think they’ve found an infringer. They send off the letter. And whoops, it turns out they were wrong and now they either have to stop selling their product or they decide to fight a long and expensive trademark infringement suit.

And it can all be so easily avoided in two easy ways. First, keep your cool and don’t send off a cease and desist letter to every person you think is infringing or diluting your trademark. Second, contact a trademark attorney if you think you’ve found someone negatively impacting your trademark rights. At the very least, a cool head and a second pair of (well trained) eyes can go a long way to make sure you don’t inadvertently get yourself into trouble by acting too hastily.

My friend may have had a terrible situation on his hands. Something no employer wants to have to deal with.

An implied employment contract.

Yes, even though he meant for the employee to be “at-will” and terminable at any time for any reason (any legal reason, anyway, but that’s a post for another day), by simply having a probationary period, my friend might have unwittingly created a contractual employment relationship that could have superseded the desired at-will employment terms.

So how does this work exactly? Well, you start the employment relationship with an at-will employee agreement. That’s fine. That’s what everyone wants. But then you tell your employee that for the first 60 days, you’re going to give her extra feedback and fire her only if warnings have been given in advance. Uh oh. You see, the problem is that some courts have found that an oral employment contract can exist, and if you haven’t structured your employee handbook or employment agreement carefully, you may run right smack into a court saying that your probationary period created an oral employment agreement

There’s the problem. And here’s the solution. Ditch the probationary period all together. You can still keep an extra watch on new employees and give them feedback without the need for probation. After all, you probably tell your veteran workers when they make a mistake and if you’re an effective boss, you know exactly how well every one of your employees does their job—whether they’ve worked there a week or a decade.

Of course, if you really love the probationary period and can’t possibly let it go, you can always make sure it doesn’t affect your at-will employment relationship with a few quick fixes. First, make sure all employment agreements are in writing and include a provision that prevents the formation of any oral employment contracts. Second, include the facts of the probationary period in your written employment agreements and make sure that you outline in specific detail that the conclusion of the probationary period does not create any additional obligations for you or your employee. Third, make sure you have a well-drafted employee handbook and that the handbook explicitly states that no additional benefits, such as vacation time, paid time off, etc., will entitle your employee to permanent employment as opposed to at-will employment. If you keep those three factors in mind, and contact an attorney who can help you make sure your employment documents are in order and legally sound, you will significantly lower the risk that an employee can turn a successful employment period into an oral contract for permanent employment at your business.

To many, the name of your business is just the thing you wrote down on articles of incorporation or the articles of organization at the time you formed your business. Maybe you spent a few minutes thinking about it—maybe you spent a few hours. But the real question is: Did you consider the branding implications, the marketing prospects, and the complete integration of your business around your name? Didn’t think so.

You see, the name is more than just the name of your business entity. For many entrepreneurs, it also extends to everything their company produces. The website address, the product name, and (what unfortunately becomes a sticking point for many businesses later on) the trademark. Because so much hinges on the business name, you want to make sure you get it right the first time. Changing a name because of trademark issues can be detrimental to your business—and having to settle for a less-than-perfect website address can spell doom for an entirely web-based startup.

So what should you keep in mind when naming your new business? Here are a few questions you need to ask yourself when choosing a name for your business.

• Is Your Business Name Already Taken? When you decide to form a business entity, you’re going to have to register with some Secretary of State office. At the time of registration, there may be another company with your chosen name—at which point you’ll have to come up with a new business name. Instead of thinking you’ve found the perfect name from the beginning, why not save yourself from disappointment by picking a few possible names and ensuring they’re not already taken in your chosen state.
• Are There Any Laws Against The Use Of Your Chosen Business Name? Some states have laws regarding what can or cannot be used in a business name. Generally, these laws are designed to prevent use of deceptive business names, but additional laws could cause problems too, so make sure you read the applicable rules and regulations regarding business names before you try and register.
• Is A Domain Name Available For Your Business Name? Chances are you’re going to want a web presence for your business at some point. Do you really want to have to resort to a .net or .biz domain name? Or worse, has someone registered all of the top level domains for your chosen business name, leaving you to register a domain name that only vaguely resembles the name of your business.
• Is The Business Name Able To Be Trademarked? This is a big one for companies that want to protect the goodwill associated with their name (which should be every company). If you’ve chosen a name for your business that can’t be trademarked, you may have a tough time trying to protect your business down the road. And if you’re taking your business around the world, make sure you can trademark your business name in places beyond just the United States. This applies to product names, too.
• Will The Business Name Subject You To Trademark Infringement Claims? Have you decided to name your new company something deceptively similar to another company that already has a very strong presence in the field? If so, you may be inadvertently subjecting yourself to trademark infringement claims. Not a good thing. Make sure you’re not picking a name that is clearly designed to sound incredibly similar to your competitors.
• Does My New Business Name Mean Something Weird In Another Language? This is kind of silly, but take a page from Ikea when naming your business (and your products) and try to make sure the name isn’t some vulgar word or phrase that could get your company into trouble when you branch out to foreign markets.

But, if you only take away one thing from this article, make sure that when you come up with your business name, you make sure your name is unique enough that you’re not infringing on anyone’s rights.