Many Americans dream of owning a successful business. Countless literature on the subject exists, counseling entrepreneurs on how to fuel their business growth and achieve their goals. However, these guides often assume their readers have some familiarity with business management, causing them to overlook a population in desperate need of help. Those with criminal records often find it impossible to find sustainable work, as a result of many businesses refusing to hire them for better-paying jobs. This leads them to turn to entrepreneurship and become their own employer, despite having little to no insider knowledge. Unfortunately, their lack of familiarity with rules and regulations means their companies are at higher risk of lawsuits. Attorney Tammy Allison, former Prosecutor and former senior Department of Justice attorney, seeks to overcome this issue by giving formerly incarcerated business owners the knowledge they need to stay competitive and avoid conflict. Entrepreneurship attorney and law firm coach, Dayna Thomas, Esq., host of Launched and Legal, sits down with Allison to discuss the rules entrepreneurs with prior convictions should follow.
Check business paperwork
The first thing business owners should do is make sure their organizations are structured correctly. They can start by checking their paperwork, to make sure it is properly filed with the state. Companies need to be registered with their state’s secretary of state, have an operating agreement, and ensure that all contracts are written under the name of the business, not their owner. This is good advice regardless of criminal history. In most states, those who fail to meet these three obligations find themselves at risk of prosecution or civil lawsuits.
Check company structure
Many entrepreneurs who are unfamiliar with state statutes find themselves embroiled in mail and wire fraud, and may even find themselves pleading guilty to defrauding the U.S. federal government if not careful. This is because they fail to accurately explain the structure of their business on credit and loan applications. Owners have to be extremely careful to accurately answer questions relating to their salary, revenue, employees, projected growth etc. This can be exceptionally difficult for those with criminal records, who often lack formal business training and may be the first in their families to start a company. An excellent resource for new owners can be found on the U.S. Small Business Administration’s website. Allison recommends hopeful owners read the business structure classifications there to avoid violating the law.
Check tax codes
One of the chief areas many new business owners struggle with is their state and federal taxes. The paperwork can be a nightmare to maintain, only surpassed in difficulty by the actual filing process. However, small businesses, especially those run by those with criminal records, are often targeted by the IRS. Understanding the tax code, and how it applies differently to certain organizations will help owners avoid fines or worse following tax season.
Many minority business owners are often hard on themselves, especially if they feel their efforts aren’t meeting expectations. However, Allison wants them to remember to forgive themselves, their parents and their previous generations, for not understanding the business system in the U.S. The country’s laws are difficult, and many underserved groups are simply overlooked by the education system. However, new entrepreneurs must still take care to learn the process and avoid litigation. Thankfully many resources exist expressly to help them navigate the business world. “What’s really important is to ask questions,” concludes Allison.
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