Legal View: Employees vs. Independent Contractors

Legal Views

ScalesYou’ve been working harder than ever to make your small business successful.  And it has paid off!  You have more orders than you know what to do with and you’re running yourself ragged.  You’re working at the crack of dawn and you don’t stop until the stars are out.  Work is stressful, you need help and luckily, with all of the success you are experiencing, you can afford to hire someone!  Read below to learn about the two most common types of employees and contractors you can hire!

Independent Contractors

An independent contractor is a person or business entity that provides goods or services to another business entity under the terms of a specified contract or per the terms of a verbal agreement.  Independent contractors are free-lancers.  The company or person they are working for defines the job that the contractor is paid to perform, but the contractor, individually, has the autonomy to decide how to complete the job.  An independent contractor is responsible for their own tax withholding procedures and the hiring person or business entity does not have the same tax and insurance obligations towards the contactor as they would towards an employee (i.e. workers compensation, unemployment, etc).

Employees

An employee is a person employed for wages or salary.  The employer defines the terms of employment and  can control how the employee performs the tasks associated with the position.  Employees can be employed to work either full- or part-time.  Employers are usually required to pay workers compensation & unemployment insurance and withhold taxes as per the employee’s requested withholding.  Unless expressly stated otherwise in an employment contract, employees work on an At-Will basis, which means that the employee may quit or the employer may fire the employee with no notice and no explanation required.

For more information on state and federal regulations regarding employees and independent contractors, contact an attorney in your area.

[DISCLAIMER: This article does NOT contain legal advice and NO attorney-client relationship arises from reading it.  Always contact an attorney in your jurisdiction to learn about laws applicable to you.]

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Legal View

Legal Views

ScalesLast month I wrote about the three pillars of intellectual property: Trademarks, Copyrights and Patents.  Now that you know the difference between the various types of Intellectual Property, the question becomes: How do I protect my Intellectual Property?  Read on below for information on how to obtain a Trademark, Copyright and Patent! Continue reading

Featured Designer: Ellen from The Chilly Dog

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Project1Meet Ellen, the creative mind behind The Chilly Dog.  On her stand-alone website and her Etsy shop, Ellen sells beautifully handcrafted textile items, such as knitting needle cases, yarn bags and amazing, step-by-step tutorials so you can knit and crochet your own lovely bags, scarfs, blankets and more!  In addition to her retail operation, Ellen is also active within the Etsy and blogging communities!

How did you become interested in knitting & crocheting?

Sea-to-Shining-Sea-AfghanI started crocheting as a girl because I always saw my mother and grandmother working on projects. It impressed me that they could create beautiful, usable items from a hooked stick and a ball of string. In high school I expanded my crafty skill set and taught myself how to knit, mainly from books.  I love making practical items like afghans, socks, scarves and sweaters as well as whimsical items like my little Arizona snowman. I also appreciate the meditative aspect of yarn crafts. The repetitive stitch patterns can be very relaxing at the end of a stressful day.

Tell us about your experience opening an Etsy shop.

Beach-ToteWhen I opened my Etsy shop in November 2011, I didn’t really have a plan for what I wanted to sell. I’m an ADD crafter that sews, beads, crochets, knits… I though my shop would give me the opportunity to sell a little bit of everything.  Then I started visiting other Etsy shops and it quickly became apparent to me that the more successful shops had a niche. They didn’t carry a lot of different types of items (sweaters, cat toys, purses, garden art…), instead they had a cohesive product line that focused on one type of item, like jewelry, or one craft skill, like sewing.  First, I focused on selling some of my knit and crochet items. Each item took hours or even days to create. When I sold an item I was barely making a profit. I gradually transitioned my shop and started selling handmade fabric cases for storing crochet hooks and knitting needles. The profit margin was higher, but my studio at the time was less than 100 square feet, so I didn’t have room to store much inventory. Finally, I started writing and selling knit and crochet patterns, which also led to requests for custom orders.

flower-cluster-crochet-hook-caseWhat type of products do you carry in your shop?

Today I have my own on-line shop, http://shop.thechillydog.com, where I sell handmade products “for your hooks and needles”, roll-up cases, project bags and patterns, as well as “from my hooks and needles”, the items I make when I design and test each pattern. I also welcome custom orders.

Arizona-SnowmanWhat inspires your work?

I love colors, textures and patterns. It is such a joy to start with a beautiful yarn and figure out the best stitch(es) to highlight the hues and weight of the material.

Who is your ideal customer?

I take great pride in my work and enjoy customers who appreciate the time and love that goes into every handmade item. I create my own designs and put a lot of care and effort into each project. It frustrates me when a customer wants a personalized item made with high quality materials for a big box store price. I finally have the confidence to turn down jobs when a customer is not willing to compensate me fairly.

What advice would you give to someone looking to start their own creative business?

Branches-AfghanIt takes time and patience to grow your handmade business, just as it takes time and patience to create your items. You need to be willing to take risks, adapt and sometimes even fail.

When you aren’t knitting and crocheting, what are you doing?

