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Yahoo
4 days ago
- Business
- Yahoo
How to protect your assets from nursing home costs
As you or your parents get older, it's natural to start thinking about the future and the financial impact of long-term care. Many people worry that nursing home costs and medical expenses could affect their life savings and the legacy they want to leave for their families. But by familiarizing yourself with the law, you can learn how to protect assets from a nursing home and create a stable future for yourself and your loved ones, LegalZoom says. Protecting assets from nursing home costs isn't about avoiding the costs of care—rather, it's about legally preserving your assets according to your wishes. According to the National Council on Aging, the average cost of a private nursing home room in the U.S. is just over $9,700 per month—or more than $100,000 per year—and it's only expected to rise. Many people rely on Medicaid benefits for long-term care, but Medicaid has strict asset eligibility limits, and you may have to 'spend down' your assets to qualify. The Medicaid system also has a five-year "look-back" period that's designed to keep applicants from giving assets away or selling them at less than fair market value in order to qualify. That's why many of these strategies for protecting assets from nursing home costs require advance planning—as in, at least five years before you'll need nursing home care. There are several strategies you can use to protect assets from nursing home costs. Here are some of the most effective ways to afford the end-of-life care you or your loved ones need. 1. Purchase long-term care insurance Long-term care (LTC) insurance covers the cost of a nursing home, assisted living facility, adult day care, or home health care for people who are unable to take care of themselves. With an LTC plan in place, you'll have a way to pay nursing home care costs without emptying out your savings account. There's a price for that coverage, though. "The cost of long-term care insurance has gone up dramatically and many people hesitate to purchase a product which is available if they need it, but much like term life insurance, has no cash value if they do not need to go into a nursing home," says elder law attorney Steven Weisman. When purchasing this protection, keep in mind that the Department of Health and Human Services says 22 percent of adults will need care for more than five years. Only 12% will need care for less than a year. Long-term care needs can add up, making LTC insurance worth it in the eyes of many. 2. Purchase a Medicaid-compliant annuity A Medicaid-compliant annuity is a special type of annuity that helps protect assets by turning them into regular monthly income payments that Medicaid can't count against you. Both individuals and married couples can purchase these annuities, but they're especially relevant for married couples when there's a healthy spouse who isn't in a care facility. If a couple has assets that would disqualify the applicant spouse from Medicaid, they can invest those funds into a Medicaid-compliant annuity to create a monthly income stream for the healthy spouse. When properly structured, it's a way to 'spend down' and reduce the income Medicaid considers when deciding if you qualify for that assistance. "Annuity purchasers are effectively giving a lump sum of money to an annuity company in exchange for equal amounts of monthly payments to a healthy spouse while the other unhealthy spouse is receiving medical assistance subsidized by Medicaid," explains Shawn Plummer, CEO of The Annuity Expert. People tend to make this purchase when they're in a last-minute or crisis planning situation, notes Plummer. However, not all annuities are Medicaid-compliant, and those that are have specific requirements, such as being non-transferable, irrevocable, and set to pay out over your life expectancy. It's important not to rush into an annuity, and consult with an elder law attorney who understands Medicaid rules. 3. Form a life estate Wondering how to avoid a nursing home taking your house? A life estate is a legal arrangement that allows a homeowner to transfer ownership of their primary residence to another person (usually a family member) while also remaining an owner until they die, even if death occurs in a nursing home. It protects the home from being counted as an asset for Medicaid purposes, so you get more coverage for nursing home costs. With a life estate, 'The home passes to the 'remainderman,' who is the person listed on the deed as the person to inherit the property upon the death of the 'life tenant,'" says Weisman. He adds that it differs from a joint tenancy in that until the homeowner dies, the 'remainderman' has no interest in the property. 4. Put your assets in an irrevocable trust An irrevocable trust is a legal entity that holds and protects assets for designated beneficiaries. When you place assets in an irrevocable trust, you no longer maintain control over them directly. Instead, the assets are managed by a trustee, who can make distributions according to the trust's terms. You can put your home, business, investments, and other assets into the trust. You can even put your life insurance death benefit into an irrevocable life insurance trust (ILIT). Because the trust owns the assets, not you, the assets aren't counted as a resource toward Medicaid eligibility. They also offer better asset protection from creditors, minimizing the chance they'll be used for nursing home costs—that's why an irrevocable trust is also sometimes called an asset protection trust. The downside of an irrevocable trust is that, unlike a revocable trust, it doesn't allow you to make changes or cancel the trust except under certain circumstances. "Assets placed in the trust are legally no longer yours, and you must name an independent trustee," says Certified Estate Planner Chuck Czajka, founder of Macro Money Concepts. Also keep in mind that the five-year Medicaid lookback period applies, so you'll need to plan well before you or your loved ones need to enter a nursing home. With an asset protection trust, you're revoking your rights to the assets, so consider this option carefully. Trusts can be complicated legal documents, so it's best to work with an elder law attorney, estate planning attorney, or professional trust service to be sure it's set up correctly. 5. Consider financial gifts to family members Making financial gifts to family members is a popular asset protection plan. The IRS allows you to gift $18,000 per person each year without having to pay the federal gift tax. By gradually transferring wealth through gifts, you can reduce the size of your estate, which may help with Medicaid eligibility down the line. The more Medicaid benefits you receive, the more nursing home costs will be covered when you need care, and the better asset protection you'll have. Keep in mind that Medicaid's five-year look-back period applies to gifts, so any gifts made within five years of applying for Medicaid could result in penalties. If you're considering this asset protection strategy, start planning as early as possible, and keep detailed records of any gifts. 6. Start saving statements and get expert advice If you want to protect assets from nursing home costs, don't wait to take action. The documentation required for spending during the five-year lookback period means you will need to keep bank records and receipts for large expenses, including financial gifts. Keep a clear record of your financial history to make the Medicaid application process smoother. Also, keep a thorough list of all your assets—including your life insurance policies, investments, and titles to homes and vehicles—in case you want to create a trust. Finally, be certain to consult an elder law attorney or estate planning attorney. They will help you understand the best options and strategies for your life stage and assets, whether you want to learn how to protect parents' assets from a nursing home or your own. They'll also help you navigate complex Medicaid rules, set up trusts, and make sure all your documents are in order. Taking a proactive approach to protecting assets from nursing home costs makes a big difference in your success—and your peace of mind. Does a trust protect assets from a nursing home? Yes, certain types of trusts, like irrevocable trusts, can protect assets from nursing home costs. By placing your assets in an irrevocable trust, you remove them from your direct ownership, so it's more difficult for creditors to claim them. It can also help reduce the size of your estate for Medicaid purposes. What is the Medicaid look-back period? The Medicaid look-back period is a five-year timeframe during which Medicaid reviews your financial history for any large transfers or gifts. If you've given away money or assets within this period, Medicaid may delay your eligibility for benefits. The penalty period is based on the value of the transferred assets, so you'll want to plan ahead to avoid major transfers within five years of applying. What types of assets are exempt from Medicaid eligibility calculations? Medicaid exempts certain assets when it calculates the size of your estate to determine your eligibility for benefits. Typically, your primary residence, one vehicle, household goods, personal belongings like clothing or jewelry, certain life insurance policies, and some burial funds are not counted. Retirement accounts may also be exempt, depending on the state and whether you're drawing income from them. Asset exemption rules vary by state, so you should consult an estate planning or elder law attorney. How do you avoid a nursing home taking your house? To protect your house from nursing home care costs, consider transferring it to an irrevocable trust or creating a life estate. An irrevocable trust removes your ownership, and a life estate allows you to transfer the house to a family member while keeping the right to live there. Both strategies require advance planning due to Medicaid's five-year look-back period. Consulting an elder law or estate planning attorney can help you decide the best option for your situation. How do spousal protection rules help preserve assets for a healthy spouse? Medicaid has rules in place to protect the healthy spouse—known as the 'community spouse'—when the other spouse requires nursing home care. These rules allow the community spouse to keep certain assets, including a portion of the couple's combined assets, the primary home, and some income. This helps ensure the healthy spouse isn't left without resources while the other spouse receives care. Spousal asset protection rules vary by state, so working with a professional can help you understand what's allowed in your situation. Sandra Beckwith contributed to this article. This story was produced by LegalZoom and reviewed and distributed by Stacker.
