I am inspired by entrepreneurs who base their business model on improving the wider community/environment.

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In August 2010, our legislature became one of the first to enact the low-profit limited liability company (L3C), which is a hybrid business form combining profit-making with socially responsible missions.  It can be the perfect venture for educational, scientific, literary or religious businesses that don’t want the hassle of complying with non-profit reporting requirements, or that have some activities that are not permitted by the federal tax code.

The L3C can be structured to take advantage of both non-profit and for-profit sources of capital.  It may offer marketing advantages by attracting socially aware investors and partners.  It may also attract private foundation program-related investments.

The biggest disadvantage, however, (and this is not a small disadvantage) is that the federal tax authorities have not ruled whether investments in L3Cs qualify as program-related investments.

We have a wide range of supports here for social entrepreneurship, including  informal meet-ups. formal academic programs at Duke and UNC,  community-based efforts to increase and support social entrepreneurism, and paid consultants.

How is your business giving back on a day-to-day basis?

Related articles

• One Entrepreneur Greets MLK Day with Work (smallbiztrends.com)
• United Way Triangle MLK Day of Service (unitedwaytriangle.org)
• Thousands In Triangle will Volunteer on MLK Day (nbc17.com)
• For-Profit Social Entrepreneurs (wealthartisan.com)
• The Rise of the Charitable For-Profit Entity (forbes.com)

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Small business owners in the Triangle are invited to attend a free corporate legal clinic on Friday, October 28, 2011, sponsored by the Durham County Bar Association, North Carolina Lawyers for Entrepreneurs Assistance Project (NC LEAP) and the Small Business Center at Durham Technical Community College.

 This is the place for you if:

•  You are thinking about starting a business and have questions for an attorney;
• You tried to form your own corporation or LLC and need reassurance and review;
• You have a contract to be reviewed;
• You have questions about an employee or independent contractor;
• You want to find out more about protecting your company’s name, logo, web site or materials;
• You have a question about trademarks or copyrights;
• You need help collecting money from your customers;
• You’ve received a legal notice you don’t understand; or
• You want to get your company’s legal affairs in order so you can get financing. 

 The clinic will be held at the Durham Tech Small Business Center, SOUTHBank Building, 400 W Main St, Third Floor, Durham, NC 27701, from 10 a.m. to 2 p.m. Clients are encouraged to pre-register by calling (919) 536-7241, and will be given an hour-long window in which they will have a 20-minute consultation with an attorney. We will try to fit in walk-ins as best we can, but the wait will be long.

The volunteer attorneys will help you assess your legal needs, give you some basic information and point you toward appropriate resources. 

 NC LEAP assists low-wealth entrepreneurs with their legal needs in starting or expanding their businesses by providing access to pro bono North Carolina business and transactional lawyers.

 The Durham Technical Community College Small Business Center is a state-funded organization which is part of the Small Business Center Network of North Carolina. The Small Business Center (SBC) provides small business owners with information they need for success, including advice on marketing, sales, bookkeeping, and management. 

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Guest post by Annemarie Cleary

What a week we just had in Virginia!  An earthquake, a hurricane with flooding, and swamp fire smoke all in one week.  If last week didn’t convince you to review, or prepare for the first time, a Business Continuity Plan (BCP), then the approaching ten-year anniversary of 9/11 should spur you to action.

The 9/11 attacks destroyed tens of thousands of vital records, irreplaceable documents and art.  The businesses affected lost employee records, customer lists and many, many more documents vital to business operations. As many employers on the East Coast are undoubtedly discovering, it doesn’t take a disaster as devastating as 9/11 to cause an interruption in business.  Earthquakes, hurricanes, floods and fires are just a small sample of the very real disasters that can strike your business.  Are you prepared to pick up the pieces?

Creating a BCP so that you can get your business up and running as soon as possible after a disaster is vital to your company’s long-term survival.  A BCP should include lists of emergency contact information, both internal and external, and a detailed recovery plan and should be developed with employees from all business units and levels of your company.