If I don’t have a yarn project in my hand, chances are, you’ll find me at the computer writing a tutorial or pattern for my craft blog, http://www.thechillydog.com. I started my blog as a way to promote my Etsy shop and since then it has expanded and taken on a life of its own.  Whenever our schedules allow, my husband and I enjoy traveling. It’s always nice to take a break from the routine to see new places, meet new people and eat new food. One of the perks of a freshly empty nest!

You can follow all the latest from Ellen & The Chilly Dog at:

Legal View: Intellectual Property Basics

Legal Views

ScalesYou just created the perfect logo for your small business.  Or perhaps you’ve created a brand new product or production method.  Maybe you even wrote some original music.  So what do you do now?  How do you protect your intellectual property from being misappropriated and stolen by other, unscrupulous people?  Do you need a copyright, patent or trademark?  These terms are often confused and misused.  Read on for a clearer understanding of intellectual property basics.

What is intellectual property?

Intellectual property, commonly referred to as IP, is a legal term that refers to creations of the mind.  This includes original music, literature and other artistic works, discoveries, inventions, phrases, symbols, designs and more.  Anything your brain can imagine has the potential to be your intellectual property.  IP is protected by law through the use of trademarks, copyrights and patents, which allow people to earn recognition and/or financial benefit from what they have invented or created.

Trademark

A trademark is a sign that is capable of distinguishing the goods and services of one business from those of other businesses.  Examples of trademarks include logos and slogans, company specific designs and phrases, packaging and colours and even non-visible signs, such as sounds or fragrances.  To obtain a trademark, one must simply file an application with the national/regional trademark office and pay the required fees.

Copyright

A copyright is the legal term used to describe the rights that creators maintain over their original literary, musical and artistic works.  Copyrights can protect a wide range of material, such as books, music, paintings, sculpture, computer programs, maps, advertisements, films, and much more.  No action needs to be taken in order to secure a copyright; once the work is created in its fixed form for the first time, a copyright automatically applies.  It is, however, highly advisable that you register your material with the US Copyright Office.  This creates an official record of your copyright and enables you to sue for the infringement (use without your permission).

Patent

A patent is the exclusive right granted for an invention/product or new method of production.  When you obtain a patent, you are the only person who can produce the product/invention or use the method of production.  In order to obtain a patent, technical information about the invention or production method must be disclosed to the public in a patent application. Patents are generally issued for a limited time, usually 20 years from the date of the application.

To learn more about intellectual property, contact an IP lawyer in your area!

[DISCLAIMER: This article does NOT contain legal advice and NO attorney-client relationship arises from reading it.  Always contact an attorney in your jurisdiction to learn about laws applicable to you.]

Featured Designer: Calling All Artisans!!

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Want to be featured on the Poskett’s blog?  We are currently looking for independent artisans and craftsmen to showcase in our Featured Designer series!  If you would like to demonstrate your creative prowess, reach a new audience, and get some free marketing, then being a part of our Featured Designer series is perfect for you!

If you are interested in participating in the Featured Designer series, please send an email to posketts@gmail.com.  In your email, please reference the Featured Designer Series and include links to your online shop/products, blog or anything else you might feel is relevant to your creative business.

Being a part of the Featured Designer series is easy and your time commitment is minimal!  If selected, you will receive a set of 8 interview questions to answer.  In addition to your interview answers, Poskett’s will need 5-7 pictures.  The pictures can be of your finished products, your work process, studio space, your logo and you-whatever you would like to showcase!  That’s it!  I hope you all will consider participating in this opportunity!!

Cheers,

Pamela from Poskett’s

Legal Views: Business Entities

Legal Views

ScalesLast month I wrote about the importance and benefits of turning your hobby-business into a legitimate, legal business. As promised, I am now going to explain four of the most common business entites.  Read below about Sole Proprietorships, General Partnerships, Corporations and Limited Liability Companies.  Each state has different requirements for business formations, so the information below is general and applies to all states.  Consult an attorney in your area to learn more about forming a legal business in your state.

Sole Proprietorship

A Sole Proprietorship (S.P.) is the simplest business entity that a person can use to legally operate a business.  An S.P. is not a legal entity, but rather refers to the individual who owns and operates the business.  Here are some key facts you should know about Sole Proprietorships:

  • Least expensive method of business formation.
  • There may be state specific requirements for formation, such as filing for a d.b.a. (doing business as) with the State Comptroller. State sales tax laws apply.
  • There is only one business owner.
  • For tax purposes, profits are actually personal income for the business owner, also called pass-through taxation.
  • Business owner maintains unlimited personal liability for business debts, taxes, damages from defective products, etc.
  • This is the minimum requirement for legally operating a business.