Miami Herald
4 days ago
- Business
- Miami Herald
How to protect your assets from nursing home costs
How to protect your assets from nursing home costs As you or your parents get older, it's natural to start thinking about the future and the financial impact of long-term care. Many people worry that nursing home costs and medical expenses could affect their life savings and the legacy they want to leave for their families. But by familiarizing yourself with the law, you can learn how to protect assets from a nursing home and create a stable future for yourself and your loved ones, LegalZoom says. Why protect assets from nursing home costs and Medicaid? Protecting assets from nursing home costs isn't about avoiding the costs of care-rather, it's about legally preserving your assets according to your wishes. According to the National Council on Aging, the average cost of a private nursing home room in the U.S. is just over $9,700 per month-or more than $100,000 per year-and it's only expected to rise. Many people rely on Medicaid benefits for long-term care, but Medicaid has strict asset eligibility limits, and you may have to "spend down" your assets to qualify. The Medicaid system also has a five-year "look-back" period that's designed to keep applicants from giving assets away or selling them at less than fair market value in order to qualify. That's why many of these strategies for protecting assets from nursing home costs require advance planning-as in, at least five years before you'll need nursing home care. 6 ways to protect assets from nursing home costs There are several strategies you can use to protect assets from nursing home costs. Here are some of the most effective ways to afford the end-of-life care you or your loved ones need. 1. Purchase long-term care insurance Long-term care (LTC) insurance covers the cost of a nursing home, assisted living facility, adult day care, or home health care for people who are unable to take care of themselves. With an LTC plan in place, you'll have a way to pay nursing home care costs without emptying out your savings account. There's a price for that coverage, though. "The cost of long-term care insurance has gone up dramatically and many people hesitate to purchase a product which is available if they need it, but much like term life insurance, has no cash value if they do not need to go into a nursing home," says elder law attorney Steven Weisman. When purchasing this protection, keep in mind that the Department of Health and Human Services says 22 percent of adults will need care for more than five years. Only 12% will need care for less than a year. Long-term care needs can add up, making LTC insurance worth it in the eyes of many. 2. Purchase a Medicaid-compliant annuity A Medicaid-compliant annuity is a special type of annuity that helps protect assets by turning them into regular monthly income payments that Medicaid can't count against you. Both individuals and married couples can purchase these annuities, but they're especially relevant for married couples when there's a healthy spouse who isn't in a care facility. If a couple has assets that would disqualify the applicant spouse from Medicaid, they can invest those funds into a Medicaid-compliant annuity to create a monthly income stream for the healthy spouse. When properly structured, it's a way to "spend down" and reduce the income Medicaid considers when deciding if you qualify for that assistance. "Annuity purchasers are effectively giving a lump sum of money to an annuity company in exchange for equal amounts of monthly payments to a healthy spouse while the other unhealthy spouse is receiving medical assistance subsidized by Medicaid," explains Shawn Plummer, CEO of The Annuity Expert. People tend to make this purchase when they're in a last-minute or crisis planning situation, notes Plummer. However, not all annuities are Medicaid-compliant, and those that are have specific requirements, such as being non-transferable, irrevocable, and set to pay out over your life expectancy. It's important not to rush into an annuity, and consult with an elder law attorney who understands Medicaid rules. 3. Form a life estate Wondering how to avoid a nursing home taking your house? A life estate is a legal arrangement that allows a homeowner to transfer ownership of their primary residence to another person (usually a family member) while also remaining an owner until they die, even if death occurs in a nursing home. It protects the home from being counted as an asset for Medicaid purposes, so you get more coverage for nursing home costs. With a life estate, "The home passes to the 'remainderman,' who is the person listed on the deed as the person to inherit the property upon the death of the 'life tenant,'" says Weisman. He adds that it differs from a joint tenancy in that until the homeowner dies, the "remainderman" has no interest in the property. 4. Put your assets in an irrevocable trust An irrevocable trust is a legal entity that holds and protects assets for designated beneficiaries. When you place assets in an irrevocable trust, you no longer maintain control over them directly. Instead, the assets are managed by a trustee, who can make distributions according to the trust's terms. You can put your home, business, investments, and other assets into the trust. You can even put your life insurance death benefit into an irrevocable life insurance trust (ILIT). Because the trust owns the assets, not you, the assets aren't counted as a resource toward Medicaid eligibility. They also offer better asset protection from creditors, minimizing the chance they'll be used for nursing home costs-that's why an irrevocable trust is also sometimes called an asset protection trust. The downside of an irrevocable trust is that, unlike a revocable trust, it doesn't allow you to make changes or cancel the trust except under certain circumstances. "Assets placed in the trust are legally no longer yours, and you must name an independent trustee," says Certified Estate Planner Chuck Czajka, founder of Macro Money Concepts. Also keep in mind that the five-year Medicaid lookback period applies, so you'll need to plan well before you or your loved ones need to enter a nursing home. With an asset protection trust, you're revoking your rights to the assets, so consider this option carefully. Trusts can be complicated legal documents, so it's best to work with an elder law attorney, estate planning attorney, or professional trust service to be sure it's set up correctly. 5. Consider financial gifts to family members Making financial gifts to family members is a popular asset protection plan. The IRS allows you to gift $18,000 per person each year without having to pay the federal gift tax. By gradually transferring wealth through gifts, you can reduce the size of your estate, which may help with Medicaid eligibility down the line. The more Medicaid benefits you receive, the more nursing home costs will be covered when you need care, and the better asset protection you'll have. Keep in mind that Medicaid's five-year look-back period applies to gifts, so any gifts made within five years of applying for Medicaid could result in penalties. If you're considering this asset protection strategy, start planning as early as possible, and keep detailed records of any gifts. 6. Start saving statements and get expert advice If you want to protect assets from nursing home costs, don't wait to take action. The documentation required for spending during the five-year lookback period means you will need to keep bank records and receipts for large expenses, including financial gifts. Keep a clear record of your financial history to make the Medicaid application process smoother. Also, keep a thorough list of all your assets-including your life insurance policies, investments, and titles to homes and vehicles-in case you want to create a trust. Finally, be certain to consult an elder law attorney or estate planning attorney. They will help you understand the best options and strategies for your life stage and assets, whether you want to learn how to protect parents' assets from a nursing home or your own. They'll also help you navigate complex Medicaid rules, set up trusts, and make sure all your documents are in order. Taking a proactive approach to protecting assets from nursing home costs makes a big difference in your success-and your peace of mind. FAQs Does a trust protect assets from a nursing home? Yes, certain types of trusts, like irrevocable trusts, can protect assets from nursing home costs. By placing your assets in an irrevocable trust, you remove them from your direct ownership, so it's more difficult for creditors to claim them. It can also help reduce the size of your estate for Medicaid purposes. What is the Medicaid look-back period? The Medicaid look-back period is a five-year timeframe during which Medicaid reviews your financial history for any large transfers or gifts. If you've given away money or assets within this period, Medicaid may delay your eligibility for benefits. The penalty period is based on the value of the transferred assets, so you'll want to plan ahead to avoid major transfers within five years of applying. What types of assets are exempt from Medicaid eligibility calculations? Medicaid exempts certain assets when it calculates the size of your estate to determine your eligibility for benefits. Typically, your primary residence, one vehicle, household goods, personal belongings like clothing or jewelry, certain life insurance policies, and some burial funds are not counted. Retirement accounts may also be exempt, depending on the state and whether you're drawing income from them. Asset exemption rules vary by state, so you should consult an estate planning or elder law attorney. How do you avoid a nursing home taking your house? To protect your house from nursing home care costs, consider transferring it to an irrevocable trust or creating a life estate. An irrevocable trust removes your ownership, and a life estate allows you to transfer the house to a family member while keeping the right to live there. Both strategies require advance planning due to Medicaid's five-year look-back period. Consulting an elder law or estate planning attorney can help you decide the best option for your situation. How do spousal protection rules help preserve assets for a healthy spouse? Medicaid has rules in place to protect the healthy spouse-known as the "community spouse"-when the other spouse requires nursing home care. These rules allow the community spouse to keep certain assets, including a portion of the couple's combined assets, the primary home, and some income. This helps ensure the healthy spouse isn't left without resources while the other spouse receives care. Spousal asset protection rules vary by state, so working with a professional can help you understand what's allowed in your situation. Sandra Beckwith contributed to this article. This story was produced by LegalZoom and reviewed and distributed by Stacker. © Stacker Media, LLC.
