Avoid these five small-business-crushing scams

wynnatlaw — Thu, 22 Jun 2017 12:42:00 +0000

Consumers aren’t the only victims of fraud. Wynn at Law, LLChears about thousands of small business scams every year. A reward of our business is being able to work with entrepreneurs to get a business off and running (see related article). It doesn’t take much more than a single scam to derail that dream.

These days it’s fairly simple to pop up an official-looking website and professional – but fake – letterhead. Aside from the possible remuneration from and legal ramifications for the scammers, if they’re caught, once the business owner parts with the money for a scam, the money is gone.

Wisconsin’s Better Business Bureau notes, “We continually see various scams against small businesses and they seem to be increasing each year.” Some of the common small business scams reported to the BBB include:

1. Phony invoices. Businesses receive fake invoices demanding payment for product or services they never ordered or received. Often, if you look closely, you’ll see fine print that identifies the bill as an actual solicitation for business. Generally, the amount is small enough to not raise a red flag. Make sure that the business billing you is a business with whom you are familiar. If not, question it. Wynn at Law LLC’s best small business clients limit the employees authorized to place orders or pay invoices.

2. Directory scams. A problem that has plagued businesses large and small for decades involves deceptive sales for directories. Scammers call claiming they want to update the company’s information for an online directory… when they could be using the info to set up your business for identity theft. Otherwise, they may also try to upsell your listing in a directory that’s irrelevant to you or your customers, or doesn’t exist at all. Do not give out information about your business to anyone, unless you know for what the information will be used.

3. Charity pitches. Even new businesses are routinely asked to donate funds to needy causes. While many requests are legitimate, every year small businesses become victims of fraudulent or deceptive charitable solicitation schemes. If the charity isn’t on give.org, don’t give.

4. Coupon books. Small business operators are often approached to participate in coupon book promotions. They seem like an inexpensive way to advertise your start-up. Problems occur if the promoters change the terms of the coupons to make them more attractive to buyers, when the books are oversold or when books are primarily distributed outside our area.

The fifth scam is among the most prolific – with terrifying outcomes. Internet & phone scams are a common nightmare. Watch out for ransomware, phishing, URL hustles, and spoofing scams. Scammers play on fear, convenience and lack of technical knowledge. Installing a protective software program like Norton or McAfee is a good start. A ‘firewall’ is recommended because it keeps your inside information inside… which includes your customers’ information. These days, you’re flirting with disaster by clicking on any links in unsolicited emails. One recent tip we heard was to shut off the preview pane on email inboxes to avoid emails a spam filter missed.

*The content and material in this original post is for informational purposes only and does not constitute legal advice.
Photo by Brian Jackson, used with permission.

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Form your company first

wynnatlaw — Thu, 08 Jun 2017 11:30:00 +0000

Wynn at Law, LLCcounsels many business owners when a legal situation arises. However, the best opportunity for us to help a business happens at the front end, somewhere between the inspiration to start the business and the day the first customer arrives. We totally get the excitement and energy every business owner exudes when the lightbulb burns bright to start an enterprise.

Forming a general partnership doesn’t require any legal paperwork, but it wouldn’t hurt to have a written agreement amongst partners. The fact is, partnerships are formed every day without even intending to do so if you and another person start working together on a business.

Other business structures require a bit more organization. A tax adviser is going to help with the tax advantages or disadvantages of organizing a business as a partnership, a limited liability corporation (LLC), or incorporate as an S-corp or a C-corp. I’ve listed these in order from the easiest to form to the more complex.

An attorney is your lifeline to help you form the business within the state guidelines while protecting your best interests. As one of my clients puts it, ‘Everything is great when it’s great… when it goes south you’re glad to have an operating agreement.’

She has an LLC, which needs an operating agreement among the LLC members. It governs the business and the members’ financial and managerial rights and roles. For a corporation, they’re also known as by-laws.

Remember what the two L’s stand for: Limited Liability. The operating agreement separates the owner’s or owners’ liability from the business’ liability. In short, you separate your business finances and personal finances, shielding the liabilities of each from the other. That’s a huge deal, especially if a suit is brought against the business – or, just as crushing – at some point you face personal bankruptcy, a frequent topic of Wynn at Law LLC’s articles. (See our archive, below right, please)

*The content and material in this original post is for informational purposes only and does not constitute legal advice.

Photo by Andrew Lobov, used with permission.

The post Form your company first appeared first on Wynn at Law, LLC.

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Avoid these five small-business-crushing scams

Form your company first