The Ins and Outs of Onboarding Employees and Independent Contractors

1410367624-should-i-hire-contractor-or-employeeQ: What is the difference between an independent contractor and an employee and what kind of documents do I need for each?

A: In the early stages of a business, many founders prefer to engage independent contractors or consultants to perform services. It allows the company to avoid implementing costly payroll processes and employee benefits and the company saves significant dollars that would otherwise have to be paid on employee-related federal and state taxes. In fact, it’s such a big savings that the IRS decided several years ago to crack down on improper classification of employees by imposing hefty penalties on the companies.

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Here’s How to Grab an Investor’s Attention and Land Funding

1409173678-5-ways-bootstrapped-startups-through-first-yearQ: What is the best way to get the attention of a potential investor?

A: I was a judge at a pitch event a couple of years ago where one of the entrepreneurs presented his company while wearing a furry pink rabbit suit. While that outfit was certainly memorable, I’m not sure it prompted any of the panelists to write a check. There are better ways to get an investor’s attention.

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ENTREPRENEUR.COM

Before You Form an S Corp., Consider These Points

Q: Someone told me that having an S corp has many advantages as well as disadvantages. Can you explain to me exactly what this type of corporation entails and if it is beneficial? 
- Peggy Stiles

A: An S Corporation is a small corporation that elects to be taxed under Subchapter S of the Internal Revenue Code, which gives an electing corporation some, but not all, of the tax benefits of a partnership. An LLC can also make this election, enabling it to take advantage of the payroll tax savings discussed below. But before we get into the pros and cons, here is a brief history of the Subchapter S Corp.

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What to Consider When Deciding Between Forming a Sole Proprietorship or LLC

Q: With starting a home-based vegan foods business, is it better to set up as sole proprietor or LLC?

A: I considered this question a few months ago when I started my own law firm.  Sole proprietorship is so simple and inexpensive and thus, so appealing.  But after researching the issue, I chose the LLC instead.  While my law firm might not be as tasty a venture as your vegan foods business, the issues we face in choosing our business entity are the same.

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Have a Burning Business Question? Ask the Expert: Lori Hoberman

When starting up, many entrepreneurs have limited time, money and resources to get their vision off the ground. So, they skate by with a passable social-media strategy, employ some creative tactics for customer acquisitions and do their PR on a dime. But one area where founders shouldn’t cut corners is their legal needs. Not setting a company up correctly in the beginning can set an entrepreneur up for disaster in the long run.

Fortunately, we have Lori S. Hoberman, a New York City-based lawyer and entrepreneur, to offer advice to our readers on the legalities of starting and running a business.   

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