Yahoo
5 days ago
- Business
- Yahoo
Knowing when it's time to talk to an employment attorney
When a workplace-related issue arises, you may need an employment attorney for legal advice. But when is it appropriate to reach out? Employment lawyers provide legal counsel to employers and employees facing workplace-related issues. They offer a wide range of services, including helping clients navigate state and federal employment law, ensuring businesses are legally compliant, drafting employment contracts, investigating employment disputes, and litigating disputes. But how do you know when it's a good time to talk to an employment attorney for your own employment-related issues? Below, LegalZoom unpacks everything you need to know about employment attorneys, when to contact them for legal advice, and how to hire the right one for your circumstances. There are basically two types of employment attorneys. One type focuses on plaintiffs or employees—sometimes referred to as an employment discrimination attorney, employment rights attorney, or federal employment attorney—and the other focuses on defendants or employers—also known as management attorneys. Usually, an employment attorney either focuses on one side or the other, but there are some attorneys who will take clients from either side. An employment lawyer can help employers and employees work together to reach a resolution in the event of a problem. If your employer-employee relationship becomes strained on account of a dispute involving wages, workplace safety, discrimination, or wrongful termination, it's helpful to consult an employment lawyer who can explain both sides' rights and duties. 'An employment attorney deals with any aspect of employment,' says attorney and shareholder Mark Levitt of Allen, Norton, and Blue. 'That could be discrimination, wage equality, hour allotment issues, creating new employee handbooks and codes of conduct, safety issues under the Occupational Safety and Health Act, or just about anything related to employment.' In short, this kind of attorney helps ensure that employers comply with employment laws and that employees are treated fairly. Here is what an employment attorney can do for you: Gives legal advice Employment lawyers provide legal counsel on rights and responsibilities outlined in federal and state employment legislation, such as the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA). They help employees determine if their rights were violated and decide whether or not to pursue legal action. They also provide legal advice to employers who have claims filed against them and work to investigate, negotiate, and resolve the complaints. Creates employee handbooks and agreements Legal experts in employment issues draft and review employee handbooks and workplace safety policies to ensure they comply with labor laws and regulations. Negotiates and reviews employment contracts These lawyers negotiate, write, and review employment contracts and independent contractor agreements to ensure the terms are legal and fair. This involves examining the terms and conditions outlined in severance contracts, non-compete and non-disclosure agreements, and executive compensation packages. Advises on independent contractors In addition to helping employers draft independent contractor agreements, lawyers help ensure contractors understand how they're classified and how their contractor rights may differ from employee rights. Monitors regulatory compliance Employment lawyers help businesses comply with labor and employment regulations and state and federal employment law, helping prevent noncompliance issues that could otherwise lead to litigation. Aids with litigation and administrative proceedings Employment lawyers represent employees and employers in court during employment litigation and before employment-related boards and agencies, such as the Equal Employment Opportunity Commission (EEOC), the Department of Labor (DOL), and the National Labor Relations Board (NLRB). Provides representation in disputes During court proceedings, lawyers represent their clients and work to resolve disputes related to discrimination, harassment, wrongful termination, breaches of contract, wage and hour issues, and other violations of state and federal labor laws. They also negotiate on behalf of their clients' interests on potential settlement of legal claims. The unfortunate truth is that layoffs are a recurring theme in business, especially during economic downturns. Layoff data from the U.S. Bureau of Labor Statistics (BLS) illustrates this best—widespread job cuts in the private sector followed the dot-com crash in 2001, the financial crisis in 2008–2009, and the 2020 pandemic in dramatic fashion. Today, many businesses are once again under pressure to cut costs—whether due to shifting trade and tariff policies, supply chain disruptions, or persistent inflation. As in the past, economic pressures like these often lead companies to reduce staff. That said, not all layoffs are legally permissible. Most private-sector employees work at-will, meaning they can be let go for almost any reason. But even in at-will employment, there are limits. Some layoffs may still constitute wrongful termination if they involve the following: Breaches of contract, such as violating employment terms, withholding agreed-upon severance payments, or failing to follow standard disciplinary procedures. Employment law violations, including terminations based on discrimination, harassment, retaliation, or targeting of protected classes. If you believe your layoff was the result of one of these issues, it might be time to speak with an employment lawyer. Before you meet with one, it helps to gather any documentation that can support your case, such as written communications from your employer, your employment contract, the employee handbook, and a layoff notice. Federal employees can work with employment attorneys—and in many cases, they should. Layoffs in the federal workforce, formally known as reduction-in-force (RIF), are handled very differently than layoffs in the private sector. Federal agencies group employees by location and job type, then rank them using factors like tenure, military service, and recent performance to determine who stays and who is let go. Because of these complex procedures, it makes sense to at least meet with an employment attorney for a consultation. Many offer free initial meetings, which can help you understand your legal standing and whether you may have a valid claim. It's also important to act quickly—if you believe the agency failed to follow RIF regulations, you only have 30 days to file an appeal with the Merit Systems Protection Board (MSPB). With so many variables at play, an attorney can help you decide how to move forward and protect your rights in the process. As an employer, there are times when you might need a consultation with an employment attorney regarding your business or employees. This might involve having your lawyer review your business to ensure it's compliant with state and federal laws and to help prevent legal issues from arising in the first place. In other cases, you may want a lawyer's advice and counsel when a workplace-related issue arises, like if a former employee claims they experienced wrongful termination or sexual harassment at your workplace. It's also important to stay in regular contact with a lawyer along the way to ask questions, get clarification, and ensure your business is on the right track. Some instances when you, as an employer, may want to consult with an employment lawyer include the following: Writing your employee handbook: You need help ensuring your handbook is compliant. Drafting employment agreements: You want employment contracts, non-compete clauses, and severance agreements that comply with legal standards. Compliance with labor laws: Your business needs to be compliant with employment laws. Handling employee disputes: You need legal guidance when dealing with issues like workplace discrimination, sexual harassment, and employee rights. Workplace investigations: You're investigating allegations of misconduct or harassment within or against your workplace. Legal representation: You need legal representation during court or board proceedings. Training management: You're training managers and your HR department on legal compliance, best practices, and appropriate hiring and firing procedures. Restructuring your business: You need legal advice during mergers, layoffs, acquisitions, and divestments. Protecting information: You need to ensure your business' confidential and proprietary information stays private. For a real-world example: Let's say you want to seek legal advice from your employment lawyer concerning an age discrimination claim a former employee has filed against your business. In this example, your lawyer will review the claim, evaluate the evidence and circumstances, and provide advice on how to mitigate the situation. If the claim should proceed to court, then your lawyer can represent you and help resolve the dispute. Whether you're an employer looking to create legally compliant documents or facing an employee complaint, it's never too early to seek advice from a lawyer. In fact, as an employer, staying in regular contact with a lawyer can be extremely beneficial, as it can help ensure you're in a good position to address any current or future claims against you. As an employee, you may find yourself in a situation where you'd like to meet with an attorney to discuss your legal options. An employment attorney can help you navigate the laws, determine if your employee rights were violated, and decide whether further action is necessary. This might involve exhausting internal remedies or ultimately filing a claim against your employer, workplace, or another employee. The following are some examples of when an employee may turn to an employment attorney for help: Wrongful termination: You believe you were fired without a valid reason, or the reason given violates employee protection laws. Discrimination: You faced unfair treatment at your workplace due to a protected characteristic, such as your age, disability, religion, race, gender, or sexual orientation. Harassment: You endured sexual harassment or a hostile work environment. Wage and hour issues: You dealt with wage and hour issues that violated the Fair Labor Standards Act (FLSA), such as not receiving overtime pay or being denied unpaid meal breaks. Retaliation: You experienced retaliation, such as a demotion, after whistleblowing or filing a complaint, which are legally protected actions. Unsafe work conditions: You are concerned your workplace is in violation of the Occupational Safety and Health Act (OSHA). Contract disputes: You would like clarification or help with disputing the terms in one of your workplace documents, such as your employment contract or confidentiality agreement. Leave issues: You faced challenges when taking or returning from legally protected leave. If you're unsure whether your situation warrants legal action, consider scheduling a consultation with an employment lawyer to gain clarity. Let's look at a real-world example: You think you were unfairly treated at your job due to your sexual orientation. Perhaps your boss overlooked you for a promotion several times despite your excellent performance record, and that's coupled with comments from other employees or superiors about LGBTQ+ people or you personally. Because your sexual orientation is a protected class (along with other characteristics, like your national origin, age, gender, and religion) your attorney will review the facts and determine whether promotion discrimination was at play. If there is evidence you did face discrimination, your lawyer will help you take the appropriate legal action and file a workplace discrimination claim. Another scenario in which you, as an employee, might want to reach out to an employment law firm is if you've faced challenges associated with legally protected leave. For instance, if you were fired after taking medical leave for a serious health condition. The Family and Medical Leave Act (FMLA) provides job-protected leave for employees with medical conditions that make them unable to work, meaning your workplace cannot terminate you due to your inability to work. Therefore, you would want to schedule a consultation with an employment lawyer to determine if your workplace wrongly terminated you in violation of the FMLA. We've provided some examples of scenarios that might require an employee to consult with a lawyer, but at what point should an employee reach out? An employee should seek legal advice when they perceive an issue and no solution is provided by their employer. However, you don't necessarily need to hire a lawyer right off the bat. You can take other avenues, such as contacting the EEOC, which will investigate your claim and help determine if you have sufficient evidence. Based on the results of the investigation, the EEOC may offer further guidance or recommend that you hire an attorney. However, regardless of the EEOC's findings, you are welcome (and encouraged) to seek legal counsel at any time. A big part of choosing an appropriate employment lawyer involves doing your homework. Research their professional background to ensure they have the skills, knowledge, significant experience, and expertise to address your situation. Consider seeking out a lawyer with a specialization in your particular area of concern. So, what should you look for when hiring an employment lawyer? Consider some of the following: Licensed. Is the lawyer licensed and in good standing in the state where you live or work? Experience. How many years have they been practicing? And have they taken on employment law cases like yours before? Areas of expertise. Do they specialize in the area where you need legal guidance? Track record. What does their professional history look like? Have they been involved in any ethical violations or disciplinary matters? Reputation. What are other lawyers and previous clients saying about their experiences working with this lawyer? Personality. Do you feel comfortable working with this lawyer, and can you effectively communicate with each other? Legal fees. What is their legal fee structure? Can you afford the fees, and are you aware of any hidden or unexpected charges associated with hiring them? From reviewing testimonials to assessing their communication style, take the time to ask questions and determine if a particular lawyer is the right fit for you. As an employee, there are a few things you can do to protect yourself and prepare for meeting with an employment lawyer. Document everything Employees who believe they are being discriminated against in some way or are not being paid correctly, etc., should keep accurate records of incidents, including dates and times. Note any witnesses. All of this information will be helpful for the agency or attorney should the employee decide to pursue action. This means capturing emails, screenshots, Slack messages, or anything that can help an employee make a case that a violation or breach occurred. Know the code As an employee, your employment terms and rule of engagement are clearly outlined in the documents you signed the day (or day before) you become an employee of the firm. It is incredibly important to make sure you are firmly aware of the employee code so that you know when a violation has occurred. Follow protocol The quickest way to undermine your own case is to not follow the proper standard operating procedures that your firm has in place when a violation occurs. Most companies have a strict mandate in place that a violation must be followed up on by an investigative board. That requires the employee to file a complaint with HR before involving outside sources. If your company has this policy, you'll want to follow it to the letter to ensure you are still entitled to litigation if all other avenues are exhausted. There are a plethora of labor laws an employer could easily violate unknowingly, and since there are different employee count and tenure thresholds for different laws, it's helpful to get guidance from an attorney. Here are other ways employers can help protect themselves: Codify rules and culture 'Even very small companies should have an employment handbook,â' Levitt cautions. 'It should have policies and rules in place for equal opportunity employment. The handbook should clearly address how employees can register a complaint with the company or file grievances over discrimination. At that point, every employer has the duty to investigate and determine whether or not there was unlawful conduct.' Practice what you preach Many business owners and leaders have failed because they did not treat all employees equally. You must use the rulebook that you wrote as a strict living document that governs how each employee engages with you, how you engage with them, and how they engage with each other. Leave nothing to chance As a company owner or leader, your actions are visible to everyone. Maintain an open door policy. Document your communications so there is no misunderstanding and workplace policies can be referenced with clarity. Navigate termination effectively If you have to terminate, do it with an employee termination letter drafted by experts. Do not attempt to navigate the hoops of terminating an employee legally by yourself. This can raise risks that you will be unlikely to mitigate in the future. Still have questions regarding employment lawyers? Check out some answers to some frequently asked questions below: When is the best time to seek advice? 'As soon as an employee believes something is wrong and no remedy is forthcoming from the employer is the best time to seek out advice,' Levitt says. As soon as you experience a workplace-related issue, reach out to a lawyer for advice. In addition, depending on the concern, the Equal Employment Opportunity Commission (EEOC) may be able to help investigate the issue and provide additional guidance. How much does an employment attorney cost? The cost of hiring an employment attorney will depend on various factors, such as the specific lawyer, the law firm they work for, their level of expertise, and how long they've been in business. Some lawyers work on a contingency basis, which means the outcome of the case determines how much they get paid. For example, if they win the case, they'll earn a percentage of what their client receives, but if they lose, they won't get paid. Meanwhile, other lawyers charge hourly fees, ranging anywhere from around $250 to more than $1,000 an hour, and may require a retainer. Can freelancers consult an employment lawyer? Yes, freelancers can consult with employment lawyers. However, it's important to understand that freelance contractors or independent contractors are self-employed and treated as their own businesses, so they are not considered employees. This means they do not share the same rights as employees under certain employment and labor laws. It is strongly recommended to make sure you have a robust attorney-drafted independent contractor agreement in place before you take on new work. If these terms or the terms of federal law are violated, an independent contractor should reach out to an attorney. This will help you in the event of nonpayment or even termination without just cause. What are the potential outcomes of an employment dispute case? Each case is unique, but there are generally a few ways things could go. For one, the court could dismiss the claims and throw out the case before it ever goes to trial. Or both parties could agree to a settlement to resolve the case outside of court. Another potential outcome is that one party is found liable and is responsible for the damages, such as paying compensation, or the