The Legalities of Business

What does it take to legally start your real estate media business? What are the various business structures to consider? S-Corp? LLC? Sole Proprietorship? What's the correct one to use? What about whether you hire employees, or bring on contractors to shoot photos and video for you? Catch this episode to get started on the legalities of starting your business, and what you need to consider!

Show Summary:

0:00-1:00 Sneak Peek

1:01-2:45 Intro

2:46-12:25 How to legally set up a business

• • This podcast is not official legal advice; we recommend you find an attorney for official legal help
  • There are three main business types: sole proprietor
  • Sole proprietor: an individual who functions as a business; you can file taxes and report business income and expenses
  • It’s the simplest to set up; in many states, you can do this online

• LLC: becoming an LLC separates your business from your personal self

• • If you set a house on fire as a sole proprietor, the insurance company can come after you personally, including everything you personally own (your car, house, possessions, and financial assets); if you are an LLC, the insurance company can come after whatever your business owns (usually just equipment)

• S Corp: You as the owner pay yourself a salary and treat yourself as an employee

• This helps with tax savings (you will want to discuss this with your accountant)
• Depend on high-level people, such as a good accountant, to know what your business needs
• The owner of an LLC or sole proprietor generally gets paid through a disbursement or draw

12:26-18:09 The legalities of hiring: 1099 or W-2?

• You have control over a W-2 employee; you do not have control over a 1099 contractor
• Most states put out a list of characteristics of each
• A simple way to determine: you set an employee’s hours, while a contractor works when there is a job (you are a contractor to real estate agents)
• An employee has tax deductions from their paycheck, while a contractor takes care of their own taxes
• An employee may have paid time off, while a contractor does not

18:10-24:39 How do you legally end a business relationship?

• For W-2 employees, Ohio is an at-will state, which means that termination can be at any point for any reason (although you can not discriminate for reasons outside their control)
• Todd always calls his attorney before terminating an employee; they can help with the verbiage
• Be honest with the employee/contractor; tell them what they did well and the direct reason why you are terminating them (you are not obligated to tell them why, but they are human)
• Never surprise an employee with termination; if they are surprised, evaluate how you led because you need to communicate with them how they are doing
• Employees want to know if you are unhappy with their work; use the conversation as a training moment and look for the positive

24:40-31:46 It’s okay if this intimidates you; find an expert who can help you through the process.

 

UPDATE: Tasks and to-dos in Spiro have launched!

 

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