Two of the biggest challenges for a business owner is knowing how to set up their business so it operates legally and how to tackle any employee issues that may arise. It may not seem as if these are major issues for a business owner, but one small mistake can have devastating ramifications that can leave a company bankrupt. Here is a quick look at just a few of the many aspects of managing employees and structuring a business.
One of the major benefits of understanding an organizations business structure is the tax benefits that can be gained by doing so. One of the most sought-after classifications is operating as a pass-through entity, which allows any income earned to be passed through the owner, and avoid corporate taxation. Corporate tax rates can be as high as 35 percent, which makes knowing this tax advantage invaluable.
If a company is not incorporated, then it is listed as a sole proprietorship, which does not require any specific filings to exist. As a sole proprietor, the owner takes full responsibility for any fallout that may occur during business transactions, which means their assets are fair game if financial issues arise. Gaining corporate status provides protections to the owner by keeping their assets separate from any business transactions.
Common Employee Issues
Managing employees can be complicated, but the best way to combat the most common problems is to have a keen understanding of employee regulations. This includes what is considered a safe workplace, any wage requirements, and the rights that an employee has when applying or reporting for a job. One minor slip-up can lead to financial disaster and an EEOC complaint that can cost thousands of dollars to litigate.
Trying to manage a business can be stressful, but when an owner or manager knows how to setup your business structure and legally handle employee maters, it can help reduce stress and liability. The team at Magness Law can help when issues arise and offer support in navigating employment problems and creating the most appropriate business structure. Call today and make managing the legalities of a company as simple as possible.