party is not found liable and not responsible for any damages. What can employers and employees do to protect themselves? Employers should create an employee handbook containing policies and rules for equal opportunity employment. The handbook should clearly address how employees can register a complaint with the company or file grievances over discrimination. At that point, every employer has the duty to investigate and determine whether or not there was unlawful conduct, which is where consulting an experienced employer defense attorney can provide invaluable guidance and legal support. As for employees, they should review their employment documents, familiarize themselves with their employee rights, and keep records of any instances of misconduct. If a workplace incident does occur, they should report it to their employer and request a consultation with the EEOC and/or an attorney. Can an employer be forced to rehire a laid-off employee? In most cases, no. If the original layoff wasn't wrongful, there's generally no legal reason that would force an employer to rehire a laid-off employee. Because most employment is at-will, employers usually aren't required to provide a reason for hiring (or not rehiring). However, in some cases, union contracts or collective bargaining agreements may require employers to offer rehire opportunities to former employees before recruiting new hires. If you're unsure whether your employer should be obligated to rehire you, it's best to contact an employment attorney for advice. Diane Faulkner and Chloe Packard contributed to this article. This story was produced by LegalZoom and reviewed and distributed by Stacker.
Miami Herald
5 days ago
- Business
- Miami Herald
Knowing when it's time to talk to an employment attorney
Knowing when it's time to talk to an employment attorney When a workplace-related issue arises, you may need an employment attorney for legal advice. But when is it appropriate to reach out? Employment lawyers provide legal counsel to employers and employees facing workplace-related issues. They offer a wide range of services, including helping clients navigate state and federal employment law, ensuring businesses are legally compliant, drafting employment contracts, investigating employment disputes, and litigating disputes. But how do you know when it's a good time to talk to an employment attorney for your own employment-related issues? Below, LegalZoom unpacks everything you need to know about employment attorneys, when to contact them for legal advice, and how to hire the right one for your circumstances. What is an employment attorney? There are basically two types of employment attorneys. One type focuses on plaintiffs or employees-sometimes referred to as an employment discrimination attorney, employment rights attorney, or federal employment attorney-and the other focuses on defendants or employers-also known as management attorneys. Usually, an employment attorney either focuses on one side or the other, but there are some attorneys who will take clients from either side. What does an employment attorney do? An employment lawyer can help employers and employees work together to reach a resolution in the event of a problem. If your employer-employee relationship becomes strained on account of a dispute involving wages, workplace safety, discrimination, or wrongful termination, it's helpful to consult an employment lawyer who can explain both sides' rights and duties. "An employment attorney deals with any aspect of employment," says attorney and shareholder Mark Levitt of Allen, Norton, and Blue. "That could be discrimination, wage equality, hour allotment issues, creating new employee handbooks and codes of conduct, safety issues under the Occupational Safety and Health Act, or just about anything related to employment." In short, this kind of attorney helps ensure that employers comply with employment laws and that employees are treated fairly. Here is what an employment attorney can do for you: Gives legal advice Employment lawyers provide legal counsel on rights and responsibilities outlined in federal and state employment legislation, such as the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA). They help employees determine if their rights were violated and decide whether or not to pursue legal action. They also provide legal advice to employers who have claims filed against them and work to investigate, negotiate, and resolve the complaints. Creates employee handbooks and agreements Legal experts in employment issues draft and review employee handbooks and workplace safety policies to ensure they comply with labor laws and regulations. Negotiates and reviews employment contracts These lawyers negotiate, write, and review employment contracts and independent contractor agreements to ensure the terms are legal and fair. This involves examining the terms and conditions outlined in severance contracts, non-compete and non-disclosure agreements, and executive compensation packages. Advises on independent contractors In addition to helping employers draft independent contractor agreements, lawyers help ensure contractors understand how they're classified and how their contractor rights may differ from employee rights. Monitors regulatory compliance Employment lawyers help businesses comply with labor and employment regulations and state and federal employment law, helping prevent noncompliance issues that could otherwise lead to litigation. Aids with litigation and administrative proceedings Employment lawyers represent employees and employers in court during employment litigation and before employment-related boards and agencies, such as the Equal Employment Opportunity Commission (EEOC), the Department of Labor (DOL), and the National Labor Relations Board (NLRB). Provides representation in disputes During court proceedings, lawyers represent their clients and work to resolve disputes related to discrimination, harassment, wrongful termination, breaches of contract, wage and hour issues, and other violations of state and federal labor laws. They also negotiate on behalf of their clients' interests on potential settlement of legal claims. Should you talk to an employment lawyer if you're laid off? The unfortunate truth is that layoffs are a recurring theme in business, especially during economic downturns. Layoff data from the U.S. Bureau of Labor Statistics (BLS) illustrates this best-widespread job cuts in the private sector followed the dot-com crash in 2001, the financial crisis in 2008–2009, and the 2020 pandemic in dramatic fashion. Today, many businesses are once again under pressure to cut costs-whether due to shifting trade and tariff policies, supply chain disruptions, or persistent inflation. As in the past, economic pressures like these often lead companies to reduce staff. That said, not all layoffs are legally permissible. Most private-sector employees work at-will, meaning they can be let go for almost any reason. But even in at-will employment, there are limits. Some layoffs may still constitute wrongful termination if they involve the following: Breaches of contract, such as violating employment terms, withholding agreed-upon severance payments, or failing to follow standard disciplinary law violations, including terminations based on discrimination, harassment, retaliation, or targeting of protected classes. If you believe your layoff was the result of one of these issues, it might be time to speak with an employment lawyer. Before you meet with one, it helps to gather any documentation that can support your case, such as written communications from your employer, your employment contract, the employee handbook, and a layoff notice. Can federal employees work with employment attorneys? Federal employees can work with employment attorneys-and in many cases, they should. Layoffs in the federal workforce, formally known as reduction-in-force (RIF), are handled very differently than layoffs in the private sector. Federal agencies group employees by location and job type, then rank them using factors like tenure, military service, and recent performance to determine who stays and who is let go. Because of these complex procedures, it makes sense to at least meet with an employment attorney for a consultation. Many offer free initial meetings, which can help you understand your legal standing and whether you may have a valid claim. It's also important to act quickly-if you believe the agency failed to follow RIF regulations, you only have 30 days to file an appeal with the Merit Systems Protection Board (MSPB). With so many variables at play, an attorney can help you decide how to move forward and protect your rights in the process. How an employment attorney can help employers As an employer, there are times when you might need a consultation with an employment attorney regarding your business or employees. This might involve having your lawyer review your business to ensure it's compliant with state and federal laws and to help prevent legal issues from arising in the first place. In other cases, you may want a lawyer's advice and counsel when a workplace-related issue arises, like if a former employee claims they experienced wrongful termination or sexual harassment at your workplace. It's also important to stay in regular contact with a lawyer along the way to ask questions, get clarification, and ensure your business is on the right track. Some instances when you, as an employer, may want to consult with an employment lawyer include the following: Writing your employee handbook: You need help ensuring your handbook is employment agreements: You want employment contracts, non-compete clauses, and severance agreements that comply with legal with labor laws: Your business needs to be compliant with employment employee disputes: You need legal guidance when dealing with issues like workplace discrimination, sexual harassment, and