Begin by assessing the potential risks to your business’ ability to deliver products or services to customers.  Arizona business may need to plan for the effects of an evacuation due to forest fires, but not for a hurricane.  Businesses in North Carolina or Virginia, on the other hand, would be more likely to plan for flooding as a result of a hurricane, for an office fire or even for an earthquake.

After determining the risks that your business might face, consider how to mitigate the effects of those risks on business operations.  The objective is to compile a detailed step-by-step guide to getting your business running again.  You should:

• Identify the employees who are critical to the operations of your business, as well as a backup for each position in case key personnel are not available.  Your list should include every available means of contacting these individuals (e.g., business phone, home phone, cell phone, business and home email).
• Identify the critical products and services you provide to your customers and record the contact information for your most important customers so that you can stay in touch.
• Identify an alternative location from which to operate your business in the event your office is inaccessible.
• Identify contingency equipment options.  If, for example, the equipment your company uses to operate is its computers, contingency equipment options might include identifying which of your employees can telecommute.
• Identify what protections you need to take to preserve confidential client information.
• It is vital that your BCP includes a technology recovery plan.  You should regularly back up important IT data, such as customer lists, banking information, employee records and anything else that would be necessary to starting your business again.  Back up the information and arrange a secure off-site storage location.  Redundancy is the key.

Once you have all the necessary information, put your plan in writing.  Create step-by-step instructions on what to do, who should do it, when it should be done and how.  Ensure that critical personnel have copies of the plan and keep a copy off-site, too.  Then, practice and maintain your plan.  Review your plan periodically and walk through the plan with an imaginary disaster in mind.  Then, make changes where needed.

There are a number of websites that offer additional suggestions on developing a BCP, including the Federal Emergency Management Agency (FEMA) and Inc. .  You can alsocontact your employment attorney for assistance in preparing a plan.

Related articles

• Corporate Damage Control (nclawlife.com)

While many business owners are savvy enough to select the proper entity on their own, many do not understand the difference between trade names and trademarks. Others accidentally give the rights to their logos and other commissioned artwork to their graphic artist and the content of their website to their web host.  Some will think they can choose whether a worker is a contractor or an employee.  A good business attorney can address these issues on the front end, and save much expense and aggravation later.

Likewise, a good certified public accountant isn’t just a number cruncher — he or she is a trusted advisor who understands your business and today’s economic climate.  CPAs evaluate business ideas, plan for growth, minimize taxes, monitor cash flow and help keep proper financial records.  Poorly set up books can make it impossible for companies to track costs, make profits and attract financing.

Those of us that work with startups are familiar with the intersection of  providing value and penny-pinching, and can often work with the bootstrapped entrepreneur on how the services are provided and paid for.

Related articles

• Moving beyond the kitchen table (csmonitor.com)
• Bootstrapping Mistakes You Can Easily Avoid (startupbiz.wordpress.com)
• How to Get Good At Making Money (inc.com)
• About Starting a Small Business (thinkup.waldenu.edu)

The White House claims the tax credits are the first steps in making health insurance affordable for small businesses to provide for their employees. Critics claim these tax credits will cause small business owners not to hire additional workers or increase salaries, so they can take advantage of the highest tax credits.

For most small businesses, the devil remains in the details, as they struggle to determine first if they are making money and secondarily if they can qualifiy for the credits. The FAQs addressed in the IRS rules are:

