Entrepreneurs, Welcome to the Law, Part 4

This fourth part is on the boring, yet crucial ongoing topics of accounting and employment law.

Accounting
It is the language of capitalism and commerce. A balance sheet is a snap shot of your company’s finances. No investor will take you seriously without good accounting paperwork.
An Income Statement is an annual or monthly recording of revenues and expenditures. A cash flow statement is like an EKG of how the money is circulating. Cash flow is the most important metric you have to monitor.

Accounting allows you to do analyses on which operations are profitable and which are not.

Employment Law
This is a minefield that you and your management need to understand.

With interview questions, do NOT ask:
Race- What are you, Filipino, Hispanic?
National Origin- What kind of name is that?
Family- Do you have kids? Are you pregnant?
Age- When did you graduate from Central High?
Mere brush with the law- Have you been arrested (not convicted)

Sexual Harassment: You can be sued under two theories
Hostile work environment- Jokes, pin-up calendars, whistling
Quid Pro Quo- If you do sexual favors for the boss, your work life improves.
Brief EVERYONE upon joining, and continue. Set up a procedure.

Job descriptions must be exacting as to qualifications and have no hint of any prejudice. For example, don’t say “Computer Literate, say “Proficient with Microsoft Word, Excel, QuickBooks.” For example, avoid saying “no more than 20 years in Grade” that is age discrimination.

Every 3-6 months have a formal, consistent, regularized counseling.

With trouble makers, first give them a verbal warning and document the incident. If it happens again, have a written form where you explain what happened, and what the expectations are. If it happens again, you might want to consult an attorney but there is now a paper trail.

Make sure any termination is strictly job related and not based on any
personal animosity or prejudice.

The status of workers is very important. W-2 Employees work for you under your control. A whole host of laws and taxes need to be adhered to. 10-99 Independent Contractors have a horizontal business relationship with you. Basically If the company controls the time & manner of the work as well as provides the resources, the law says that is a W-2 worker even if a contract says “1099.”