employee investigations: You're investigating allegations of misconduct or harassment within or against your representation: You need legal representation during court or board management: You're training managers and your HR department on legal compliance, best practices, and appropriate hiring and firing your business: You need legal advice during mergers, layoffs, acquisitions, and information: You need to ensure your business' confidential and proprietary information stays private. For a real-world example: Let's say you want to seek legal advice from your employment lawyer concerning an age discrimination claim a former employee has filed against your business. In this example, your lawyer will review the claim, evaluate the evidence and circumstances, and provide advice on how to mitigate the situation. If the claim should proceed to court, then your lawyer can represent you and help resolve the dispute. The right time for an employer to contact an employment law attorney Whether you're an employer looking to create legally compliant documents or facing an employee complaint, it's never too early to seek advice from a lawyer. In fact, as an employer, staying in regular contact with a lawyer can be extremely beneficial, as it can help ensure you're in a good position to address any current or future claims against you. How an employment attorney can help employees As an employee, you may find yourself in a situation where you'd like to meet with an attorney to discuss your legal options. An employment attorney can help you navigate the laws, determine if your employee rights were violated, and decide whether further action is necessary. This might involve exhausting internal remedies or ultimately filing a claim against your employer, workplace, or another employee. The following are some examples of when an employee may turn to an employment attorney for help: Wrongful termination: You believe you were fired without a valid reason, or the reason given violates employee protection You faced unfair treatment at your workplace due to a protected characteristic, such as your age, disability, religion, race, gender, or sexual You endured sexual harassment or a hostile work and hour issues: You dealt with wage and hour issues that violated the Fair Labor Standards Act (FLSA), such as not receiving overtime pay or being denied unpaid meal You experienced retaliation, such as a demotion, after whistleblowing or filing a complaint, which are legally protected work conditions: You are concerned your workplace is in violation of the Occupational Safety and Health Act (OSHA).Contract disputes: You would like clarification or help with disputing the terms in one of your workplace documents, such as your employment contract or confidentiality issues: You faced challenges when taking or returning from legally protected leave. If you're unsure whether your situation warrants legal action, consider scheduling a consultation with an employment lawyer to gain clarity. Let's look at a real-world example: You think you were unfairly treated at your job due to your sexual orientation. Perhaps your boss overlooked you for a promotion several times despite your excellent performance record, and that's coupled with comments from other employees or superiors about LGBTQ+ people or you personally. Because your sexual orientation is a protected class (along with other characteristics, like your national origin, age, gender, and religion) your attorney will review the facts and determine whether promotion discrimination was at play. If there is evidence you did face discrimination, your lawyer will help you take the appropriate legal action and file a workplace discrimination claim. Another scenario in which you, as an employee, might want to reach out to an employment law firm is if you've faced challenges associated with legally protected leave. For instance, if you were fired after taking medical leave for a serious health condition. The Family and Medical Leave Act (FMLA) provides job-protected leave for employees with medical conditions that make them unable to work, meaning your workplace cannot terminate you due to your inability to work. Therefore, you would want to schedule a consultation with an employment lawyer to determine if your workplace wrongly terminated you in violation of the FMLA. The right time for an employee to contact an employment law attorney We've provided some examples of scenarios that might require an employee to consult with a lawyer, but at what point should an employee reach out? An employee should seek legal advice when they perceive an issue and no solution is provided by their employer. However, you don't necessarily need to hire a lawyer right off the bat. You can take other avenues, such as contacting the EEOC, which will investigate your claim and help determine if you have sufficient evidence. Based on the results of the investigation, the EEOC may offer further guidance or recommend that you hire an attorney. However, regardless of the EEOC's findings, you are welcome (and encouraged) to seek legal counsel at any time. Choosing the right employment lawyer A big part of choosing an appropriate employment lawyer involves doing your homework. Research their professional background to ensure they have the skills, knowledge, significant experience, and expertise to address your situation. Consider seeking out a lawyer with a specialization in your particular area of concern. So, what should you look for when hiring an employment lawyer? Consider some of the following: Licensed. Is the lawyer licensed and in good standing in the state where you live or work?Experience. How many years have they been practicing? And have they taken on employment law cases like yours before?Areas of expertise. Do they specialize in the area where you need legal guidance?Track record. What does their professional history look like? Have they been involved in any ethical violations or disciplinary matters?Reputation. What are other lawyers and previous clients saying about their experiences working with this lawyer?Personality. Do you feel comfortable working with this lawyer, and can you effectively communicate with each other?Legal fees. What is their legal fee structure? Can you afford the fees, and are you aware of any hidden or unexpected charges associated with hiring them? From reviewing testimonials to assessing their communication style, take the time to ask questions and determine if a particular lawyer is the right fit for you. What can employees do to protect themselves? As an employee, there are a few things you can do to protect yourself and prepare for meeting with an employment lawyer. Document everything Employees who believe they are being discriminated against in some way or are not being paid correctly, etc., should keep accurate records of incidents, including dates and times. Note any witnesses. All of this information will be helpful for the agency or attorney should the employee decide to pursue action. This means capturing emails, screenshots, Slack messages, or anything that can help an employee make a case that a violation or breach occurred. Know the code As an employee, your employment terms and rule of engagement are clearly outlined in the documents you signed the day (or day before) you become an employee of the firm. It is incredibly important to make sure you are firmly aware of the employee code so that you know when a violation has occurred. Follow protocol The quickest way to undermine your own case is to not follow the proper standard operating procedures that your firm has in place when a violation occurs. Most companies have a strict mandate in place that a violation must be followed up on by an investigative board. That requires the employee to file a complaint with HR before involving outside sources. If your company has this policy, you'll want to follow it to the letter to ensure you are still entitled to litigation if all other avenues are exhausted. What can employers do to protect themselves? There are a plethora of labor laws an employer could easily violate unknowingly, and since there are different employee count and tenure thresholds for different laws, it's helpful to get guidance from an attorney. Here are other ways employers can help protect themselves: Codify rules and culture "Even very small companies should have an employment handbook,â" Levitt cautions. "It should have policies and rules in place for equal opportunity employment. The handbook should clearly address how employees can register a complaint with the company or file grievances over discrimination. At that point, every employer has the duty to investigate and determine whether or not there was unlawful conduct." Practice what you preach Many business owners and leaders have failed because they did not treat all employees equally. You must use the rulebook that you wrote as a strict living document that governs how each employee engages with you, how you engage with them, and how they engage with each other. Leave nothing to chance As a company owner or leader, your actions are visible to everyone. Maintain an open door policy. Document your communications so there is no misunderstanding and workplace policies can be referenced with clarity. Navigate termination effectively If you have to terminate, do it with an employee termination letter drafted by experts. Do not attempt to navigate the hoops of terminating an employee legally by yourself. This can raise risks that you will be unlikely to mitigate in the future. FAQs Still have questions regarding employment lawyers? Check out some answers to some frequently asked questions below: When is the best time to seek advice? "As soon as an employee believes something is wrong and no remedy is forthcoming from the employer is the best time to seek out advice," Levitt says. As soon as you experience a workplace-related issue, reach out to a