1. Which employers are eligible for the small employer health care tax credit?
2. Can a tax-exempt organization be a qualified employer?
3. What expenses are counted in calculating the credit?
4. What is the average premium for the small group market in a state (or an area within the state)?
5. What is the maximum credit for a qualified employer (other than a tax-exempt employer)?
6. What is the maximum credit for a tax-exempt qualified employer?
7. How is the credit reduced if the number of FTEs exceeds 10 or average annual wages exceed $25,000?
8. Can premiums paid by the employer in 2010, but before the new health reform legislation was enacted, be counted in calculating the credit?
9. How is the number of FTEs determined for purposes of the credit?
10. How is the amount of average annual wages determined?
11. Can an employer with 25 or more employees qualify for the credit if some of its employees are part-time?
12. Are seasonal workers counted in determining the number of FTEs and the amount of average annual wages?
13. If an owner of a business also provides services to it, does the owner count as an employee?
14. Do family members of a business owner who work for the business count as employees?
15. How is eligibility for the credit determined if the employer is a member of a controlled group or an affiliated service group?
16. How does an employer claim the credit?
17. Can an employer (other than a tax-exempt employer) claim the credit if it has no taxable income for the year?
18. Can a tax-exempt employer claim the credit if it has no taxable income for the year?
19. Can the credit be reflected in determining estimated tax payments for a year?
20. Does taking the credit affect an employer’s deduction for health insurance premiums?
21. May an employer reduce employment tax payments (i.e., withheld income tax, social security tax, and Medicare tax) during the year in anticipation of the credit?
22. Is it expected that any transition relief will be provided for tax years beginning in 2010 to make it easier for taxpayers to meet the requirements for a qualifying arrangement?

I appreciate the article because I would not want to appear completely self-serving when I advise that businesses of all sizes should meet with their attorneys (and accountants) at least once a year to head off potential problems. I know there is a lot of belt-tightening going on right now, but penny-wise can turn pound-foolish in an instant. For example:

• One of my first matters as a corporate attorney was “cleaning up” an IT company that had a founder’s friend do the formation. He was an attorney, but a divorce attorney, and it took about 30 hours to unravel the mistakes that were made in setting up the stock, the shareholders’ agreement and stock-option plan. It was pure luck that the S-corporation election was not invalidated by the way the stock was set up.
• Another client got into a dispute with a supplier of wire and wanted to cancel the contract. A low-level manager had written a contract that said the supplier would supply all wire needed by the company for the next three years (including a minimum purchase requirement). There was no way to terminate the contract early. It took many hours of negotiation to end the contract early when the telecom industry tanked and the client didn’t need the minimum order.
• Finally, one of the saddest matters I have handled was a client who got into some financial trouble and didn’t pay state income taxes. They owned a viable retail business, but the Department of Revenue padlocked them and put many people out of work.

All of these situations could have been largely avoided (or handled quickly and possibly less expensively) if the clients had spoken with a business attorney early on.

Yet, I am seeing an increase in people starting new businesses or buying existing businesses.

I was speaking with some small business owners last week who were surprised at just how few of their colleagues were filing for bankruptcy. This recession has made companies more efficient and more aware of every cent. People are hanging on, and continuing to fuel our economy and provide jobs.

I am thankful for these entrepreneurs who are willing to take risks and to gut it out. What are you thankful for?

What’s so scary? Many executives fear posting something personal (on Facebook) that might prove damaging. It needn’t be a lampshade on the head, either. Perhaps it’s vacation photos from a second home that looks too opulent at a time when employees are losing jobs. Or maybe their support for a controversial ballot proposition proves a bit too vocal. . .

Obviously it’s never a good idea to post “personally identifiable information” that can lure identity thieves and other malefactors. And only a very careless or foolish person would publish proprietary company information onto a social media site. But what about all the stuff in the grey area–the pictures of you barbecuing at home, gin and tonic in hand? The tweet about the movie you just enjoyed? The link to that Atlantic article recommending an overhaul of the banking industry?

Similarly, companies are debating who should “people” the corporate Twitter account, marketing, executives, CSRs, tech help, etc..

Twitter, the microblogging service, which limits posts to 140 characters, has become a favourite of celebrities and digerati. Businesses worried about being left behind are experimenting with using the service to promote themselves. Done badly, the effect can be like watching your grandfather dance at a wedding disco. So should it be left to a company’s marketing department to tweet?

Everyone has a different comfort level about what information to post. It is clearly a good idea to be cautious, as I’ve blogged previously. But when we use social media as a relationship-building tool, to do so effectively means we need to put ourselves out there by more than providing the product/service “name, rank and serial number” (and by that I mean, posting more content than mere brand puffery, PR and cliche).

Personally, I use this blog , LinkedIn and Twitter most often for business purposes. On the blog, I try to post legal updates, commentary on legal issues and commentary on issues relevant to small businesses and their owners (like this one). Each post is an initial remark that is intended to spark an ongoing conversation.

I connect with new business acquaintances and referral sources on LinkedIn. Although many people find LinkedIn impersonal and cumbersome, to me it is only the first step in business-relationship building. I am as active as I can be in groups that match various professional interests, and dialog with people through discussions that often start on the web and continue offline. As we get to know each other, we develop an actual relationship, outside of LinkedIn.

I use Twitter to promote the blog and develop relationships with referral sources and potential clients. I try to keep my Twitter posts relatively business-like and have decided not to post about the whether, what I am eating (unless I am talking about a new restaurant/business in the area) or what my dogs/kids/spouse are up to. I realize everyone has a personal philosophy about these types of post, and “small talk” tweets often lead to strong relationships. Again, for me, public tweets are like meeting someone at a Chamber meeting — if I want to know more, we meet for coffee later in the week for a more substantive and personal interaction.

I have made a deliberate decision to limit Facebook to keeping in touch with actual social friends and family, and not to use it as a business development tool. Nonetheless, I never post anything on Facebook that I wouldn’t want both my mother and our firm’s Board of Directors to see.

I’m interested in how other people use these tools. Where are your boundaries?

Join the conversation: Golden Belt Building, 807 East Main Street, Suite 2-300 (Building 2, Third Floor), Durham, NC.

Click here for more information and to RSVP.

The SBA is supposed to be the federal government champion of small businesses. According to its web site:

The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.

But to many entrepreneurs, the SBA is a joke. The main thrust of the SBA has been its loan program, but these loans were used by only 4% of businesses in 2006. Most small businesses would never need or qualify for this type of funding. They need available micro-loans, a simplified tax code, reduction in governmental bureaucracy, and affordable health care.

And Ms. Mills’ background is with venture capital, early, private equity funds that typically start lending at $1 million or more, and take an ownership position in their investment. Yet Ms. Mills seems to be trying. In her confirmation hearing, Ms. Mills stated:

Small business is the heart of the American economy. There are over twenty-six million small businesses in this country and they create 70 percent of the new jobs. This means that to find our way out of the current economic crisis, we have to find ways to help small businesses stay in operation and even expand. . . .

If confirmed I will work on three important fronts:

First, the SBA must continue executing the plans in the Recovery Act and get capital flowing again through the core SBA loan programs.

Second, we must reinvigorate the Agency by attracting a strong and passionate leadership team and investing in the information technology the agency needs to operate.

Finally, we must &endash; and I will &endash; act as an advocate for small business across the administration. As Chair Landrieu and Ranking Member Snowe have suggested, I will coordinate with other Agencies, including Commerce, Labor and Energy, whose programs also affect small businesses.

I hope she can make the SBA relevant to small businesses and spur the economy from the ground up.

March Highlights:

• The number of small business owners who say the economy is getting worse dropped to 60 percent, down from 69 percent the previous month and significantly below the all-time high of 79 percent reached in June 2008. Those who see the economy getting better rose from 12 percent to 16 percent.
• 24 percent of owners see economic conditions for their businesses improving, up from 19 percent in February and the highest response in this category since August 2008. Similarly, 47 percent see conditions getting worse, down from 54 percent in February.
• 41 percent of owners say they have experienced temporary cash flow issues over the past 90 days, basically unchanged from 42 percent in February.
• Views of the current economy remained constant: 90 percent rated the economy as fair or poor in March, unchanged from February.
• 48 percent of owners say they plan to decrease spending on business development over the next six months, a drop from 51 percent in February; while 21 percent plan to increase spending and 29 percent will make no changes.

This report surveys businesses with five or more employees, which would include the bulk of my clients. I know my business clients are closely monitoring their cash flow and bottom lines. So far, I have not had to counsel them on layoffs, and a few are actually growing. After a very slow fall and winter, I am seeing business activity pick up.

How do you feel about the local business climate?