Well, it’s a New Year and you should start thinking about how you are going to improve your business. For some that means seeking out ways to expand and grow, and for others it just means a hard look at where your business is and, if needed, giving it a tune-up. The first thing you should think about doing is joining an industry association where you can get help, because sooner or later, you’re going to have to deal with the 20 or so state or federal agencies that deal with the trucking industry.
With all the states cracking down on companies that utilize independent contractors, you should make sure you are not subject to the various litigation lawsuits that are going around involving misclassification, FLSA (Fair Labor Standards Act), truth in leasing, false marketing and, in California, PAGA (Private Attorney General Act). Independent contractors that can prove they are really independent are worth their weight in gold, these days. This is something you might want to consider in 2016. They will make more money than employee drivers, non-union or union drivers. This was pointed out back in October in an article in the Wall Street Journal.
Incorporating provides a number of benefits to new small business owners, including saving on taxes, protecting personal assets and adding legitimacy to your business. You’d think that the answer to the question, “When should I incorporate?” would be, “As soon as possible!” But the bad news is, in January, state offices have the reputation of being extremely backlogged. So, if you file in January, it may take 60 days or longer to incorporate your business – a process that should not, by any means, take that long. Every business is different, and every business owner has different needs, but, typically, the sooner you incorporate the better. Every state has different rules, so be sure to check with your individual state office before moving forward.
DBAs are another good way to separate the business owner from the business. If an entrepreneur is planning on doing business using a name other than his or her own personal legal name, then he or she will probably need to file a DBA (which stands for Doing Business As). Most states require DBAs, in fact, prior to conducting any business under a name other than the business name or a personal name.
DBAs are specifically important and beneficial for banking purposes. Operating under a business name without setting up a DBA would make it impossible to issue and receive checks under that business name. For one thing, a business owner can’t use his personal account and issue checks or receive checks under his business name. A business owner also cannot open a banking account under his business name without first having a proper DBA filed.
As a business owner, you should plan ahead for these potential banking issues by getting your DBA filed prior to setting up any bank accounts. With a DBA, you’re connected to your business – in that you can still receive checks under the name of your business – but you’ll still be able to keep the two accounts separate, separating yourself from the business entity.
Sole proprietors are the most common users of DBAs. Sole proprietors are individual business owners who run their businesses themselves, and are typically newer to the small business game. Since most people in these circumstances use a business name other than their own name, it’s often necessary for them to get a DBA.
DBAs can also be useful to corporations, LLCs, and other business entities because they permit doing business under other names without having to form new organizations. In this way, more formalized business entities that are seeking to branch out into other businesses or industries can do so without forming new corporations or LLCs. This can save money (in the form of filing fees) and time (in the form of filing documents and maintaining the business entity throughout the year). According to the Small Business Administration, DBAs can be registered either at the county clerk’s office or with the state government, depending on your state. They also have a handy list of each state’s requirements that you can check out to confirm where you’ll need to go, and with what documents.
Forming a business entity such as a corporation or LLC, along with a DBA, provides excellent benefits for a business owner and should be seriously considered. It allows you to have liability protection for your personal assets, arrange taxation of your business in a way that is the most beneficial for you and your business, and make use of various names for your different business endeavors. Remember, there are about 276 business deductions that are allowed by law.
Lastly, here’s a reminder for businesses with paid workers. Employees in California are required to be paid minimum wage (with some exceptions). Today, California minimum wage is $9.00 per hour (note: this is higher than the Federal Minimum wage, which remains at $8.00 per hour, but all California employers must follow the stricter standard when Federal and State laws conflict – and use the one that is most beneficial to their employees). Effective January 1, 2016, the minimum wage in California will increase to $10.00 per hour. Employers should be looking ahead at payroll and preparing to make the timely adjustments to their employee paychecks to reflect the proper minimum wage beginning January 1, 2016.