3 E-commerce Tips for Smallbiz Owners
Today\’s article was generously contributed by Deanna Wharwood, a lifetime member of the U.S. military. Thanks, Deanna, for serving our country in more ways than one! As a consumer, when you check out of your local convenience store, you may swipe your credit card through a point-of-sale device and your gas, coffee, and donuts are paid for. What if you are the retailer and your business is online? How do you as the retailer process their credit card information? Essentially, that is the job that the payment gateway. What\’s a Payment Gateway? Payment gateways allow online merchants such as electronic store owners or auction sellers to accept credit card payments over the Internet. They authorize the cardholder’s credit, i.e, they check to ensure that the customer has enough money on their credit card to cover the charges. Then they place a hold on that amount so the buyer can’t turn around and spend that same money elsewhere before it gets transferred to the retailer’s merchant account. A Payment Gateway is NOT a Merchant AccountMany people confuse merchant accounts with payment gateways but they are not the same. Merchant account services act, for the most part, as a liaison between your business bank account and the payment gateway. When a customer orders a product from your online business their card is processed via the payment gateway. The money is then moved over to the merchant account service. The merchant account service then moves those newly captured funds to your business bank account. 3 Tips for Choosing a Payment Gateway Is it PCI-compliant? If it is compliant, then the company’s security has been audited by a third party and met the industry standards. Since payment gateways store all your customers’ credit card information, your customers’ valuable information is secure. Does it provide good customer support? Clearly good customer support is essential, especially when your account receivables are involved. You will want to be able to reach a person on the telephone when there are challenges. And, you also want to make sure that you have back-ups to your invoices. Is it compatible? Finally, it is important that the payment gateway you choose be integrated to the third-party solutions you are planning to use. That means things like store front platforms and shopping carts work with your gateway. Many payment gateways offer an array of security features, some of which will help you avoid becoming a victim of fraudulent orders! In the end, they will make your e-commerce business a less-stressful, more pleasant experience for you and your customers.
Preventing Family Feuds for the Smallbiz Owner
At a Chicago Bar Association’s Solo/Small Firm Committee Meeting, I gave remarks on why estate planning is not a “basic” endeavor. A favorite example was a about Ms. Small Biz (Ms. SMB) who was married to Mr. Manager and had College-Age Children. It’s a favorite example because it identifies the issues contemporary families comprised of smallbiz owners may confront with respect to business planning, disability, death, and succession planning: Ms. SMB is the sole proprietor of a small, lucrative, and growing graphic design firm. She has 3 employees in addition to herself, and her son works part time during the school-year and full-time during the summer. Her daughter, however, has no interest in the business. But Ms. SMB has great vision for the business with a Pinterest page, a blog, and even a design auction website. Her husband is satisfied with his position as a midlevel manager with a software company. So the family is happy and enjoying its status. For several years now, Ms. SMB has been consistently reaping the fruits of 10 years of hard work and wants to ensure that in the event of her disability or death, her family and business are safe and wrapped up in a neat little package. So how should the estate planning attorney assist? First, we should assess the following: her stand-alone net worth; when the last time, if ever, was her business valued; what is the best legal entity for her business (at this point it should not be a sole proprietorship); who will run the business – digital assets and all – if she suffers a long-term illness; upon her death does she want the business sold or transferred to her son or her son and employees, or family and employees; who will wind the business up if she wants it sold; and if it is sold who gets what and in what form? Undoubtedly, Ms. SMB will need a will or a trust. She will also need to consider the tax implications of the business entity, e.g., LLC, S-Corp, FLP, she decides on. And what about those digital assets; do we need to consult with an IP colleague? However, what is equally important is her decision about what to do with the business at her death. This decision will weigh heavily on her attorney’s counsel about choosing fiduciaries. For example, will that person understand her business, can he or she successfully execute a buy/sell agreement, and can he or she manage winding up the business? Additionally, she wants to provide for both children equally. But giving half of the business’ financial interests to the daughter when the daughter has shown no interest may start a family feud between the siblings. Perhaps life insurance may help and may help in two ways. Once, the attorney ascertains the value of her business and, subsequently, her estate, life insurance can help lower the value of the estate for estate tax purposes and equalize the gifting between her two children. This example shows that smallbiz owners have a several critical decisions and options to make and consider at the start and near the end of their involvement with their businesses. Also, because the decisions made in the beginning can significantly affect the options with respect to succession planning, new smallbiz owners should seek to create a business plan that isn’t a stand-alone plan, but one that also encompasses estate planning. Ms. or Mr. Smallbiz & Family is just one of the faces of today’s family and the multiple faces and overlaps of today’s family shows why estate planning isn’t a “basic” area.
80% Get It Wrong…
In the digital age, it\’s rare that potential clients haven\’t done research before contacting our firm. So, when speaking or meeting with them, it\’s important to hear what they\’ve found. Sometimes it\’s factually correct, but not for their case; sometimes it\’s factually incorrect with respect to their case; and often the pieces just don\’t fit together at all. So then I say, \”Think about this…\” And, as colleagues continue to criticize DIY services, as online legal documents services proceed with IPOs, and as folks continue to ask me to opine, I thought these few facts may be worth sharing:
Consider the Sushi: 3 Critical Plans for Small Business Owners
One of the most critical tools a small business owner should use is a business plan. Having drafted an untold number of these for businesses over the course of many years, I know how time-consuming and arduous creating a solid, comprehensive business plan is. However, small business owners who don’t undertake and complete such an effort are playing a dangerous game. Most business plans involve a forecast of at least 3-5 years, anticipating profit, loss, and resource growth. However, what if the business owner falls temporarily ill at the end of year 2 or year 4 or wants to retire? Who will see the business succeed and what financial interests will the original owner be able to sustain for herself and her family? Small family-owned businesses typically operate under the assumption that “someone” in the family will take over. But that “someone” isn’t always the best person or even a competent person with respect to business management. Granted, who is best to manage the business other than the original business owner may not be the person in the forecast, either. This is why a business plan is a “working” document. Another critical step that should be discussed in your business plan is the reason underlying your business entity selection or lack thereof. If you’re a small business owner, it’s unlikely that you will have selected a c-corporation and more likely that you decided to operate as a sole proprietor or partnership. Hopefully, your reasons included liability protection, asset protection, and minimizing taxes. Let’s look at an example: Craig and Andre established a catering business as equal partners. Craig was the creative genius and Andre was the financial guru. In Illinois, they will be taxed individually and the partnership may be subject to unlimited liability for any debts or claims, e.g., if someone was poisoned by blowfish. If the partnership cannot pay the claim, then the liability will flow to Craig and Andre together and separately. Now, let’s say that Andre quit the partnership as an owner before the blowfish incident but retained a financial interest in the business, which he bequeathed to his son who was a great beneficiary but a lousy business manager. That interest, because Craig and Andre established a plain partnership entity, may become worthless. However, let’s say that after Andre quit but before the blowfish incident, Craig hired a competent accountant. He structured the hiring according to the business succession plan, and then converted the partnership into a Limited Liability Company (LLC) because he didn’t want the business to be subject to unlimited liability. Now, the business and the bequest to Andre’s son are probably safe. An LLC is a very popular tool among small business owners right now because of the safety nets it provides for owners and for their interests. So if you’re a small business owner, revisit your plan to ensure you’ve selected the right entity. You should also determine who should succeed you as manager and at least how and when to replace other critical functions if and when they become vacant. Finally, be sure to place information regarding family successors and financial business interests in your estate plan – the third critical plan. If you choose the right entity and the right successors, you don’t have to risk your business, your financial interests, or your non-business-minded progeny’s esteem.