lawyer for advice. In addition, depending on the concern, the Equal Employment Opportunity Commission (EEOC) may be able to help investigate the issue and provide additional guidance. How much does an employment attorney cost? The cost of hiring an employment attorney will depend on various factors, such as the specific lawyer, the law firm they work for, their level of expertise, and how long they've been in business. Some lawyers work on a contingency basis, which means the outcome of the case determines how much they get paid. For example, if they win the case, they'll earn a percentage of what their client receives, but if they lose, they won't get paid. Meanwhile, other lawyers charge hourly fees, ranging anywhere from around $250 to more than $1,000 an hour, and may require a retainer. Can freelancers consult an employment lawyer? Yes, freelancers can consult with employment lawyers. However, it's important to understand that freelance contractors or independent contractors are self-employed and treated as their own businesses, so they are not considered employees. This means they do not share the same rights as employees under certain employment and labor laws. It is strongly recommended to make sure you have a robust attorney-drafted independent contractor agreement in place before you take on new work. If these terms or the terms of federal law are violated, an independent contractor should reach out to an attorney. This will help you in the event of nonpayment or even termination without just cause. What are the potential outcomes of an employment dispute case? Each case is unique, but there are generally a few ways things could go. For one, the court could dismiss the claims and throw out the case before it ever goes to trial. Or both parties could agree to a settlement to resolve the case outside of court. Another potential outcome is that one party is found liable and is responsible for the damages, such as paying compensation, or the party is not found liable and not responsible for any damages. What can employers and employees do to protect themselves? Employers should create an employee handbook containing policies and rules for equal opportunity employment. The handbook should clearly address how employees can register a complaint with the company or file grievances over discrimination. At that point, every employer has the duty to investigate and determine whether or not there was unlawful conduct, which is where consulting an experienced employer defense attorney can provide invaluable guidance and legal support. As for employees, they should review their employment documents, familiarize themselves with their employee rights, and keep records of any instances of misconduct. If a workplace incident does occur, they should report it to their employer and request a consultation with the EEOC and/or an attorney. Can an employer be forced to rehire a laid-off employee? In most cases, no. If the original layoff wasn't wrongful, there's generally no legal reason that would force an employer to rehire a laid-off employee. Because most employment is at-will, employers usually aren't required to provide a reason for hiring (or not rehiring). However, in some cases, union contracts or collective bargaining agreements may require employers to offer rehire opportunities to former employees before recruiting new hires. If you're unsure whether your employer should be obligated to rehire you, it's best to contact an employment attorney for advice. Diane Faulkner and Chloe Packard contributed to this article. This story was produced by LegalZoom and reviewed and distributed by Stacker. © Stacker Media, LLC.
Miami Herald
6 days ago
- Business
- Miami Herald
How to start an online business in 8 steps
How to start an online business in 8 steps In many ways, the internet has leveled the playing field for small business owners everywhere. Online businesses are relatively easy to start, without the kind of up-front costs a brick-and-mortar business demands. However, this relative ease doesn't mean that you can simply jump in and hang out your shingle. LegalZoom offers eight steps for those interested in starting an online business. As with any business, you need to establish a strong footing for your online business. While the steps outlined below don't necessarily have to be completed in order, their objective is to provide you with a foundation that's solid enough to bear the weight of your future business growth and success. 1. Assess the viability of your new business idea Just because it's easier to start an online business doesn't mean no costs are involved. As with a physically based business, the first step to take with your online business is to assess your idea's feasibility. The most brilliant online business ideas can be unsuccessful if your product or service has no market. Even if you've hit on the solution to a problem that plagues many people, you're just throwing money away if the problem turns out to be one that most people don't care enough about to spend time or money solving. With this in mind, you need to evaluate your online business idea. The following are just a few of the questions you need to ask yourself: Does your product or service solve a problem that enough potential customers have?Does your product or service provide a cost-effective solution to that problem?Are people willing to spend money to solve the problem?How costly will it be to reach the people in need of the solution your product or service offers? How to perform market research In order to evaluate your online business idea and answer these questions, you'll first want to conduct market research. From a broad perspective, you want to identify your target audience, understand the problem they have, and determine whether or not your business can be the solution. Here are several research methods to try: Keyword research. Start with basic Google searches related to your business idea, including similar products, services, and key phrases. Pay attention to the search suggestions and related queries, as these often reveal customer concerns and what they prefer to engage with. For a deeper dive, you can also use tools like Google Trends to track interest in your niche over analysis. Study successful online businesses in your target market, including their product offerings, pricing strategies, and marketing tactics. Look for gaps in their services that your business could potentially fill, and consider whether competing with them is social media. Nowadays, it's crucial for businesses to track trends and conversations across Facebook, Instagram, TikTok, and other popular platforms. Pay attention to frequently asked questions, pain points, and the general sentiment toward existing solutions and and interviews. With some planning, you can create short, focused surveys using free tools like SurveyMonkey or Google Forms. Ideally, you can share them in relevant online communities (such as a Facebook group) or with your network. Likewise, you should also conduct informal interviews with potential customers to better understand their needs and preferences. Ultimately, you want to confirm your business idea addresses a genuine market need and has the potential to stand out among the competition. 2. Develop a business plan Once you know your idea is feasible, it's time to put together a comprehensive business plan. Even if you don't plan on obtaining funding for your business, at least not initially, having a business plan is valuable because it lets you spot any potential bumps down the road and plan for future growth and profitability. The work you did in step one gives you a good base from which to develop your own business plan, and multiple resources are available online to help you put together the core elements of a solid plan, including the following: The vision. Your business' purpose and long-term goals (usually known as an executive summary).Market insights. Your target audience, competition, and industry strategy. Your approach to marketing, sales, and customer roadmap. Your projected revenue, expenses, and potential funding needs. An effective plan will help you to identify your market further, clarify your objectives, provide a marketing roadmap, and assist you in making the kinds of decisions that may mean the difference between success and failure. 3. Choose a business name Choosing your business' name is an important step in the startup process. Because your business will primarily function online, your chosen name must be available for registration as a business name in your state and within the digital space. This means you will need to check whether the name you want is available as a: Business name in your stateDomain nameUsername on each of the social media platforms you plan to use If your chosen name isn't available as a domain name or social media username, consider different permutations of the name, and remember that many domain name extensions beyond the original ".com" are available. Additionally, it's important to check that your name and domain name aren't impinging on any registered trademarks. 4. Decide on your business structure The business type you choose will dictate the legal and tax requirements you need to meet. Most small business owners choose from the following structures: Sole proprietorship. This is the simplest form of business structure, but its lack of limited liability offsets its While this form of business structure might appeal to you if you are embarking on your venture with a partner, your liability is unlimited, like a sole liability company. An LLC offers limited liability without the additional complexity of incorporation, making it one of the most popular small business Like an LLC, a corporation provides limited liability, and while it's more complicated to set up and maintain, it may be a good choice depending on your circumstances. It's always a good idea to consult an attorney to determine the appropriate business type for your new business. Because each structure has different tax requirements, you may also want to consult a tax professional. 