General Partnership

A General Partnership (G.P.) another simple business entity.  It is substantially similar to a Sole Proprietorship; where an S.P. has one business owner, a G.P. has two or more business partners that jointly own the business.  In most other aspects, the two business entities are identical.  Here are some key facts you should know about General Partnerships:

  • Inexpensive method of business formation.
  • There may be state specific requirements for formation, such as filing for a d.b.a. (doing business as) with the State Comptroller; State sales tax laws apply.
  • There are two or more owners.
  • For tax purposes, profits are actually personal income for the business partners, also called pass-through taxation.
  • Business partners maintain unlimited personal liability for business debts, taxes, damages from defective products, etc.
  • No governing document or formalized agreement between the business partners is required; all formation requires is a mutual agreement to operate a business together and to commence operation of the business.
  • By default, all partners share equally in management responsibilities, liability, ownership percentage and profits; this default can be overridden by the execution of a Partnership Agreement.

Corporations

Corporations (Corps.) are business structures that form a legal entity which is separate from the business owners.  Corporations maintain their own earnings and protect the owners from unlimited personal liability.  Here are some key facts you should know about Corporations:

  • Formation requires the filing of Articles of Incorporation with the state.
  • The owners of a Corporation are called Shareholders. Shareholders obtain their ownership by investing or purchasing Shares of the Corporation.
  • Shareholders are paid through Dividends. A Dividend is a payment from the Corporation, usually taken out of the Corp’s profits.
  • A Corporation is managed by Directors and Officers. Directors decide the corporations’ policies and sit on The Board.  Officers carry out the day-to-day functions of the Corporation.
  • Shareholders’ liability is normally limited to the amount he has invested; the Corporation maintains the balance of the liability.
  • A corporation is a separate, tax-paying entity; The Corp. pays tax on its income and the shareholders also pay tax of dividends they receive from the Corp. This results in a double taxation, which can be avoided if you choose to form your corporation as an Subchapter S Corporation, which is not subject to entity taxation.

Limited Liability Companies

A Limited Liability Company (LLC) can best be described as a cross between a partnership and a corporation.  An LLC combines the tax benefits of a Partnership and the liability protection of a Corporation.  Here are some key facts you should know about Limited Liability Companies:

  • The owners of a LLC are called Members; there is no requirement as to the number of Members an LLC must have.
  • There are state specific requirements for formation, such as filing Articles of Operation or a Constitution with the Secretary of State.
  • For tax purposes, profits are actually personal income for the Members, also called pass-through taxation. This is the same tax benefit as a Sole Proprietorship and a General Partnership.
  • Members’ personal liability is limited; the LLC maintains the majority of liability in the same way a Corporation does.
  • Members must execute an Operating Agreement which details how the LLC will be managed; the LLC is bound by the terms of the Operating Agreement.

[DISCLAIMER: This article does NOT contain legal advice and NO attorney-client relationship arises from reading it.  Always contact an attorney in your jurisdiction to learn about laws applicable to you.]

Featured Designer: Lindsey from SA Jolie

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Project1Meet Lindsey, the creative powerhouse behind the French-Inspired Jewelry Boutique, SA Jolie!  Her Etsy shop has an amazing variety of original jewelry designs, including custom pendent necklaces, key chains, hair clips and beautiful vintage pieces.  With over 1000 sales, Lindsey is a seller on the rise!

Beautiful is Strong Charm NeckalceHow did you become interested in jewelry making?

Like most ladies, I have always adored jewelry, but found that I couldn’t find the pieces I liked on the high street.  Actually, let me rephrase that; I couldn’t find the pieces I liked for the right price.  So it got me thinking that I should start making my own.  A few months down the line, I thought other ladies must be having a similar shopping experience and I decided to open an online store.

PackagingTell us about your experience opening an Etsy shop.

Opening a shop was the easy part; getting customers to your shop is a little more difficult.  It’s a full time job, keeping your store fresh and updated.  The main key, I find, is having good photos.  Online customers are buying with their eyes.  They don’t have the option to touch and feel the product, so you need everything to come across is just five photos.

What type of jewelry products do you carry in your Etsy shop?

An eclectic fusion of Bohemian, Spiritual, Cowgirl and Charm.  You will find something for all jewelry styles within my large collection of Vintage and Handmade pieces.  I love nothing more than a custom order!

Bottle Opener Charm NecklaceWhat inspires your work?

Throughout my life, I have always been inspired by the French, whether it was my previous business of selling chic French furniture and décor to the little jewelry store that I have today.  I guess I inherited my love of French things from my Grandma, and of course the wonderful summers spent in the romantic French countryside.

SONY DSCWho is your ideal customer?

I don’t believe there is an ideal customer, but I love hearing feedback from my customers.

What advice would you give to someone looking to start their own jewelry business?

Have patience. It does take a while to get your new business off the ground. At first, when you are just seeing those odd sales and you think it’s not going to work out, instead, persevere! The rewards are there for those who work hard.

Moon Love Key ChainWhen you aren’t making jewelry, what are you doing?

I lead quite the hectic life.  Life for my family and I always seems to be on the move.  I am an ex-pat, having moved to the US from the old market town of Bakewell, in Derbyshire England.  I have been living in the states now for just over seven years.  I have been in Houston for 18 months, and actually spend my time between our two homes in Houston and Fort Worth.  When I’m not making jewelry, I am either travelling, cooking or reading.

You can follow all the latest from Lindsey and SA Jolie at: