Forming a limited liability company (LLC) can bring you a host of benefits – it will establish a legal identity for your small business, separate you from your business’ legal and financial liabilities and simplify your taxes at year’s end. 

Whether you are creating a new LLC or converting to an LLC from a sole proprietorship, the process requires knowledge of your state’s rules on how to form and operate an LLC, a lot of paperwork and legal agreements between you and the members of your LLC, if you do not intend to be the sole member. 

Your best bet in forming an LLC is to consult with an attorney who has experience in forming LLCs in your particular state and municipality. Of course, you can try forming an LLC yourself, but mistakes on any of the required paperwork can leave you prone to significant delays in or, worse yet, legal liability and fines. 

Your LLC attorney can help you:

• Determine if an LLC status is right for your business as opposed to sole proprietorship or an L or C corporation structure;
• Draft and file your articles of incorporation, and make sure that they comply with your state’s regulations;
• Negotiate funding agreements with your investors, if you have any other than yourself;
• Draft and file the most important document of all – your LLC operating agreement, which specifies how you will operate your business, which includes how to invite or replace members of your LLC and bind the company to business loans. Without an attorney representing the interests of all of the LLC members, you are vulnerable to drafting an operating agreement that could present future conflicts and financial risks for your business, as well as potential future legal disputes between you and your partners, and 
• Ensure that your LLC is compliant with business laws specific to your state and municipality. 

How to Choose an LLC Lawyer

Of course, attorneys can be expensive, and if you’re just starting a business, you may not have the budget for one. If that’s the case, you may consider using one of the various online legal services out there such as LegalZoom and Rocket Lawyer. These types of services offer you legal advice as well as an on-call attorney for a low monthly fee. 

However, if you are using one of these services, chances are you’re setting up an LLC yourself, which can still make you prone to errors in your paperwork. Additionally, you don’t know the experience level of the attorney you will be in contact with when using one of these services. 

If you choose to hire an attorney and have the budget to do so but don’t know where to begin, you can always look in your local Yellow Pages, put out a request for local referrals to the community via social media platforms, or you may wish to use online services such as LegalMatch and UpCounsel – both of which can match you with a qualified local attorney after you answer an online questionnaire.

Another inexpensive way to go could be to consult with a law school near you. Most law schools such as Columbia University in New York and Northwestern University near Chicago have programs in which law students assist entrepreneurs with starting their businesses, and the services these students render typically are free. Note however, you will be getting advice from law students who are seeking experience, and not licensed attorneys. 

Questions You Should Ask

If you have a list of attorneys that you are considering but don’t wish to end up inadvertently hiring the slick-talking title character from “Better Call Saul,” here are some questions you should ask:

• How many years of experience do you have in helping to form an LLC?
• Are you familiar with business law in my state and the state in which my LLC will conduct the most business?
• How much experience do you have with my specific industry?
• How much do you charge and what is your fee structure?
• How long will it take to finish setting up my LLC (this affects how much you’re going to pay)?
• Will paralegals or legal assistants handle part of my case? (This will also affect how much you pay)?
• Do you have experience with funding agreements for an LLC?
• Are you knowledgeable about tax options for LLCs?
• How much experience do you have in drafting articles of incorporation and operating agreements?

While all entrepreneurs have dreams and are determined to operate for themselves, if you’re forming an LLC, you would be well-advised not to go it alone. While state agencies can provide you with the necessary templates and forms to fill out to create an LLC, the law prevents them from giving you any sort of legal advice. Mistakes in drafting complex documents such as operating agreements, articles of incorporation and funding agreements can cost you in the long run, so you should at least use an online legal service, depending on your budget.

It’s no secret that healthcare plans represent a dilemma for many small businesses: on one hand, offering comprehensive, all-inclusive health insurance is often crucial to attracting and retaining talented employees, but on the other, setting up and maintaining a healthcare plan is expensive, confusing and time consuming. 

According to a recent survey of 827 small businesses from Small Business for America’s Future, more businesses (55%) are worried about the costs of providing health insurance to their employees than they are about the dangers of COVID-19 (37%). The study also found that 76% of small business owners do not provide coverage because the cost is too high, while 53% of small business owners said they do offer insurance but are considering dropping it because of rising costs. 

Roughly 90% of small business owners said their health insurance costs increased over the past four years, with 40% responding that costs have risen by 10% or more a year. 

What to Do?

There are several ways to reduce the cost of health insurance while at the same time providing your full-time employees with the health coverage that they need for both themselves and their family members. 

#1 Shop Around for a New Plan

If your insurance provider keeps increasing costs at an unreasonable rate, then simply shop around with a health insurance broker, such as eHealth, for a new plan that offers modest increases in prices. If you have a preferred provider organization (PPO) plan, keep in mind that with the rise of value-based health care – new types of medical care systems that are meant to drive the cost of care down – those types of plans are a thing of the past. You may consider switching to types of plans that are generally cheaper, such as:

• Exclusive provider organization (EPO) plan, which have a curated number of doctors but don’t require referrals;
• Health Maintenance Organizations (HMOs), which restrict patients to a particular set of doctors, but often charge higher co-pays if the patient sees an out-of-network physician, and
• A tiered plan – a plan that offers multiple tiers of physicians under the in-network umbrella. The first tier of doctors already have arrangements with the insurance carrier to offer financial discounts for services, and those savings are passed on to you and your employees.

#2 Offer a Plan With an FSA Option

Flexible spending accounts (FSAs) allow employees to set aside pre-tax dollars to spend on major medical events, such as surgery, teeth replacement, high-cost prescription drugs, or any other future medical need. Insurance plans that offer FSAs typically will offer you, the business owner, high annual deductibles but also a discount on premium contributions while still providing health insurance to your employees. 

#3 Look for Insurance Plans That Emphasize Value-Based Care

Value-based health care is the new trend in medicine today, and there are several ways insurance companies can offer it and pass the savings along to your business in the form of lower monthly costs. Look for plans that include:

• Wellness plans rewards;
• Telemedicine;
• Free annual physicals and flu (and COVID-19) vaccination shots, and 
• Prescription drug coverage that requires pharmacy benefit managers (PBMs) to automatically offer cheaper, generic versions of prescription drugs before selling patients the more expensive brand name ones, and
• Dedicated service experts.

#4 Shifting Healthcare Costs to Employees When Applicable

While not ideal, you may want to choose a cheaper insurance plan that places a greater burden of healthcare costs on employees. Some plans can save you money by raising the deductibles and copayments for medical services, and raising the costs of using out-of-network doctors. Be warned, however, that employers must balance this approach with affordability requirements under the ACA.

As a benchmark: A 2020 Kaiser Family Foundation health benefits survey found that full-time employees paid on average 17% of the premiums for single coverage, and 27% of the cost for family coverage. The survey also showed that employers are shifting costs to employees through increased deductibles and out-of-network copays.

You also may want to add “working-spouse” provision to your health coverage plan. These provisions limit an employee’s spouse’s access to a plan when the spouse works for another employer that offers health insurance, thus saving you time and administrative costs.

#5 Educate Yourself and Your Employees

If you and your employees don’t have a solid grasp of the ins and outs of medical insurance, know that you’re not alone. The more your employees are educated on their health benefits, the better and lower-costing choices they will make. You may want to consult with a health insurance brokerage firm such as eHealth or your current insurance carrier to:

 

• Provide training on open enrollment;
• Give a simplified summary of benefits from your insurer, as well as explanations on deductibles and in-network doctors, and 
• Provide access to a health insurance expert, either through your own HR manager (if you have one) or an agent from your insurance carrier.

Which Insurance Companies Are the Most Popular?

Whether you have two employees or 200, there are insurance companies that have a reputation for offering generally lower costs and specialize in providing coverage for small businesses. The most popular seven companies are:

1. UnitedHealthcare, which has a reputation for providing one of the most extensive network of physicians and emphasizes the use of modern technology for virtual healthcare;
2. Blue Cross Blue Shield, which operates through 36 local, independent doctor networks and is known for affordable tiered plans;
3. Anthem, which has the largest network of doctors and takes an integrated approach to medical care through combined health plans, which connect patient data in order to more effectively manage care;
4. Humana, which offers a diverse array of tiered plans and emphasizes preventative care, and wellness programs;
5. Kaiser Permanente, the largest managed care organization in the U.S. and offers one of the widest array of plans specialized for small businesses;
6. Health Care Services Corp., the largest customer-owned health insurance company in the nation that emphasizes affordable plans for small businesses through value-based care, and
7. Oscar Health, a company that emphasizes cheaper insurance plans for small businesses by utilizing healthcare technology such as telehealth, electronic appointments and automatic wellness checks.  

While setting up a health insurance plan is time consuming and often painfully expensive, we all want to see everyone have access to the healthcare that they need, especially our employees. The good news is that employer health care costs have not risen as sharply as it has in recent years. There is an affordable, well-priced plan out there that is right for your business and employees, it just may take some time to find the right one, but in the end, it will be time well spent.  

“All of humanity’s problems stem from man’s inability to sit quietly in a room alone,” wrote French philosopher Blaise Pascal. While that statement was written in the 17th century, we’re about to find out if it’s true in 2021, as tens of millions of Americans will continue to work quietly alone in their homes. 

If your small business operates out of an office and has decided to permanently move to a remote work environment, you are going to experience both benefits and headaches from that decision. Of course, most of your employees will be happy with the arrangement, but you’re also going to have to deal with new tax classifications and employee productivity issues, among other things. 

Savings Benefits With Remote Working

One benefit to remote working is a potential savings on office space. The average rent-to-revenue ratio in some business sectors in the U.S. is as high as 15%, so with fewer or no workers coming into the office, you may think about moving your company’s headquarters to a smaller, cheaper and more tax-friendly location anywhere in the country, especially if your headquarters is in an expensive urban area such as New York City or San Francisco.

Don’t Lose Valuable Employees

Moving to a remote working environment could very well allow you to retain valuable employees. This is particularly important since the number of job openings right now far outpace the number of new hires and the volume of people quitting their jobs, according to the Bureau of Labor Statistics. Roughly 40% of Americans prefer to work from home full-time, compared with 35% who seek a home-office hybrid and 25% who want to go back to the office full-time, according to The Harris Poll survey of 1,224 working adults.

Put simply, there are more job openings right now than available employees, so the competition for new employees is fierce right now. By not setting up a remote work environment, you risk losing much of your staff.

A recent poll of American workers from Flexjobs revealed that 60% of women and 52% of men who have been working from home during the pandemic would rather quit their jobs than return to their respective offices full time. 

You are also no longer limited to just hiring employees who live in the area surrounding your headquarters. You are free to hire talent from anywhere across the country, or even overseas. Bear in mind that every state does have different employment laws that could be costly. 

Challenges With a Remote Work Environment

While a remote work environment may be great for some of your employees, it will create challenges for you from a human resources and accounting standpoint. Some of the potential downsides of moving to a remote working environment include:

• The ability for employees to collaborate and communicate may suffer;
• Remote communications technology may need to be added or upgraded;
• Payroll taxes and deductions may be confusing;
• Workers may become less productive and motivated, and
• The mental health of some workers may suffer due to the isolation of working at home alone.

Talk to Your Accountant

The first thing you need to do if you move to remote work is to speak to your accountant about managing your payroll. If your employees are out of state, you may have to deduct state and local taxes (SALT) from both the location of your company’s headquarters and the state in which your employee lives. 

Some employers will choose to make the employee responsible for his or her own SALT taxes, and some employers may even opt to make some out of state employees independent contractors in order to avoid the confusion. While some states such as New York and New Jersey and Washington, D.C. and Maryland do have reciprocity agreements in place that allow employers to pay only one set of SALT taxes, you still need to speak to your accountant about your options. 

If you do classify some of your employees as independent contractors, be aware that the PRO Act was reintroduced in Congress in January 2021, which will require employers to engage in the ABC test to determine if an employee can be labeled as an independent contractor to keep in compliance with the National Labor Relations Board. 

Use the Latest Communication Apps and Technology

To make remote working work, you’ll need to use the latest remote communications software that will allow for you and your employees to meet regularly. 

Video conferencing apps such as Zoom, 247Meeting, and Teamviewer will enable you to do that. Additionally, it’s crucial that you implement apps such as Google Docs, G Suite or Think Free that allow you and your employees to freely share and edit documents. 

Additionally, it is important for your IT or HR teams to set up a system to send laptops (with cameras) and other office equipment out to your employees so that they can stay connected.  Your HR team (which may be you, depending on your business) will also have to adjust payroll to allow employees to receive direct deposit and to have access to their paycheck stubs online. Services offered by ADP, Paychex or Onpay can help you with that. 

Hold Employees Accountable

According to a recent survey of small business leaders by The Harris Poll and Trinet, 55% of them said that employees were less productive when asked what the biggest challenges of a remote working environment is. The distractions of working from home, taking care of children or doing household chores can be a major deterrent. 

As a result, you may want to set up regular video conferences during the work week with your employees to go over what assignments they are working on. Set definitive performance goals and deadlines for them, and do not be afraid to set up one-on-one calls with employees whose productivity may be slipping since working from home. 

Keep Mental Health Issues in Mind

While working from home is considered a blessing by most, the lack of office friendships, the inability to pop your head over your cubicle wall and confide in your co-worker, and the general absence of employee camaraderie can lead to a feeling of isolation and depression in others, especially for those who live alone. According to the most recent Census data, single occupancy households are now the second-most prevalent in the country. 

Amber Broughton, managing director of The Harris Poll, said in a statement, “Small and medium size businesses continue to step up as they adapt to the new realities of this pandemic, investing in the wellbeing of their workforce through enabling remote work, staying in close contact, and offering increased flexibility to balance daily work and life.”

According to human resources association SHRM, some tips to avoid employee loneliness in remote work situations may include:

Encouraging regular, non-work related video chats between employees.

• Creating a private Facebook group for your employees to share personal photos and thoughts.
• Creating  a video conference  happy hour once a week where employees can grab a beverage of their choice and socialize.
• If you can afford to, offer employee discounts at gyms, restaurants and other places where they can get out of the house.
• As mask-wearing mandates loosen, try having company outings if most of your employees live within a close vicinity to the office. Also, the isolation factor could heighten the importance of holding an annual office holiday party and other events so employees can meet at least once a year.

Morgan Stanley’s CEO James Gorman was recently quoted as saying, “If you can go into a restaurant in New York City, you can come into the office.” While that may be a hard-line view, employers should carefully weigh the many pros and cons before moving to a fully remote work environment.