5. Take care of all the legal tasks Like a brick-and-mortar business, you will need to file all the appropriate business-formation documents and other paperwork to ensure your new business has a solid legal foundation. This includes: Registering your business with the appropriate government all the required permits and all federal and state tax requirements, such as applying for state and federal tax ID numbers. Since these requirements vary on a state-by-state basis and the nature of your business, it's important to do your research so you meet any applicable requirements. Again, it's often helpful to consult with an attorney with experience in business startups in your particular industry to make certain you're on the right track. 6. Build your website and choose your sourcing and fulfillment methods An online business's website is as important as the physical location of a brick-and-mortar company, and you should put as much care into this part of the startup process as you would if you were location and lease shopping. Here's how. Decide how to build your website You have several options to create your website, including the following: Website builders. Platforms like Shopify, Wix, and Squarespace offer user-friendly interfaces and templates to build a website and set up management. CMS platforms like WordPress offer more flexibility and plugin options to customize your own website, though they're not quite as sites. For many online businesses, hiring a website developer to help build your site makes sound business sense, as they can build it exactly to your preferences and give your brand a premium look. When looking at how you will build your website, consider available payment processors (such as through Square, Apple Pay, or PayPal), their fees, and whether they meet your customers' preferences. Choose your domain name and hosting platform Next, you can register your domain name with the website builder you use or another service like GoDaddy or Google Domains. The web host you choose is an important consideration as well, provided you build a custom site. You can have a top-notch website, but it will do you no good if your host has too much downtime or if the speed of browsing your site is too slow. In addition to checking out reviews online, consider asking your personal and business network contacts. Other online business owners, in particular, can provide invaluable information about a web host's reliability. Plan your sourcing and fulfillment strategy Depending on the products or services you'll be offering, you will also need to evaluate and choose your sources of supply and inventory, as well as how you will deliver your product or service to your customer. Again, a number of options are available. Given the importance of having inventory on hand-or a good on-demand provider-and a reliable method of fulfillment, spending adequate research time on this aspect can mean the difference between success and failure. 7. Develop and implement your prelaunch marketing strategies It's important to market your online business while you're working on each of the previous steps. Your business plan will provide you with the information you need to develop effective marketing strategies for your potential market. Then, you'll need to choose the right channels to reach your customers, such as: Content marketing. Create and share relevant content on your website to attract and engage your target audience, whether through blog posts, videos, or media marketing. Build brand awareness on social media platforms to drive traffic to your website. Be sure to tailor your content to each platform's unique audience, features, and marketing. Use personalized and targeted email campaigns to keep your audience informed about your launch, promotions, and new offerings when they come advertising. Invest in targeted ads on platforms like Google Ads or social media to reach a wider audience quickly. No matter what strategies you go with, it's important not to skimp on implementation. By building up your target market's anticipation of your launch through social media and various advertising methods, you will be paving the way for a successful launch. 8. Test and launch your new business Before launching, you should test every element and feature of your online business to confirm the customer experience is where you want it to be. Start by testing your website on various devices (desktop, tablet, and mobile) and browsers to verify compatibility. You should also confirm everything functions, including the navigation and menu items, product pages, payment processor, and other relevant features. Once you're confident everything works as intended, you're ready to launch. While you won't actually be "cutting the ribbon" the way you might with a physical business, you'll be doing so metaphorically when you make your website live and announce to the world that you're open for business. This announcement can be made in a variety of ways, including: Social media accountsYour email listOnline adsTraditional ads During the launch phase, you will reap the benefits of the work you did during your prelaunch marketing. Of course, your work will have only just begun, but by going through these eight steps, you will have built a solid foundation for your online business. Laying the groundwork in this manner means you can devote your time to running and marketing your new business rather than dealing with the various fires that might arise if you've neglected any of these important steps along the way. Why start an online business? There's arguably never been a better time to start an online business. E-commerce sales are projected to account for over 20% of all retail sales in the U.S. by 2027, compared to less than 15% in 2022. Besides the expected growth, starting an online business comes with numerous benefits, including the following: Flexibility Unlike traditional businesses with fixed hours and locations, an online business allows you to set your own schedule and work anywhere as long as you have an internet connection. This flexibility also extends to your work environment-you can operate from a home office, a coffee shop, or even while traveling. Low startup costs Starting an online business is usually less expensive than opening a physical location, as you don't necessarily need to pay for rent, renovations, or repairs. With lower overhead costs, you also have more flexibility to allocate resources where they're needed most, whether that's building your business website, purchasing software, or padding savings in your business bank account. Global reach With an online presence, you're not restricted to local customers or traditional business hours. Your website is "open" 24/7, allowing customers from different time zones to visit at their convenience. This also means you can tap into niche markets that you otherwise couldn't reach locally and expand your customer base. Scalability As your business grows, it's generally easier to accommodate the increased demand without proportional increases in physical infrastructure or staff. Likewise, if you need to downscale during seasonal fluctuations, you won't have as many associated expenses or long-term assets to maintain. Automation and tools You can find numerous tools and programs that can handle everyday tasks associated with running your online business, including inventory management, order fulfillment, and customer service, among others. As you become more familiar with the operations and implement these tools, you can improve efficiency while freeing your time for more important matters. Useful tools for starting an online business Depending on your business model and needs, you might consider using some of these tools to help start your online business: All-in-one e-commerce platforms. Platforms like Shopify or Squarespace allow you to build a website, launch an online store, and set up various features all in the same tools. It's helpful to set up accounts with tools like Google Analytics, Ahrefs, or Mailchimp to track analytics and manage marketing management tools. The early stages of launching a business can feel overwhelming, so you might use productivity software like Asana or ClickUp to keep your projects on schedule. FAQs How do I build an effective website for my online business? To build an effective website, focus on user-friendly design, clear navigation, and mobile responsiveness. You can either use a website builder or hire a professional developer for more complex designs. It's also a good idea to reference successful online business websites you'd like to model after. Can you start an online business with no money? Yes, it's possible to start an online business with no money, including graphic design, writing, and other freelance services. You can usually find free or low-cost online courses to build your skills in these areas. However, expect to invest time and effort to grow your business. Can you sell online without a business? You may be able to sell online without a formal business through marketplaces like Amazon. However, most online businesses must have licenses to operate, so you should check with your county, state, or the Small Business Administration to confirm what you'll need. What challenges of starting an online business should I prepare for? You should prepare for challenges related to earning customer trust and establishing a name for your business. You may also face technical issues or struggle with scaling operations as you grow. Still, the exact challenges ultimately depend on your business type, strengths, and weaknesses. Belle Wong, J.D., contributed to this article. This story was produced by LegalZoom and reviewed and distributed by Stacker. © Stacker Media, LLC.
