Virtual Entrepreneur

Yahoo! SmallBusiness:
01. Save up as much money as possible before starting;

02. Start on a shoestring;

03. Protect your personal assets;

04. Understand how – and if – you will make a profit;

05. Make a business plan, no matter how short;

06. Get and keep a competitive edge;

07. The laws of your state require you to put some contracts and agreements in writing:

* Contracts that will last longer than a year.
* Contracts that involve the sale of goods worth $500 or more.
* Contracts that transfer the ownership of copyrights or real estate.

08. Hire and keep good people;

09. Pay attention to the legal status of your workers – When you hire workers as independent contractors, make sure they shouldn’t really be taxed as employees. The IRS can impose substantial penalties against you for not withholding taxes and paying taxes for a worker who is really an employee. The IRS and other agencies are likely to think that a worker is an employee rather than an independent contractor under any of these conditions:

* The worker works full-time or nearly full-time for you.
* The worker doesn’t work for anyone else.
* The worker provides services that are an integral part of your operations.
* You control how the worker does the job and provide detailed instructions and training for the worker.

One way to help avoid trouble is to have the worker sign a written service contract, or independent contractor agreement.

Most employees you hire will be ‘at-will’ employees – subject to being fired at any time and for any reason (except for illegal motives such as discrimination). It’s important to preserve your at-will rights because they protect you from having to prove that you have a valid business-related reason to terminate an employee. Don’t make any promises to prospective or current employees that you are offering a permanent job or that they will lose their job only if they perform poorly, because this will limit your ability to terminate the employee for other reasons, such as personality conflicts or finances.

When hiring an at-will employee, have the employee sign an offer letter that makes it clear that the employment relationship is at will. Except for high-level executives, you shouldn’t have employees sign an employment contract – this can limit your ability to alter the terms of employment as your business needs change and subjects you to higher legal standards.

10. Pay your bills early and your taxes on time. Details here.

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